Tag Archives: Cleanup funding

Clean energy transition, Clean-up costs, Cleanup funding, Decommissioning, Fossil fuels, Keeping Watch on Earth News

Is this Benicia’s future? New Mexico stuck with $8 billion in fossil fuel cleanup

New Mexico Stuck With $8 billion in Cleanup for Oil Wells, Highlighting Dangers From Fossil Fuel Dependence

The oil industry boasts that it fills state coffers with revenues from drilling, but a new study finds a serious gap in funding available to tackle the environmental legacy of abandoned wells.

DeSmog.com, by Nick Cunningham, May 26, 2021
Oil stored in tanks. Credit: Bureau of Land Management (CC BY 2.0)

New Mexico is facing more than $8 billion in cleanup costs for oil and gas wells, an enormous liability that taxpayers could be left to pick up if drillers go out of business or walk away from their obligations.

Cleaning up old wells at the end of their operating lives can be expensive, and typically states require drillers to cover part of the cleanup cost at the outset, known as financial assurance requirements. The money is tapped later on when the well or pipeline must be dismantled and cleaned up.

But a study commissioned by the New Mexico State Land Office published on April 30 found that “financial assurance requirements do not exist for much of the oil and gas infrastructure explored in this study, and in some cases where such requirements are imposed, operators may have multiple ways of minimizing or avoiding those requirements.” The study was conducted by the Center for Applied Research, an independent analytical firm.

Inadequate bonding requirements means there is a serious gap in available funding to properly clean up after the fossil fuel industry. According to the report, it could cost as much as $8.38 billion to clean up the state’s tens of thousands of wells and associated pipeline infrastructure. Alarmingly, however, New Mexico only has $201 million tucked away for cleanup, leaving a hole of $8.1 billion.

“That’s $8.1 billion that we don’t have,” New Mexico Commissioner of Public Lands Stephanie Garcia Richard said in a statement. “Enormous sums of taxpayer money and money meant for public schools, along with the long-term health of our lands, are on the line.”

The industry likes to boast that oil and gas revenues contribute roughly a third of the state’s general fund — a fact that the New Mexico Oil & Gas Association (NMOGA) triumphantly advertised in a recent report and regularly highlights on social media.

Indeed, drilling accounts for a large source of state revenues. In April 2021, for example, the state took in $109 million in royalties, a record high. Those funds will be funneled into public services, including schools and hospitals.

As the report exposed, however, the massive liability put onto the public in cleanup costs somewhat undercuts the notion that the oil and gas industry is a financial godsend.

The industry has helped fill state coffers in recent years, with oil production booming to roughly 1 million barrels per day, more than double production levels from five years ago. According to the report, last year the oil and gas industry produced nearly 370 million barrels of oil and 2 trillion cubic feet of natural gas from roughly 60,000 wells, which was transported on 35,000 miles of pipelines.

But as the State Land Office study highlights, the industry is leaving behind enormous costs for the state and the general public to deal with at a later date, a liability that is mostly obscured from public discussion.

The average cost to plug an old well and reclaim the surface is over $182,000 per well, but the state only has the finances to cover a little over $3,200 per well. The funding gap is even more staggering for pipelines. Decommissioning and reclamation costs are roughly $211,000 per mile of pipeline, but available financial assurance only totals about $51 per mile.

A pump jack in Roswell, New Mexico. Credit: BLM. (CC BY 2.0)

The risk to the public from inadequate bonding requirements is compounded by the fact that oil and gas drillers can go out of business long before wells are cleaned up, which can be years or even decades later. The U.S. shale industry has burned through hundreds of billions of dollars in cash, and there have been more than 250 bankruptcies of North American oil and gas companies since 2015. And as the clean energy transition accelerates, the financial challenges to the industry are likely to only grow more severe.

The state has long suffered from the roller coaster cycles of extractive industry, according to James Jimenez, executive director of New Mexico Voices for Children, a health, education, and economic advocacy organization. “We’ve made policy choices in boom times that have really exacerbated our over-dependence on oil and natural gas revenues,” Jimenez told DeSmog.

“Because of the really volatile nature of the oil and gas industries, we haven’t had sustainability in the programs,” he said. A dependence on a boom-and-bust industry has forced the state to make cuts to school systems during downturns in the past.

“We need to reduce this over reliance we have on oil and natural gas to fund really basic important programs like our K-12 education and higher education systems,” Jimenez said. He added that the state should diversify its revenue base, such as through progressive taxation on the wealthy and supporting non-extractive business sectors.

