Plugging Away: Texas Confronts Its Persistent Orphaned Well Backlog

As a geographically large state with several major hydrocarbon plays and a long history of oil and gas production, Texas has grappled with the environmental challenge of orphaned wells —abandoned oil and gas wells left behind by insolvent operators – for decades. The State Managed Plugging (SMP) Program, administered by the Railroad Commission of Texas (TRRC), has been instrumental in plugging these wells to prevent contamination of land and water. Since its inception in 1984, the program has plugged over 46,000 wells, a significant achievement in oilfield cleanup.

The Infrastructure Investment and Jobs Act (IIJA) of 2021 has provided Texas with an additional $25 million in initial federal funding for orphaned well plugging. This allowed the RRC to plug 730 wells in 2023 above its state-budgeted capacity. However, despite these combined efforts, the backlog of orphaned wells remains a persistent issue, driven by a steady influx of newly abandoned sites.

In addition to well plugging, the TRRC’s broader Oil Field Cleanup Program addresses environmental hazards through the State Managed Cleanup (SMC) Program. This initiative focuses on remediating abandoned oilfield sites, cleaning up oil spills, and removing waste from tank batteries and production equipment. In fiscal year 2023 alone, the RRC identified 2,392 abandoned sites for potential cleanup and conducted 239 remediation activities.

Our analysis of 16,000 wells plugged since 2010 under the SMP program provides a deeper look into the progress, costs, and challenges associated with orphaned well management.

A Surge in Plugging Activity Since 2017

Between 2010 and 2016, the SMP program plugged about 600 wells per year. That changed in 2017, when the plugging rate more than doubled to an average of 1,300 wells per year. This increase was largely due to additional state funding through the Oil and Gas Regulation and Cleanup Fund (OGRC) and a restructuring of the program to improve efficiency.

Despite these gains, Texas continues to face a growing backlog of orphaned wells. In August 2023, the number of abandoned orphaned wells stood at 7,887, a decline from previous years but still a major environmental challenge. The backlog has proven difficult to shrink, as newly orphaned wells are constantly added to the list—often outpacing the plugging rate.

The Geography of Orphaned Wells

Wells plugged under the SMP program are scattered across Texas, but certain areas dominate the numbers. About two-thirds of the plugged wells are located in Railroad Commission Districts 9 and 7B (North Central Texas), District 1 (Panhandle), and District 4 (South Texas). These regions were heavily developed in the early 20th century for their shallow oil and gas accumulations, and the average depth of plugged wells in these areas is around 2,000 feet.

?

Statewide, the average depth of wells plugged is about 2,900 feet, with nearly all under 10,000 feet. However, a few deep wells—some exceeding 20,000 feet—have also been plugged. Interestingly, the average depth of plugged wells has been declining in recent years, falling to 2,600 feet in 2024.

Rising Plugging Costs

The cost of well plugging under the SMP program has risen sharply in recent years. In 2016, the average cost per well was about $12,000, but by 2024, it had surged to $35,000. Similarly, the cost per foot of true vertical depth has jumped from $6/ft in 2018 to nearly $11/ft in 2024.

?

We believe two factors are driving these increases:

• Oilfield service cost inflation: Various oil and gas service cost indices show consistent price hikes.
• Well complexity: While we lack the data needed for a solid conclusion, it is possible that the easiest wells to plug have already been addressed, leaving more difficult and expensive projects.

Although plugging costs tend to increase with well depth due to longer tripping times and the increased number of plugs, there is a gradual decline in cost per foot as wells get deeper, at least up to 10,000 feet; this trend has been observed across multiple years and regions.

The SMP program sometimes contracts large groups of wells—up to 50 at a time—for plugging. However, 75% of plugged wells were in programs of 10 wells or fewer. Surprisingly, we found only a slight reduction in cost per foot as program size increased, indicating that economies of scale from grouping wells together are less pronounced than anticipated.

The Ongoing Challenge

Texas' orphaned well problem is far from solved. Even with state and federal funding, the backlog remains significant, and the rate of new orphaned wells entering the system continues to challenge cleanup efforts. With plugging costs rising, the long-term success of the program depends on controlling costs, and ensuring that funding keeps pace with the scale of the problem.

Sources and further reading

1. Railroad Commission of Texas. Oil Field Cleanup Program Annual Report - Fiscal Year 2017. Austin, TX.
2. Railroad Commission of Texas. Oilfield Cleanup Program Annual Report - Fiscal Year 2023. Austin, TX.
3. Osborne, James. "Orphan Well Backlog Grows in Texas, Even as Federal Funds Flow." Houston Chronicle, January 10, 2024.
4. Railroad Commission of Texas. Safeguarding the Environment for Texans - Well Plugging. Austin, TX.

Note: This article was corrected on 3/15/25 to remove reference to the number of contractors in the SMP program.