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Will the Public End up Paying to Clean up the Fracking Boom?

Fracking
Cleanup costs for abandoned oil and gas wells once the producers have moved on could fall heavily on the public.
Susan Vineyard / iStock / Getty Images Plus

By Justin Mikulka

Increasingly, U.S. shale firms appear unable to pay back investors for the money borrowed to fuel the last decade of the fracking boom. In a similar vein, those companies also seem poised to stiff the public on cleanup costs for abandoned oil and gas wells once the producers have moved on.


"It's starting to become out of control, and we want to rein this in," Bruce Hicks, assistant director of the North Dakota Oil and Gas Division, said in August about companies abandoning oil and gas wells. If North Dakota's regulators, some of the most industry-friendly in the country, are sounding the alarm, then that doesn't bode well for the rest of the nation.

In fact, officials in North Dakota are using Pennsylvania as an example of what they want to avoid when it comes to abandoned wells, and with good reason.

The first oil well drilled in America was in Pennsylvania in 1859, and the oil and gas industry has been drilling — and abandoning — wells there ever since. Pennsylvania's Department of Environmental Protection (DEP) says that while it only has documentation of 8,000 orphaned and abandoned wells, it estimates the state actually has over a half million.

"We anticipate as many as 560,000 are in existence that we just don't know of yet," DEP spokesperson Laura Fraley told StateImpact Pennsylvania. "There's no responsible party and so it's on state government to pay to have those potential environmental and public health hazards remediated."

According to StateImpact, "The state considers any well that doesn't produce oil and gas for a calendar year to be an abandoned well."

That first oil well drilled in Pennsylvania was 70 feet deep. Modern fracked wells, however, can be well over 10,000 feet in total length (most new fracked wells are drilled vertically to a depth where they turn horizontal to fracture the shale that contains the oil and gas). Because the longer the total length of the well, the more it costs to clean up, the funding required to properly clean up and cap wells has grown as drillers have continued to use new technologies to greatly extend well lengths. Evidence from the federal government points to the potential for these costs being shifted to the tax-paying public.

The Government Accountability Office (GAO) released a report this September about the risks from insufficient bonds to reclaim wells on public lands. It said, "the bonds operators provide as insurance are often not enough to cover the costs of this cleanup." The report cited a Bureau of Land Management (BLM) official's estimate of $10 a foot for well cleanup costs.

StateImpact Pennsylvania noted that costs to reclaim a well could add up to $20,000, and DEP spokesperson Fraley said they could be "much, much higher." The GAO report noted that "low-cost wells typically cost about $20,000 to reclaim, and high-cost wells typically cost about $145,000 to reclaim."

In North Dakota, where state regulators have raised concerns about this growing problem, one of the top industry regulators, State Mineral Resources Director Lynn Helms, estimated that wells there cost $150,000 to plug and reclaim.

And this problem isn't just in the U.S. Canada is facing a similar cleanup crisis.

Financial Bonding Requirements for Well Cleanup

Legally, oil and gas companies are required to set aside money to pay for well cleanup costs, a process known as bonding. These requirements vary by state and for public lands, but in all cases, the amounts required are so small as to be practically irrelevant.

The GAO report reviewed the bonds held by the Bureau of Land Management for wells on public lands and found that the average bond per well in 2018 was worth $2,122.

The Western Organization of Resource Councils summarized bonding requirements by state, and none of them came even close to being adequate to cover estimated costs to deal with old wells. In North Dakota, a $50,000 bond is required for a well. But a $100,000 bond can cover up to 6 wells, which comes out to $16,667 per well — or approximately one tenth of the estimated cost to reclaim a well in that state.

North Dakota has a history of bending to oil and gas industry pressure when it comes to regulations. While North Dakota's bonding rules fall far short of what's needed to actually cover full cleanup costs, the reality on the ground is much worse. Regulators allow companies to "temporarily abandon" wells, which requires no action from companies for at least seven years. Wells can hold this "temporary status" for decades. And another practice in the state allows a company to sell old, under-performing wells to another company, passing along the liability but not the bonding funds.