Even as money flows to the state from drilling today, the unfunded liabilities of cleanup that are dumped onto the public also highlight the downside to such high levels of drilling. “The $8 billion that it would take to do the cleanup would have to come from somewhere,” Jimenez said. Dollars spent on cleaning up the waste from the oil and gas industry, are dollars not spent on other important needs, such as rural broadband or road infrastructure, he added.

“The answers are simple and urgent — raise royalty rates and taxes on the industry, stash away the revenues in our Permanent Fund to stabilize cash flows, and spend current budget dollars on investments to diversify our economy,” Thomas Singer, senior policy advisor at the Western Environmental Law Center, told DeSmog via email.

NMOGA did not respond to a request for comment.

Well pad near Roswell, NM. Credit: BLM. (CC BY 2.0)

On top of the financial risks from abandoned wells, the fossil fuel industry brings numerous environmental and public health hazards as well. Oil and gas operations have contributed to a deterioration in air quality in the state. And in northwestern New Mexico, there have been more than 300 accidents since 2019, including oil spills, fires, blowouts, and gas releases, and much of it has occurred on Navajo land, as reported by Capital & Main.

A recently published peer-reviewed study found that shut-in conventional oil wells in the Permian basin could be leaking a substantial amount of methane, a powerful greenhouse gas that exacerbates climate change.

“New Mexicans must recognize that while industrialization of our landscape to produce oil and gas brings revenue today, if not properly cleaned up, it also jeopardizes our economy of the future,” Singer said. Allowing drillers “to defer this obligation indefinitely puts the state and taxpayers at great risk that they will have pick up the tab or leave these areas as polluted sacrifice zones.”

Cleanup funding, Crude By Rail, Derailment, DOT-111, Emergency Readiness & Response, Explosion, Federal Regulation (U.S.), Fire, Rail inspection, Rail routing, Spill, Train length

Senator: Using bad tank cars? Then pay a fee

Repost from The Columbus Dispatch

Using bad tank cars? Then pay a fee, Brown proposes

By Rick Rouan, June 30, 2015 11:36 PM

Sen. Sherrod Brown wants shippers using tank cars that have been linked to fiery train derailments to pay fees that would be used to reroute train tracks, train first responders and clean up spills.

Brown has proposed fees that start at $175 per car for those using the DOT-11 [sic], a tank car that federal regulators have warned hazardous-material shippers against using.

The fees would pay to clean up hazardous-material spills, to move tracks that handle large volumes of hazardous material and to hire more railroad inspectors. Brown’s bill earmarks about $45 million over three years to train first responders near rail lines that carry large quantities of hazardous material.

Earlier this year, federal regulators tightened rules on newly manufactured tank cars but did not require shippers to immediately remove the old cars.

“(The rule) probably didn’t go far enough,” Brown said on Tuesday at the site of a 2012 derailment and explosion near the state fairgrounds. “If it’s a threat to public safety, they probably need to be off the rails.”

The federal rule will phase out or require retrofitting of thousands of the oldest tank cars that carry crude oil by 2018. Another wave of the oil-carrying tankers would have to change by 2020.

Some of the tank cars that aren’t carrying crude oil would not be replaced or retrofitted until 2025.

Brown’s proposal calls for a tax credit for companies that upgrade their tank cars to the new federal standard in the next three years.

Chet Thompson, president of the American Fuel & Petrochemical Manufacturers trade association, said his organization would oppose the fee structure Brown proposed.

“We think the federal focus should be on the rail carriers and their efforts to improve track integrity,” he said. “We want to see legislation that beefs up track integrity to keep the trains on the track.”

A spokesman for the American Association of Railroads declined to comment on Brown’s proposal. The organization is appealing the new federal standard, arguing that it doesn’t do enough to require shippers to stop using the DOT-111 tank cars and should require more heat protection on the cars, spokesman Ed Greenberg said.

The cars have been involved in several fiery derailments while carrying crude oil from the Bakken shale formation in North Dakota to East Coast refineries. In July 2013, a runaway train killed 47 people and destroyed the business district in Lac-Megantic, Quebec.

And in February, a train carrying volatile Bakken crude derailed in Mount Carbon, W.Va., after it likely traveled through Columbus. The train was run by CSX, which has three tracks that carry crude oil converging in Columbus before they head toward West Virginia.

