What does success look like at the end of the oil and gas era?
The oil and gas industry is declining—fast.
For decades, the industry had the money and political power to keep the real costs of closing and cleaning up wells and other oil and gas assets secret. Not anymore.
The True Costs project is breaking this secrecy wide open with data that clearly shows intentional, drastic underestimates from oil and gas companies.
In this David and Goliath scenario, industry giants stand opposite front-line communities, environmental organizations, state governments and a burgeoning renewables industry. Oil and gas have experienced a steady decline over the past decade, now amplified by COVID-19. Industry executives continue their race to the bottom, dropping new wells as fast as they can, despite decreases in demand, bankruptcy on the horizon, and questionable profitability of new projects—all with the knowledge that they won’t have the money to clean up the mess they’re leaving behind.
If allowed to continue, oil and gas companies will dodge the cost of safely decommissioning and remediating millions of wells, a bill with estimates in the hundreds of billions of dollars. To avoid this outcome, we need fast action on retiring existing high-risk infrastructure, while slowing the approval of new oil and gas projects. Some states that have been historically dependent on oil and gas income—like California, New Mexico and North Dakota—are exploring the best way to de-risk.
These are some of the actions that will support a smooth and successful transition away from oil and gas:
States rejecting new drilling permits unless oil and gas companies dedicate funds for cleanup upfront.
States requiring that companies prove that they can pay for the future cleanup of their current oil and gas assets on an annual basis.
States refusing new drilling permits until a company’s backlog of wells that have been idle for seven years or more have been plugged and successfully retired, according to that state’s requirements.
States de-risking pension plans and investments, including consideration of oil and gas companies’ obligations to clean up wells, which would completely collapse the bottom lines of these companies.
If companies (often large) want to transfer their wells or assets to other (often smaller) companies, they must provide funding for future cleanup.
If we don’t hold the industry accountable during this downward spiral, states and taxpayers will be left holding the bag.
The good news: making companies pay the true costs of retiring their assets will only speed up the inevitable collapse of the oil and gas industry, paving the way for a future free from fossil fuels.