Author: Staci Tasucio, CEO

There is a car sitting on the side of the road in front of your house. It’s been there for months-it’s leaking something, the registration is expired, and no one seems to know who left it there. You aren’t responsible for it, but regardless, it is your problem.

Unlike an abandoned car, you can’t call a tow truck to deal with an orphaned oil and gas well. The agency responsible for it (the regulatory equivalent of the DMV) is underfunded, understaffed, and working through a backlog of similar situations scattered across millions of acres of American land. And if that well causes a problem— for example, if it contaminates the groundwater, if someone gets hurt, if the methane leaking from it contributes to the warming that is already accelerating— the question of who is responsible becomes complicated very fast.

That’s the orphan well problem, and it didn’t happen overnight.

The timeline of it all tends to get lost in broader conversations, so let me dig into that. Modern oil and gas regulatory agencies weren’t meaningfully in place until the mid-twentieth century, and many of the wells that are currently orphaned were drilled long before any framework existed to govern their eventual closure. The regulatory structures that did emerge reflected the realities of that era, i.e., smaller companies, fewer wells, and plugging costs that were a fraction of what they are today. An operator bond set in 1950 might very well have covered the cost to plug a well in 1950. That said, it does not come even close to covering what it costs to plug a well today. So, it’s not that the the rules didn’t exist, it’s that they simply weren’t updated as the industry matured, as costs increased (hello, inflation…), and as companies grew and consolidated and spun off assets and went bankrupt and disappeared.

The gap between what the regulations require and what responsible closure actually costs is where orphan wells come from. Closing that gap is a policy question, not necessarily an indictment of the industry or the regulators who have been working within a framework that was simply not designed for the scale of the problem they are now managing.

To fully understand how a well becomes an orphan, it helps to understand three mechanisms through which responsibility erodes.

1. Bonding was designed with the right intent. Operators were required to post a financial guarantee (bond) to ensure funds exist for eventual plugging of wells. The problem is that bonding requirements were set decades ago, often at $25,000 to $50,000, and in many states a single blanket bond could cover an operator with hundreds of wells. This made reasonable sense when the major operators of today were small operations and the total well count was a small fraction of what it is now. This bond requirement as it sits does not make sense in today’s world, where the bond covers pennies on the dollar of actual plugging cost, and a blanket bond spread across a large portfolio means essentially that individual wells are effectively uncovered.
2. Transfer of operating rights is where accountability most reliably disappears. While every new operator is required to be bonded, most states do not require that operator to demonstrate the financial capability to plug the wells they are acquiring. A company that is financially solvent with one well looks very different when it has acquired fifty aging assets with declining production and growing plugging liabilities. Naturally, wells move down the food chain, bought and sold as they lose value, and each new operator is a little less willing or able to maintain them, until the last operator simply disappears. This is the equivalent of someone leaving their car in the ditch in front of your house when it finally breaks down for good, and walking away.
3. Cessation of production is where enforcement fails. When a well stops producing economically, the obligation to plug it doesn’t go away, but the enforcement of that obligation is inconsistent, underfunded, and absolutely full of loopholes that operators have learned to navigate. Many things such as extensions, exceptions, arguments about future utility are legitimate, but many are simply mechanisms for kicking a financial obligation down the road, deflating the liability on paper while the well continues to sit and leak and age on someone else’s land.

One thing is for certain: updating these regulations will not fix the existing backlog of orphan wells. That backlog is real and large and requires a different set of tools such as private capital and the carbon market (That’s us!). However, updated policy can stop the pipeline of new orphans, and that matters enormously.

Here’s what I think is worth doing:

Require bonding that reflects current plugging costs — not costs from fifty years ago — and build in a mechanism that requires updates over time that reflect the current costs so we do not find ourselves in this same conversation in 2075. We should tie bonding requirements to well count rather than a singular operator, so that an operator acquiring a hundred aging wells cannot shelter behind a blanket bond that was designed for a single-well operation.

I also suggest that demonstrated financial capability at the point of transfer should be required. If you are taking on the operating rights to a well, you should be able to demonstrate that you can actually plug it. This is not an unreasonable ask. It is the bare minimum of what responsible operatorship means.

