Today the Government Accountability Office (GAO) released a detailed report documenting taxpayer costs for cleaning up oil and gas wells on federal lands. See below for a link to the report.

Written statement by Ryan Alexander, President, Taxpayers for Common Sense:

“Federal taxpayers have subsidized the oil and gas industry for nearly a century and should not be forced to pay the clean-up costs for abandoned wells. However, because of outdated and insufficient bonding requirements, taxpayers are being forced to pick up the tab. The new report released today by the Government Accountability Office only further demonstrates that these age-old policies are costing taxpayers millions. Oil and gas bonding rates have not changed since the 1960’s. The oil and gas industry has changed significantly in that time and it is high time bonding rates reflect that. The oil industry cannot pay 1960’s prices while making 2010 profits.”

##

Background :
Today the Government Accountability Office (GAO) released a detailed report documenting 3,979 bonds paid to the federal government by oil and gas producers. The total value of these bonds was estimated to be $162 million and cover more than 88,000 wells. Bonds are paid to the federal government before development to help ensure oil and gas operators clean-up well sites on federal lands, but insufficient rates have left taxpayers paying for the reclamation of these sites. Currently, the Bureau of Land Management (BLM) charges minimum bond rates of: $10,000 for individual lease; $25,000 for statewide lease; $150,000 for nationwide lease. These rates were last updated in the 1960’s.

In the last two decades, taxpayers have spent nearly $4 million reclaiming orphaned wells. “Orphaned” wells are locations where the bond was not adequate to cover the costs of reclaiming the site and there are no liable parties. Unless bonding requirements are changed, taxpayers will continue to lose.

GAO Report: Bonding Requirements and BLM Expenditures to Reclaim Orphaned Wells (PDF)