By any measure, the amount of private money currently allocated in the U.S. to plug and reclaim oil and gas wells is a small fraction of the real costs. That means oil and gas wells — and the U.S. had one million active wells in 2017, and even more abandoned — will either be left to fail and potentially contaminate the surrounding water, air and soil, or the public will have to pick up the tab. This represents just one of the many ways the public subsidizes the oil and gas industry.

A South Dakota Case Study

South Dakota allows companies to post a $30,000 bond for as many wells as the company chooses to drill. Spyglass Cedar Creek is a Texas-based company that was operating in South Dakota and recently abandoned 40 wells, which the state has estimated will have a cleanup cost of $1.2 million.

However, there is a twist to this story. That $30,000 bond doesn't really exist. The owners of the company had put $20,000 of it into a Certificate of Deposit. But when the state went looking for that money, the owners said they had cashed it in 2015 because, as reported by the Rapid City Journal, "company officials did not remember what the money was for."

Spyglass Cedar Creek does not have the money set aside that was required to clean up these wells, the state does not have recourse to get that money, and some of the wells are reportedly leaking. So, what can be done?

According to Doyle Karpen, member of the South Dakota Board of Minerals and Environment, the answer is for the taxpayers of that state to cover the cost.

"I think the only way we can correct this is go to the Legislature and ask for money," Karpen said earlier this year.

Following the Coal Industry Business Model

What is starting to unfold with the oil and gas industry is very similar to what has already been playing out with the U.S. coal industry.

According to a Center for Public Integrity investigation, more than 150 coal mines (and dozens of uranium mines) have been allowed to idle indefinitely, enabling their owners to avoid paying for the costs of cleanup.

In April, the Stanford Law Review published the paper, "Bankruptcy as Bailout: Coal Company Insolvency and the Erosion of Federal Law," which notes that almost half the coal mined in the U.S. is done so by companies that have recently declared bankruptcy.

The paper notes how the bankruptcy process is used by coal companies to rid themselves of environmental cleanup liabilities and pension costs "in a manner that has eviscerated the regulatory schemes that gave rise to those obligations."

Yet coal company executives often receive healthy bonuses, even as they are driving companies into bankruptcy.

This summer, Blackjewel famously failed to pay its coal miners, and even pulled funds out of their bank accounts, after the company suddenly declared bankruptcy in July. That prompted workers to sit on train tracks in Kentucky, blocking a $1 million shipment of coal, in a two-month protest. And Blackjewel is poised to leave behind thousands of acres of mined land in Appalachia without adequate reclamation.

Privatize the Profits, Socialize the Losses

The mineral extraction business model in the U.S. is set up to maximize profits for executives, even as they lose investor money and bankrupt their companies. That is true of the coal industry and that is true of the shale oil and gas industry.

At the same time, the regulatory capture by these industries at both state and federal levels allows private companies to pass on environmental cleanup costs to the public, and the inadequate bonding system for oil and gas well reclamation represents just one more example.

The so-called fracking revolution in America has resulted in many new records: record amounts of U.S. oil and gas exported (to the detriment of a livable climate), new levels of human health impacts on surrounding communities, record numbers of industry-induced earthquakes, record amounts of flaring natural gas in oil and gas fields, and record-breaking depths and lengths of wells.

And the cleanup costs for the fracking boom are also poised to be staggering.

Reposted with permission from our media associate DeSmogBlog.

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The patient in the case report (let's call him Tom) was 54 and in good health. For two days in May, he felt unwell and was too weak to get out of bed. When his family finally brought him to the hospital, doctors found that he had a fever and signs of a severe infection, or sepsis. He tested positive for SARS-CoV-2, the virus that causes COVID-19 infection. In addition to symptoms of COVID-19, he was also too weak to move his legs.

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We are neurologists specializing in intensive care and leading studies related to neurological complications from COVID-19. Given the occurrence of Guillain-Barre Syndrome in prior pandemics with other corona viruses like SARS and MERS, we are investigating a possible link between Guillain-Barre Syndrome and COVID-19 and tracking published reports to see if there is any link between Guillain-Barre Syndrome and COVID-19.

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What Is Guillain-Barre Syndrome?

Guillain-Barre syndrome occurs when the body's own immune system attacks and injures the nerves outside of the spinal cord or brain – the peripheral nervous system. Most commonly, the injury involves the protective sheath, or myelin, that wraps nerves and is essential to nerve function.