Additionally, we should build at-risk operator identification systems at the state level. The data exists in production reports, compliance records, operator portfolios, and even in reporting gaps. Use it! Identify the operators who are heading toward insolvency before their wells become orphans, not after. Intervene early. It is fully possible to create a supporting mechanism for operators who find themselves in genuine financial distress so they have a path forward that does not end in abandonment, impacting the ecosystem, community, and landowners.

And on the question of marginal and stripper wells (these are two distinct categories by the way – both defined by the federal government in US Tax Code…ask why). The right mechanism for those wells is reform and enforcement of already existing obligations (i.e. legislation and promulgation of rules), not the carbon market. It is not just a question of additionality, it’s a legal matter; and if the purpose of this piece is to address “responsibility” with a hint of “how did we get here?” then lets talk about the process to operate a well. An oil and gas operator must have both a mineral lease and a surface use agreement and regulatory approval to drill a well. Both of those private (not within the jurisdiction of the regulatory agency) contracts transfer from operator to operator with the well, unless or until it becomes an orphan. The mineral lease gives the operator rights to access the minerals, but withholds some of that future value for the mineral owners. In this exchange, the operator is obligated to produce those minerals – not just until the operator changes its mind, but prudently and with a fiduciary responsibility to the mineral owners. Suffice to say, prematurely plugging an economically viable well is in direct opposition of that requirement, yields real damages, and causes undue harm to real people who depend on that income, which sounds like more of a class action lawsuit than a carbon credit to me.

The surface use agreement is with the landowners, who are often not the same people that own the minerals, and while it gives the operator the right to use the land to access the minerals (think pad and lease roads), it also obligates the operator to maintain and eventually remediate that disturbance. To put a fine point on it: to plug the well. This agreement, sitting alongside regulation firmly places the burden of plugging on the operator in both a regulatory and a legal setting. Operators have proven themselves savvy opponents when it comes to sloughing off responsibility and they have exclusive control over the activity of the well and the information shared about those activities. It is more than fair—and therefore the opposite of conservative—to deduce that if an operator has decided it is time to plug a well, there is a reason, and it is most likely in their best interest.

I typically get an email a month from an old oil and gas industry colleague asking me about “this carbon credit thing” and if I can “help me get these old wells plugged.”

When an operator either plugs or allows a well to be plugged, it has simultaneously enacted its regulatory and contractual responsibility to perform those operations. Period. Anything else is privatizing benefit and socializing cost.

I understand there are consequences to raising the bar on operators. If we make responsible operatorship more demanding, some operators will not be able to meet the requirements. In the near term, that could mean a rush of abandonments if the transition is not thoughtfully managed. We should ask ourselves honestly: do we want operators in this space who cannot operate responsibly? And if the answer is no, which I believe it is, then we need a transition plan that supports the growth of the plugging industry to fill the void that responsible reform will create. The jobs, the expertise, the infrastructure to plug wells at scale exist and they absolutely can grow, but only if the policy environment supports a responsible transition rather than a chaotic one.

There is also value, I would argue, in simply knowing. If wells are going to become orphans, tell the regulators now. Give them the data and the systems to see it coming. An ever-growing problem that cannot be planned for is far more costly than a known problem with a roadmap.

So where does that leave us? Well, Rebellion plugs the wells that have fallen through each and every gap in this system. We do this work because the gap is real, the additionality is genuine, and the solution is permanent for the land and for the people and ecosystems whose lives rely on the land.

The state programs that exist to address orphan wells are doing important work. Unfortunately, they are not enough to address the problem at its current scale, even with the historic federal investment that came through the Infrastructure Investment and Jobs Act. The math doesn’t math without private capital, and the math will keep not mathing (now I just sound like my teenager) until the regulations that created the backlog are updated to stop adding to it.

Rebels are engineers at heart. We believe in doing things right, which means we are invested not only in plugging the wells of today, but also in the broader policy environment that determines whether there will be more wells like them in twenty years. Our measure of full success, and I sincerely mean this, would be the end of our current business model. No more orphan wells to plug. If we get there, we will find other problems to solve. Believe me, there are plenty.

And until then, we will keep showing up for the wells nobody else is coming for.