ClimateWells reduces potent greenhouse gas emissions by shutting down old, low-producing oil and gas wells. Categorized as “marginal”, these wells are often conflated with orphaned wells. Both pose a threat to the climate, but there are important distinctions between marginal and orphaned wells and their associated carbon credit projects.
High-integrity, accurate methodologies are critical to delivering meaningful carbon credit projects. The team at ClimateWells spent nearly two years studying the emissions from orphaned wells and evaluating their carbon-crediting solutions before deciding to focus on marginal wells.
Though there can be high-integrity projects in both categories and both types of wells need coordinated efforts to address emissions, we found substantial advantages to focusing on marginal well projects – and significant issues with the accuracy of current orphan well methodologies resulting in projects that may be as much as 90% over-credited.
All Wells are Not Equal
Throughout this blog, we’ll be referring to various types of oil and gas wells. These are the types we’re concerned with.
Marginal Wells: Marginal wells are defined as wells that produce very small amounts of oil and gas – fewer than 15 barrels of oil equivalent per day. In many cases, marginal wells are owned by small operators with ten or fewer employees. According to the EPA, approximately 70% of the 900,000 onshore oil and gas wells in the U.S. were low-producing in 2021. Though they only accounted for 7% of 2021 U.S. oil and gas production, these wells were responsible for an astonishing 60% of U.S. oil and gas emissions.
Abandoned Wells: An abandoned well is any well that is no longer used to produce oil or gas and is no longer operated by a solvent owner. This includes wells that were properly plugged and abandoned by their operators, wells that were improperly plugged and abandoned, and wells that were never plugged (including orphaned wells, below). There are between 2 and 3 million abandoned wells across the U.S. Some of these wells leak methane though most do not.
Orphaned Wells: An orphaned well is an abandoned well that is not plugged. If an operator goes bankrupt or otherwise disappears before plugging these wells, properly plugging them becomes the responsibility of each state. There are approximately 130,000 documented orphan wells and potentially as many as 1 million undocumented orphaned wells in the U.S.
The Problem with Current Orphan Well Methodologies
Though marginal and orphaned wells both pose a threat to our climate, significant changes need to be made to uphold integrity in carbon credit projects targeting orphan well projects, particularly in their baseline emissions measurement methodologies and resulting additionality.
Baseline Emissions: Each orphan well is not leaking that much.
For orphan wells, there are two ways to quantify baseline emissions. The first involves placing a chamber over the wellhead and taking two separate methane emissions measurements approximately 30 days apart. These measurements focus on what we'll call "Open to Atmosphere" leaks, which are present before a project has begun. This measurement method is sound, though not commonly used by project developers.
The second method, called "Other ACR approved non-chamber methods" in the ACR Orphan Well Methodology, presents significant over-crediting potential.
Consider one example: Imagine an orphan well is found with an "Open to Atmosphere" leak of 300 g/hr of methane. The crediting term in the ACR methodology is 20 years. One would assume in reading the executive summary of the methodology that baseline emissions would be calculated by propagating this 300g/hr leak over 20 years. Instead, the methodology allows a project developer to fix this current leak and conduct an annular pressure test on the well by opening the wellhead.
The pressure measured in the well is put into an equation to derive what we’ll call an “Estimated Max Leak Rate”. This number is then propagated over 20 years leading to individual wells receiving emission reductions of over 1 million tonnes of CO2e. In recently issued projects, this Estimated Max Leak Rate averages 180,000g/hr, nearly 4,000 times more than EPA measurements.
The methodology allows for this because it is likely that a well with sustained annular pressure will leak more over time until the pressure is relieved. However, it is not clear when and if the leak will increase, at what rate, or for how long the leak will be sustained. As written, the methodology allows project developers to take credit for fixing massive gas leaks that are not occurring and may not occur.
These findings have been corroborated by BeZero Carbon, the global carbon credit ratings agency.
