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PA, CNX Reach $1.48M Settlement On Abandoned Wells

STATEIMPACT PENNSYLVANIA - The Pennsylvania Department of Environmental protection announced a settlement Friday with CNX in which the company will put up bonds and plug more than 100 abandoned natural gas wells.

The order covers 141 conventional wells and five shale gas wells in Allegheny, Washington, Greene and Westmoreland counties.

Under the settlement, CNX will post a $1.48 million performance bond to cover the costs of plugging the wells, and the state has given the company eight years to plug and restore the well sites.

A performance bond is a guarantee that a company will pay for cleanup costs of its operations, if it ever goes out of business or enters into bankruptcy.

The wells were part of a July 2018 order from the state requiring three companies to plug over 1,000 abandoned wells. A March 2019 settlement dealt with most of those wells. This month’s settlement took care of the rest.

“These settlements represent a major victory for Pennsylvania’s citizens and our environment, today and into the future,” DEP Secretary Patrick McDonnell said in a statement.

The state considers any well that doesn’t produce oil and gas for a calendar year to be an abandoned well.

Methane from abandoned wells can get into underground well water and into peoples’ homes, posing a health and environmental threat. In addition, the wells can leak oil and brine into the environment.

The order mandates CNX plug five wells by the end of 2019 and 20 wells a year until all the wells are plugged, a process that should take no more than eight years.

McDonnell said the order is necessary because the state’s bonding for orphaned and abandoned wells is inadequate. A 2012 state law requires companies to take out performance bonds of $2,500 per well, or a blanket bond of $25,000 for as many wells as it wants, even though the DEP estimates the costs for plugging a well can range from $2,500 up to $100,000 or more per well.

“Unfortunately, bonding — in particular, blanket bonding — amounts prescribed under state law are woefully inadequate to actually plug an abandoned oil or gas well,” McDonnell said. “If a conventional well owner walks away, they’ve put up just pennies on the dollar and the commonwealth is forced to cover the rest.”

The state has confirmed 9,000 orphan and abandoned wells, but its own estimates put the total number at up to 560,000.

“We have always worked cooperatively with the DEP regarding our well plugging obligations,” a CNX spokesman said in a statement, “and are pleased that we were again able to arrive at an equitable agreement which reflects our firm commitment to safety and environmental compliance.”