Texas Railroad Commission Successfully Complies With Well Plugging Grants

The U.S. Department of the Interior Office of the Inspector General has released an audit report showing the Railroad Commission of Texas successfully used federal grant funding for orphaned well plugging and complied with all related laws and regulations.

The RRC utilized its 40 years of well plugging expertise to expend a $25 million Initial Grant from the Infrastructure Investment and Jobs Act (IIJA) passed by Congress. The agency plugged more than 760 orphaned wells through the Initial Grant.

The Inspector General concluded that “We found that the State of Texas properly expended IIJA orphaned well initial grant funds and fulfilled program goals in accordance with applicable laws, Federal regulations, and grant terms…We make no recommendations as there are not reportable findings.” The audit also noted that the RRC “performs enhanced monitoring on all the contractual work performed on the well-plugging using IIJA funds” submitting daily reports on all completed work and costs as well as performing three levels of review to ensure invoice accuracy.

The majority of oil and gas wells that are no longer producing are plugged by the responsible operators. If an operator is non-compliant or goes out of business the well is considered orphaned, and the Railroad Commission administers a program to plug the wells.  The IIJA grants supplement state funds that are used annually to plug orphaned wells across the state.

The RRC is now utilizing the first phase of IIJA Formula Grants to plug wells. However, the formula grants include administrative hurdles that are not specified in the IIJA, such as reviews of Endangered Species Act compliance and compliance with the National Historic Preservation Act, that significantly delay plugging projects. In fact, in the first 12 months of the IIJA Formula Grant, the RRC plugged 45 percent fewer wells using federal funds than were plugged during the first 12 months of the IIJA Initial Grant due to the reviews.

“We are proud to remain a leader in well plugging efforts nationwide and look forward to working with the new Secretary of the Interior to expeditiously plug wells in Texas,” said RRC Executive Director Wei Wang. “According to a recent Interstate Oil and Gas Compact Commission study, thanks to RRC’s robust state managed plugging program, Texas has seen one of the lowest increases in orphaned well population. We would urge our federal partners to examine and remove the red tape implemented by the previous program staff.   Texas stands ready and we are more than capable of accomplishing this important work efficiently.”