On July 11, 2012, a Norfolk Southern train slipped the rails just north of Downtown. One of the cars punctured, spilling ethanol and causing an explosion and fire. Two people were injured and about 100 people were evacuated.

The National Transportation Safety Board said a broken track caused the derailment.

“Unfortunately, that was not an isolated incident,” Brown said.

A recent analysis for Franklin County Emergency Management and Homeland Security found that crude oil represents the largest share of hazardous material transported by rail through the region, Director Mike Pannell said.

Earlier this year, the state released reports showing that 45 million to 137 million gallons of Bakken crude travel through the state each week.

Local first responders have procedures in place to handle derailments but not specific plans for every piece of track, including lines that run through residential areas, said Karry Ellis, an assistant chief in the Columbus Fire Division.

Brown’s proposal calls for the U.S. Department of Transportation to study whether first responders are prepared for flammable-liquid spills and whether longer freight trains pose a greater risk.

Information from the Associated Press was included in this story.

Bakken Crude, Cleanup funding, Crude By Rail, Derailment, Environmental Impacts, Explosion, Federal Regulation (U.S.), Fire, Hazmat notification, High threat urban areas, Oil spill, Public Health, Rail Safety, Tank car retirement, Tank car retrofit, Tar sands crude, Train speed, Water contamination

Riverkeeper sues U.S. DOT over oil train safety rules

Repost from The Times Union, State College, PA
[Editor: Note that this is a new filing, closely following the filing of May 14 by a coalition of environmental groups.  – RS]

Riverkeeper sues U.S. DOT over oil train safety rules

By Brian Nearing, May 18, 2015

The Hudson River environmental advocacy group Riverkeeper is challenging new U.S. Department of Transportation crude-by-rail standards in federal court, saying that they fail to protect the public and the environment from proven threats, according to a statement issued Monday.

The release states: Riverkeeper filed its lawsuit in the 2nd Circuit Court of Appeals in New York City on May 15, a little more than a week after the DOT issued a final tank car and railroad operation rule which had been the subject of scrutiny and controversy since its proposal in 2014. The suit closely follows another filed in the 9th Circuit Court of Appeals by a coalition of conservation and citizen groups that includes Earthjustice, Waterkeeper Alliance, ForestEthics and the Sierra Club.

The Hudson River and the Greater New York/New Jersey region, a thoroughfare for up to 25 percent of all crude shipments originating in the Bakken shale oil region, faces a daily risk of spills and explosions that could devastate communities, local economies, drinking water security, and the environment.

“These seriously flawed standards all but guarantee that there will be more explosive derailments, leaving people and the environment at grave risk,” Riverkeeper President Paul Gallay said. “The shortcomings are numerous, including an inadequate speed limit, unprotective tank car design, and time line that would allow these dangerous tank cars 10 more years on the rails. The DOT completely fails to recognize that we’re in the middle of a crisis – we don’t need bureaucratic half measures that are years away from implementation, we need common-sense protections today.”

Just this month, tank cars laden with crude oil derailed and exploded in Heimdal, North Dakota. Under the new DOT standards, the same type of cars that exploded in that disaster could stay in service hauling volatile crude oil for another five to eight years, or even indefinitely if they are used for tar sands.

Over the past several years, a series of fiery derailments, toxic spills, and explosions involving volatile crude and ethanol rail transport has caused billions in damages across North America. Crude-by-rail accidents threaten irreversible damage to waterways, many of which, like the Hudson River, serve as the source of drinking water for tens of thousands of people. This year alone,six oil-by-rail shipments have caught fire and exploded in North America. In July 2013, a derailment in Lac-Mégantic, Quebec, killed 47 people. The total liabilities for that rail disaster could easily reach $2.7 billion over the next decade.

Here are some of the ways the new safety standards fail to protect people and the environment:

• Hazardous cars carrying volatile crude oil can remain in service for up to 10 years.

• The rule rolls back public notification requirements, leaving communities and first responders in the dark about explosive crude oil tank cars rumbling through their towns.

• While new tank cars will require thicker shells to mitigate punctures and leaks, retrofit tank cars will be allowed to stay in use with a less protective design standard.

• Speed limits have been restricted only for “high threat urban areas,” but only two areas in New York have received that designation, Buffalo and New York City.

• The “high threat” category relates to cities seen as vulnerable to terrorist attacks by the Department of Homeland Security. It is unrelated to actual risks posed by crude-by-rail.

