Michigan to receive initial $25 million federal grant to address orphan wells
Michigan’s effort to seal off abandoned oil and gas wells has received a major financial boost with a $25 million grant from the Department of the Interior.
Made possible by the Federal Infrastructure Investment and Jobs Act of 2021 (IIJA), also known as Section 40601 of the Bipartisan Infrastructure Act, the IIJA stimulus funding is comprised of three tranches of money that states can apply for, including an initial grant of up to $25 million, a formula grant, and a regulatory improvement grant.
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The orphan Jablonski 01 oil well, formerly operated by Northeastern Energy Corporation, in Casco Township, St. Clair County.
“We must use all available resources to protect Michigan residents’ drinking water,” Governor Gretchen Whitmer said. “This funding will help us plug orphan oil and gas wells, which will prevent the emission of harmful gases, create jobs, ensure more sites are made available for productive use by businesses and owners, and protect families’ water supplies. the budget I signed last month, we have dedicated additional resources to help clean up orphan oil and gas wells, and I will work with anyone to protect our communities.”
Orphan wells are abandoned or poorly plugged wells for which there is no known creditworthy owner or operator. They pose significant risks to human and environmental health by releasing toxic chemicals into the air, contaminating groundwater and emitting methane, the potent greenhouse gas.
EGLE’s Oil, Gas and Minerals Division (OGMD) successfully applied for an initial grant of $25 million and also filed a notice of intent to apply for an estimated formula grant of $5.8 million of dollars. When added to the state’s current $1 million orphan well program, EGLE’s fiscal 2023 credit for treating more than 400 orphan wells statewide increases dramatically to 32 million – the largest funding increase in the program’s history.
In accordance with the bipartisan Infrastructure Act, the main objectives of the EGLE Orphan Well Project are the protection of human health and the environment, the reduction of methane emissions and the creation of well-paying jobs.
Nearly 30 years ago, OGMD worked with the oil and gas industry to pass Bill 308, PA 1994, which established the current Orphan Well Fund within the Michigan Department of Treasury. OGMD uses the fund, funded by revenue generated from a severance tax on the oil and gas industry, to plug and remediate orphan well sites. To date, approximately 400 abandoned wells have been plugged or remediated.
“We still have 447 orphan wells across the state,” said Adam Wygant, EGLE’s director of OGMD. “With this increase in funding, we hope to accomplish 25 years of work in the next few years. This additional federal infrastructure money allows us to hire two new dedicated Orphan Wells staff and plug these wells eight times faster than before.
Eligible activities permitted under the initial grant include plugging of wells, reclamation of land affected by associated development activities, and removal of infrastructure associated with wells on federal, state, tribal, and private property. Orphan well projects are ranked using a multi-element scoring system based on risks to public health and safety, potential or known environmental contamination, land use and tools environmental justice screening. Generally, projects will be completed in order from highest score to lowest score. The money from the initial IIJA grant will reduce the estimated timeframe for closing the backlog of documented orphan wells by decades.
“EGLE’s commitment to cleaning up orphan oil and gas wells is critical to unlocking new economic development opportunities and ensuring more projects are built on time and on budget,” said Zach Kolodin. , director of infrastructure for the Michigan Infrastructure Office. “This $25 million grant will help jump-start efforts to clean up 447 known orphan gas wells across Michigan. The Michigan Infrastructure Office looks forward to working with communities and stakeholders across our state to identify even more funding opportunities that will allow them to invest in critical infrastructure projects that have a lasting impact on Michigan’s future.”
The OGMD will publish on its website a list of plugged wells, decommissioned facilities and costs incurred as the projects progress.