HB 2673 worth a plugged $4M: Measure occupies the middle ground on capping orphaned wells in state

It’s a common argument against any number of issues. Some call it black-and-white thinking, but in recent years most refer to it as a false choice.
You know the drill: We cannot have laws to protect the environment if we want to continue creating jobs.
Of course, that’s often a deliberate effort to dismiss or obscure other options in the middle ground on an issue.
Last week, an example of how to resolve such a problem got our attention in an unlikely place to find the middle ground — the legislature.
It’s HB 2673, which creates the Oil and Gas Abandoned Well Plugging Fund.
This bill advanced out of committee and is headed to the full House for passage this week.
It’s described as both a mechanism for environmental protection and economic stimulus.
At first blush many will reject the idea of reducing the severance tax on oil- and gas-producing wells. Then breathe a sigh of relief knowing this bill will provide for capping 50-60 orphan wells yearly.
What this bill does is exempt low-producing wells from the 5 percent severance tax. Instead, operators are assessed a 2.5 percent fee on their sold product.
Those fees then go into the Oil and Gas Abandoned Well Plugging Fund. Fee collection is suspended for next calendar year when the fund hits $4 million. This fund will augment the current Department of Environmental Protection’s Oil and Gas Reclamation Fund.
The plugging fund will cap only orphaned wells, which have no known owner; owners of abandoned wells are responsible to ultimately cap those.
The vast majority of the state’s 72,000 gas wells — more than 55,000 — produce marginal amounts of product and pay marginal amounts of revenue.
But there is virtually no capping done of the more than 4,500 orphaned wells in the state — about six in the past five years. Well-capping costs average about $67,000 per well.
Orphaned wells are also more likely to leak pollutants, including methane gas, and potentially contaminate groundwater.
The economic stimulus facet of this bill is the tax break low-producing wells receive. Ideally the money operators save will ensure they keep these wells in operation and potentially invest in new ones.
Ultimately the state will lose about $9 million in severance tax annually as a result of this bill.
But this should be recouped in higher property values, far less environmental damage and a potential uptick in revenues from new wells.
No, HB 2673 may not be the ideal choice, but it’s not a false one, either.