Cleanup funding, Crude By Rail, Derailment, DOT-111, Emergency Readiness & Response, Explosion, Fire, Let it burn, Rail Safety, Tank car design, Water contamination

“Bomb” Trains: Hope is not enough

Repost from the Pottstown Mercury

LETTERS: Safety of ‘bomb trains’ is public health priority

By Dr. Lewis Cuthbert, 04/25/15, 2:00 AM EDT

The Mercury article of Feb. 23, “We just have to hope that nothing happens” has profound implications to everyone in the Greater Philadelphia Region. We applaud the March 1 Mercury editorial conclusion, “Clearly, hope is not enough to maintain safety…”

So-called “bomb trains” containing up to 3 million gallons of explosive, flammable, hazardous crude oil travel right through Pottstown and the Limerick Nuclear Plant Site. A derailment, explosion and days-long fire ball near Limerick’s reactors and deadly fuel pools could trigger simultaneous meltdowns with catastrophic radioactive releases. Millions of Greater Philadelphia Region residents could lose everything forever.

Days of thick black smoke from a crude oil fire could be devastating. Even Occidental Chemical’s large vinyl chloride accidents (seven-tenths of a mile from Limerick) caused problems at Limerick, according to employees, some of whom are very worried about crude oil train derailments.

Risks are increasing. Emergency responders are smart to be concerned. They shouldn’t be expected to be on the front lines of such devastating uncontrollable disasters.

Train derailment disasters should be anticipated. Sixty-five tank cars bound for Philadelphia had loose, leaking, or missing safety components to prevent flammable, hazardous contents from escaping (Hazmat report – last two years). A fuel-oil train already derailed a few miles from Philadelphia.

Heat from the rupture and ignition of one 30,000-gallon car can set off a chain reaction, causing other cars to explode, releasing a days-long fireball. Basically, responders must let it burn out.

Over 100 railcars, estimated to hold three million gallons, regularly sit on tracks from the Dollar General in Stowe to Montgomery County Community College.

ProPublica data from the federal Pipeline and Hazardous Materials Safety Administration (2011-2014) shows incidents in over 250 municipalities. The worst of eight major crude oil train accidents include:

  • A train derailment and explosion killed 47 and destroyed 30 buildings in Quebec.
  • 2,300 residents were evacuated in North Dakota. The fireball was observed states away.

Safer trains aren’t the answer. A new safer-design derailed February 2015 in West Virginia, despite adhering to the speed limit. Hundreds of families had to flee their homes in frigid weather. Burning continued for days. Drinking water and electricity were lost. Leaking crude oil poisoned the water supply. Fireballs erupted from crumbled tank cars, underscoring volatility of crude oil’s propane, butane, etc.

Safe evacuation from our densely populated region is an illusion. Limerick Nuclear Plant’s evacuation plan is unworkable and unrealistic, not robust as claimed by a health official. Just consider work hour traffic combined with deteriorated roads and bridges. We encourage officials to visit www.acereport.org to view ACE’s 2012 video-blog series on the reality of Limerick’s evacuation plan. For a graphic presentation call (610) 326-2387.

Who pays to deal with irreversible devastation from train derailments and meltdowns? Clearly, not the oil industry, nuclear industry, railroad or government. We’d be on our own, despite:

  1. Long-term ecological damage that would leave ghost towns that can’t be cleaned up safely.
  2. Risking the vital drinking water resource for almost two million people (Pottstown to Philadelphia).
  3. Millions of people losing their homes, businesses and health.

Richard Lengel, Pottstown’s Fire Chief, admitted, “If something catastrophic happens, there’s no municipality along the railroad that can handle it, the volume [crude oil] is too great. We just have to hope that nothing happens, honestly.”

Hope is no solution! Neither is denying the reality of our unacceptable devastating risks.

The catastrophic disasters we face can, and must, be prevented with foresight and political will to face the facts and take action. Enough of corporate profits jeopardizing public safety.

Wake up! Speak up! Tell local, state and federal elected officials to stop this insanity!

Say no to dangerous crude oil trains traveling through our communities and the Limerick site.

Say no to continued Limerick Nuclear Plant operations to avoid meltdowns that can be triggered by cyber/terrorist attacks, embrittled/cracking reactors, earthquakes and now oil-train explosions/fires.

— Dr. Lewis Cuthbert
ACE President