"We find significant over-crediting risk associated with ACR966 due to uncertainties as to the appropriateness of the project’s baseline leakage estimates. The recorded leakage values are significantly higher than values in the literature and applied at a constant rate for the entire 20-year crediting period...As a result, the values recorded by the project may reflect the worst-case-scenario baseline; a scenario that may not come to pass."
- BeZero Carbon
One solution to this problem would be to switch to a dynamic baseline for Orphan Well projects. This is a method used in updated REDD+ (prevention of deforestation) methodologies. Under a dynamic baseline, proxy wells would be chosen that share similar characteristics to the project well(s). Credits would be issued yearly so long as the proxy wells go unplugged. If the Open to Atmosphere leak rates increase, the baseline emissions of the project could increase proportionately until (and if) they reach the Estimated Max Leak Rate.
For marginal well projects, baseline emissions are determined by the amount of curtailed oil and gas production and the carbon intensity of that production, provided by Rocky Mountain Institute’s lifecycle emissions models. The crediting term is capped at either ten years or the amount of time the well would continue to profitably produce – whichever is less. Marginal wells have historical data to corroborate emission levels and are calculated on a decline, instead of a rapid incline like orphan wells.
Additionality: If the state is notified about a large leak, they will fix it.
In order to be legitimate and high-integrity, project outcomes must be additional to what would have happened without carbon credit finance available. Put another way, project developers must work to find any and all other means of finance for an emission reduction or removal. If alternative financing is secured, the carbon credit finance can be used for a different project, doubling the total emissions reduced.
There are currently no governing bodies assigned to the shutdown of marginal wells or regulations that require marginal oil and gas wells to be plugged and abandoned, demonstrating the clear additionality of these projects.
For orphan well projects under the ACR methodology, there is a significant oversight leading to the potential for non-additional projects.
Each state has an orphan well list. These wells are prioritized for plugging and abandonment with available state and federal funds. So far, over $7 billion has been allotted for plugging orphan wells. Unfortunately, the ACR methodology allows project developers to find lower-priority orphan wells with relatively small leaks, and claim high leak rates.
When notified of these massive “Estimated Max Leak Rates”, state agencies in Indiana, where one of the most recent ACR projects have been located, indicated that they were aware of these project wells and that the project wells were not leaking high amounts of methane upon recent examination. The state agency also made clear that if a well is reported to them with methane leaks even close to the high leak rates reported in the issued projects, they would prioritize and complete plugging within one year - at the latest. For Oklahoma, another state with a recent orphan well carbon credit project, the timeframe could be "longer than 6 months unless there was immediate danger to a residence."
If the ACR orphan well methodology is not amended and corrected, project developers will be able to categorize any well with annular pressure and a small leak as a massive methane release – and there are thousands, if not tens of thousands, of these wells. They will be able to claim that the state government, despite available funds and a clear prioritization system, would not have addressed this phantom leak for decades.
Additional Benefits of Marginal Well Projects
Environmental Impact
Every marginal well emits both methane and CO2 emissions. However, less than 10% of orphan wells showed emissions above detectable levels. Over 1 million marginal wells are active across North America, and their emissions footprint is estimated to be over 250x greater than that of all abandoned wells -- making their environmental impact much more significant.
Social Impact
Marginal wells exist within cities and across populated areas. In areas like Los Angeles, there are nearly 5,000 marginal wells still pumping small amounts of oil and gas. These wells are often located in frontline communities and the areas that will feel the greatest effects of climate change first. On the other hand, most orphan wells are rural, located reasonably far from populated areas with little direct impact on local communities.
Growing Problem
More than 200,000 productive wells will reach marginal levels over the next 10 years. As their production declines, their emissions will increase. In fact, the emissions intensity of an oil field doubles every 25 years. At a certain point, the emissions are so great they outweigh any value created by the low and decreasing energy production. We must target these marginal wells as they continue to release high levels of methane into the atmosphere.
ClimateWells is proud to zero in on marginal wells carbon credit projects as a necessary and impactful way to tackle emissions from U.S. oil and gas.
