Pennsylvania Rep. James Struzzi (R-62nd District) announced last week that he would introduce legislation to prioritize using Pennsylvania companies when it comes to plugging orphaned and abandoned wells in the state.
According to the Pennsylvania Independent Oil and Gas Association, nearly $400 million will be available to the state to address orphaned and abandoned gas and oil wells. As part of the Bipartisan Infrastructure Law, the state will be required to apply for and meet certain criteria for grants.
PIOGA said the state would apply for an “Initial Grant” of $25 million by May 16, 2022. It will have one year to use those funds once received. Additionally, the state will apply for a “Formula Grant” of more than $104 million. Those funds can be spent over five years once received. Finally, the state will apply for two “Performance Grants” of $20 and $30 million for enhanced well plugging. The state Department of Environmental Protection (PADEP), the organization said, is currently hiring someone to administer the program, given that its budget has never previously exceeded $3.5 million per year.
The organization said the state is also reviewing the location and condition of an estimated 500 high-priority wells to be addressed in the early stages of the program.
Struzzi said his legislation would ensure that companies and experts within Pennsylvania are better positioned to do that work.
“Unfortunately, DEP’s current well plugging contracts do not prioritize awarding these jobs to businesses based in Pennsylvania,” he said in a memo to House members. “And because of arbitrary size requirements, some businesses within Pennsylvania are actually prohibited from even bidding on contracts, which has led to these contracts being awarded to out-of-state companies.”
Struzzi said his legislation would require PADEP to prioritize Pennsylvania businesses for well plugging jobs and ensure that state government contracts support the businesses and workers within the state.
PIOGA said a recent survey by PADEP to assess interest among the state’s producers and industry service companies regarding bidding for contracts through the program found that more than 135 state businesses said they had plugged wells under state-issued contracts in the past. Another two-thirds said they anticipate hiring additional staff if awarded the contracts.