Without the myelin sheath, signals that go through a nerve are slowed or lost, which causes the nerve to malfunction.

To diagnose Guillain-Barre Syndrome, neurologists perform a detailed neurological exam. Due to the nerve injury, patients often may have loss of reflexes on examination. Doctors often need to perform a lumbar puncture, otherwise known as spinal tap, to sample spinal fluid and look for signs of inflammation and abnormal antibodies.

Studies have shown that giving patients an infusion of antibodies derived from donated blood or plasma exchange – a process that cleans patients' blood of harmful antibodies - can speed up recovery. A very small subset of patients may need these therapies long-term.

The majority of Guillain-Barre Syndrome patients improve within a few weeks and eventually can make a full recovery. However, some patients with Guillain-Barre Syndrome have lingering symptoms including weakness and abnormal sensations in arms and/or legs; rarely patients may be bedridden or disabled long-term.

Guillain-Barre Syndrome and Pandemics

As the COVID-19 pandemic sweeps across the globe, many neurologic specialists have been on the lookout for potentially serious nervous system complications such as Guillain-Barre Syndrome.

Though Guillain-Barre Syndrome is rare, it is well known to emerge following bacterial infections, such as Campylobacter jejuni, a common cause of food poisoning, and a multitude of viral infections including the flu virus, Zika virus and other coronaviruses.

Studies showed an increase in Guillain-Barre Syndrome cases following the 2009 H1N1 flu pandemic, suggesting a possible connection. The presumed cause for this link is that the body's own immune response to fight the infection turns on itself and attacks the peripheral nerves. This is called an "autoimmune" condition. When a pandemic affects as many people as our current COVID-19 crisis, even a rare complication can become a significant public health problem. That is especially true for one that causes neurological dysfunction where the recovery takes a long time and may be incomplete.

The first reports of Guillain-Barre Syndrome in COVID-19 pandemic originated from Italy, Spain and China, where the pandemic surged before the U.S. crisis.

Though there is clear clinical suspicion that COVID-19 can lead to Guillain-Barre Syndrome, many important questions remain. What are the chances that someone gets Guillain-Barre Syndrome during or following a COVID-19 infection? Does Guillain-Barre Syndrome happen more often in those who have been infected with COVID-19 compared to other types of infections, such as the flu?

The only way to get answers is through a prospective study where doctors perform systematic surveillance and collect data on a large group of patients. There are ongoing large research consortia hard at work to figure out answers to these questions.

Understanding the Association Between COVID-19 and Guillain-Barre Syndrome

While large research studies are underway, overall it appears that Guillain-Barre Syndrome is a rare but serious phenomenon possibly linked to COVID-19. Given that more than 10.7 million cases have been reported for COVID-19, there have been 10 reported cases of COVID-19 patients with Guillain-Barre Syndrome so far – only two reported cases in the U.S., five in Italy, two cases in Iran and one from Wuhan, China.

It is certainly possible that there are other cases that have not been reported. The Global Consortium Study of Neurological Dysfunctions in COVID-19 is actively underway to find out how often neurological problems like Guillain-Barre Syndrome is seen in hospitalized COVID-19 patients. Also, just because Guillain-Barre Syndrome occurs in a patient diagnosed with COVID-19, that does not imply that it was caused by the virus; this still may be a coincident occurrence. More research is needed to understand how the two events are related.

Due to the pandemic and infection-containment considerations, diagnostic tests, such as a nerve conduction study that used to be routine for patients with suspected Guillain-Barre Syndrome, are more difficult to do. In both U.S. cases, the initial diagnosis and treatment were all based on clinical examination by a neurological experts rather than any tests. Both patients survived but with significant residual weakness at the time these case reports came out, but that is not uncommon for Guillain-Barre Syndrome patients. The road to recovery may sometimes be long, but many patients can make a full recovery with time.

Though the reported cases of Guillain-Barre Syndrome so far all have severe symptoms, this is not uncommon in a pandemic situation where the less sick patients may stay home and not present for medical care for fear of being exposed to the virus. This, plus the limited COVID-19 testing capability across the U.S., may skew our current detection of Guillain-Barre Syndrome cases toward the sicker patients who have to go to a hospital. In general, the majority of Guillain-Barre Syndrome patients do recover, given enough time. We do not yet know whether this is true for COVID-19-related cases at this stage of the pandemic. We and colleagues around the world are working around the clock to find answers to these critical questions.

