Key Resources
When a well is drilled, a legal obligation to plug the well and reclaim the surface is created
This is a critical aspect of oil and gas regulation—unplugged wells can cause a host of issues, from dissipating hydrocarbon reservoir pressure and reducing ultimate recovery, to leaking methane, oil, and other toxic substances
In this note, one aspect of the fill-when-they-drill dynamic is demonstrated by showing how the maturation of horizontal drilling and hydraulic fracturing technology (fracking) has coincided temporally and spatially with a rise in plugging activity in Colorado. The evidence indicates that states should act now to correct incentives and secure financial assurance for well plugging, because it will only get increasingly difficult to do so as the energy transition progresses and drilling activity winds down.
Figure 1: Time series animation of plugging and drilling activity by Kerr McGee (blue), Nobel Energy (red), and PDC (green) in the Wattenberg Field, March 2016 to March 2021. Circles are well plugs and triangles are spuds. The thin lines are laterals, drilled since 2010 shown in brown and planned but not yet drilled in grey
