Orphaned wells are non-producing gas wells for which no legal responsible party can be found, or where the owner or operator leaves the financial responsibility to plug and remediate the well to local, state or federal agencies.
Recipients, subrecipients and subcontractors receiving federal grants under the Infrastructure Investment and Jobs Act to clean up orphaned wells have important reporting responsibilities or risk having to repay the grants.
Pennsylvania is among the states with the highest number of documented abandoned wells in the country. So far, about 27,000 have been identified, but researchers estimate there could be as many as 760,000 in the state. Total projected funding for the state is $412 million.
States must submit quarterly financial and performance reports to the U.S. Department of the Interior (DOI):
- The Federal Financial Report Form 425 is used for reporting the financial status of awards.
- The Federal Technical Performance Report is used to report the progress toward performance objectives, a comparison of actual accomplishments to performance goals and an explanation of why any milestones were not met.
- An annual Personal Property Report is required if funds are used to acquire equipment.
States must also submit final financial and performance reports to the DOI within 120 days of the performance end date.
In addition to periodic reporting, states must report problems that will affect the ability to meet the objective of the award, including a statement of the action taken or contemplated and any assistance needed.
Data for the above reports can be tracked via the Ground Water Protection Council’s Risk-Based Data Management System, including data such as well location information; pre- and post-plugging methane emission measurement; actual total cost per well of plugging and surface reclamation and other pertinent data.
State recipients, subrecipients, subcontractors and others will need to track and coordinate reportable information and should carefully consider how data will be collected prior to signing contracts. Feel free to contact your Schneider Downs consultant for help with any orphaned well funding or reporting matters or with any plugging and abandonment and asset retirement obligation accounting and related strategies.
About Schneider Downs Energy & Resources Services
The Schneider Downs Energy & Resources industry group provides specialized financial advice and services to our clients in the oil and gas, mining and aggregates, forest products and alternative fuel and energy industries throughout the Columbus and Pittsburgh regions. Our extensive knowledge of industry issues enables us to provide proactive audit, tax and management consulting services.
To learn more, visit our Energy and Resources Industry Group page.