Sherry H-Y. Chou is an Associate Professor of Critical Care Medicine, Neurology, and Neurosurgery, University of Pittsburgh.

Aarti Sarwal is an Associate Professor, Neurology, Wake Forest University.

Neha S. Dangayach is an Assistant Professor of Neurology and Neurosurgery, Icahn School of Medicine at Mount Sinai.

Disclosure statement: Sherry H-Y. Chou receives funding from The University of Pittsburgh Clinical Translational Science Institute (CTSI), the National Institute of Health, and the University of Pittsburgh School of Medicine Dean's Faculty Advancement Award. Sherry H-Y. Chou is a member of Board of Directors for the Neurocritical Care Society. Neha S. Dangayach receives funding from the Bee Foundation, the Friedman Brain Institute, the Neurocritical Care Society, InCHIP-UConn Center for mHealth and Social Media Seed Grant. She is faculty for emcrit.org and for AiSinai. Aarti Sarwal does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Reposted with permission from The Conversation.


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In a series of tweets Wednesday night, Ocasio-Cortez—the lead sponsor of the House Green New Deal resolution—noted that the Climate Task Force "shaved 15 years off Biden's previous target for 100% clean energy."

"Of course, like in any collaborative effort, there are areas of negotiation and compromise," said the New York Democrat. "But I do believe that the Climate Task Force effort meaningfully and substantively improved Biden's positions."

 

The 110 pages of policy recommendations from the six eight-person Unity Task Forces on education, the economy, criminal justice, immigration, climate change, and healthcare are aimed at shaping negotiations over the 2020 Democratic platform at the party's convention next month.

Sanders said that while the "end result isn't what I or my supporters would've written alone, the task forces have created a good policy blueprint that will move this country in a much-needed progressive direction and substantially improve the lives of working families throughout our country."

"I look forward to working with Vice President Biden to help him win this campaign," the Vermont senator added, "and to move this country forward toward economic, racial, social, and environmental justice."

Biden, for his part, applauded the task forces "for helping build a bold, transformative platform for our party and for our country."

"I am deeply grateful to Bernie Sanders for working with us to unite our party and deliver real, lasting change for generations to come," said the former vice president.

On the life-or-death matter of reforming America's dysfunctional private health insurance system—a subject on which Sanders and Biden clashed repeatedly throughout the Democratic primary process—the Unity Task Force affirmed healthcare as "a right" but did not embrace Medicare for All, the signature policy plank of the Vermont senator's presidential bid.

Instead, the panel recommended building on the Affordable Care Act by establishing a public option, investing in community health centers, and lowering prescription drug costs by allowing the federal government to negotiate prices. The task force also endorsed making all Covid-19 testing, treatments, and potential vaccines free and expanding Medicaid for the duration of the pandemic.

"It has always been a crisis that tens of millions of Americans have no or inadequate health insurance—but in a pandemic, it's potentially catastrophic for public health," the task force wrote.

Dr. Abdul El-Sayed, a former Michigan gubernatorial candidate and Sanders-appointed member of the Healthcare Task Force, said that despite major disagreements, the panel "came to recommendations that will yield one of the most progressive Democratic campaign platforms in history—though we have further yet to go."

 

Observers and advocacy groups also applauded the Unity Task Forces for recommending the creation of a postal banking system, endorsing a ban on for-profit charter schools, ending the use of private prisons, and imposing a 100-day moratorium on deportations "while conducting a full-scale study on current practices to develop recommendations for transforming enforcement policies and practices at ICE and CBP."

Marisa Franco, director of immigrant rights group Mijente, said in a statement that "going into these task force negotiations, we knew we were going to have to push Biden past his comfort zone, both to reconcile with past offenses and to carve a new path forward."

"That is exactly what we did, unapologetically," said Franco, a member of the Immigration Task Force. "For years, Mijente, along with the broader immigrant rights movement, has fought to reshape the narrative around immigration towards racial justice and to focus these very demands. We expect Biden and the Democratic Party to implement them in their entirety."

"There is no going back," Franco added. "Not an inch, not a step. We must only move forward from here."

Reposted with permission from Common Dreams.