Costs and Benefits of Decommissioning Orphaned Oil and Gas Wells: Evidence from Six States

In 2021, the US federal government provided billions of dollars to decommission orphaned oil and gas well sites. This program was touted by federal policymakers from both major political parties as a “win-win” for the environmental and economic benefits it would provide. In this analysis, we examine the costs and benefits of that program using data from roughly 2,150 well sites across six states. We estimate the effects of this spending on employment, methane abatement, and property values. On average, decommissioning costs were roughly $67,000 per well site, but with wide variation. Nine sites exceeded $1 million, while five sites reported the lowest costs of just $1,000. Total costs were roughly $145 million, from property value increases and methane abatement ranging from roughly $30 million to $170 million under different assumptions. For the small number of wells where methane emissions were quantified, decommissioning costs exceeded the social benefits of methane abatement in 75 to 80 percent of cases. Our results should be interpreted with caution because of extensive data limitations and the sensitivity of results to key methodological assumptions. Prioritizing decommissioning for wells with the highest environmental impacts, such as high rates of methane emissions, would easily pass cost–benefit tests in most cases.