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U.S. energy drilling boom could mean $6 billion in federal well cleanups

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WASHINGTON (Reuters) - Cleaning up the tens of thousands oil and gas wells on U.S. federal land after they stop producing could cost over $6 billion, and taxpayers may need to pitch in, according to an analysis of state and federal data commissioned by a conservation watchdog group.

The study released on Monday reflects one of the downsides to a years-long drilling boom that has made the United States a top world oil and gas producer.

The analysis by consultancy ECONorthwest on behalf of the Center for Western Priorities, estimates the potential reclamation costs for the 94,096 oil and gas wells now producing on federal lands at $6.1 billion.

The study pointed out the figure is likely several times higher than the amount the government has collected from oil and gas companies for the purposes of well reclamation - and taxpayers could be liable for some of the difference.

The Interior Department requires oil and gas companies to post reclamation bonds of $10,000 per well when they drill on federal land, to ensure that wells are cleaned up once they are retired or if a company goes bankrupt.

The report estimated, however, that the average cost of a well reclamation is now $65,200, with deeper wells that are becoming more common due to improved. 

Source :- yahoonews
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