Bipartisan bill to cap unplugged Texas oil wells could create up to 150,000 new jobs

State lawmakers want to throw a major lifeline to the Texas Railroad Commission, which regulates the oil and gas industry. For the last 20 years, the Railroad Commission has struggled to plug all of the state’s orphan wells — uncapped holes in the ground that become wards of the state when companies go bankrupt or dissolve.

These wells have plagued Texas in recent years, providing a pathway for toxic gas and contaminated water deep underground to travel to the surface and threaten protected aquifers. 

The increasing number of derelict oil and gas wells being documented is also likely to burden the Texas taxpayer — as the commission takes on more expensive leaking wells, its costs are escalating faster than the funding to plug them. The commission plugged more than 1,000 wells last year, yet the list of wells that need to be plugged at the state’s expense grew 6% to 8,347.

Lawmakers and industry groups want to force oil and gas companies to plug the wells while they are still around to do the work. As it stands, operators can leave an open hole in the ground indefinitely.

“The problem is there's no deadline,” said Republican state Sen. Mayes Middleton, an oilman from Galveston. “We know what happens eventually, if we don't do anything about it. They become orphan wells.”

Middleton’s bill would require that wells be plugged after 15 years of inactivity. It would address the state’s roughly 155,000 idle oil and gas wells — a population of wells that grows increasingly high risk with time.

“This is the right thing to do. It's good for our state … It's good for our natural resources, and it also protects taxpayers from having to be on the hook for this,” Middleton said. 

In the Texas House, Committee on Energy Resources Chairman Rep. Drew Darby, R-San Angelo, described recent issues with wells as “the single biggest economic and environmental crisis of this state.” 

Nearly 37,000 inactive operator-owned wells in Texas haven’t produced oil in 15 years or more, he said. Lawmakers, regulators and industry groups say these idle wells feed the state’s ever-growing list of orphans. 

Roughly 2,500 of the state’s orphan wells are considered environmentally sensitive, meaning they pose dangers to protected groundwater or they could be leaking poisonous hydrogen sulfide gas, Commission Chairman Christi Craddick told lawmakers during a hearing last month. 

“We’re plugging them,” Craddick said during a hearing. “They're coming on my books as fast as I can get them.”

Addressing the problem has given the Texas oil industry and its political allies unusual common ground with environmental groups such as Commission Shift, the Sierra Club and the Environmental Defense Fund, as they all support Middleton’s bill. 

The Texas Oil and Gas Association and other industry groups helped draft it. A companion bill with similar goals was proposed by representatives Charlie Geren, R-Lake Worth, and Armando Walle, D-Houston. 

“You don't see bills like this unless the stars align,” Colin Leyden, the EDF’s Texas director, said. 

High-profile well blowouts and leaks, as well as the need to ask for $100 million in taxpayer dollars to plug orphan wells, likely galvanized the industry, regulators and lawmakers to address it, Leyden said. 

And the effort to cap idle wells has an added bonus: It could create 150,000 new jobs in Texas, according to an EDF report published last week. 

A blow to small operators

But not everyone is happy about the bill, which is likely to deal a blow to small operators like Josh Pollard, who described companies like his as the “buzzards” of Texas oil. Those at the bottom of the food chain eat what’s left over once a well’s prime days have passed and the larger companies move on. 

It’s a business model that has helped the industry thrive in Texas, said Karr Ingham, president of the Texas Alliance of Energy Producers, which primarily represents small, independent producers most likely to be affected. 

“We don't have any interest in seeing that ecosystem threatened, because it is what keeps the industry alive, vibrant, looking like it looks today,” he told lawmakers.

But the number of idle wells is growing, Ingham said, so he understands the desire from regulators and lawmakers to change the trajectory. 

“We recognize a need to arrest this upward increase in the number of inactive wells and limit the opportunity for those to become a worse category of wells, which is orphan,” he said.

Amendments to the bill would soften the impact on operators, giving them until 2040 to comply with plugging requirements if they submit a plugging plan. Changes to the bill would also give the Railroad Commission discretion to grant exceptions based on market conditions, the quality of an operator’s plans to restore wells to service and on its financial ability to cover plugging costs. 

Giving small operators latitude makes sense, Middleton said, because “160,000 wells is a lot of wells to plug.” It would also take time for the Texas economy to adapt to new demand for rigs and crews that can plug more wells. 

“We know we're going to have to have more rigs out there to plug wells,” Middleton said. “And that will happen naturally, of course, because the demand is going to go up for the types of rigs that you use to plug wells. It does take a little time, so that's why that's there.”

The bill, if passed, is likely to put some operators out of business — creating more orphan wells in the aftermath — as the cost of plugging inactive wells overwhelms them, said Virginia Palacios, executive director of the watchdog group Commission Shift. 

“You're, in the short term, going to end up with more orphans, because there are operators out there who have never planned to plug their wells … because there hasn't really been a true requirement to plug their wells,” she said. “But in the long term, this will solve a lot of the problems that we've been seeing.”

Absent from the bill is a systematic way of funding all of this plugging, said Dwayne Purvis, founder of Purvis Energy Advisors. More of the burden is falling on taxpayers because Texas companies haven’t set aside nearly enough funds for plugging wells at the end of their useful lives.

Purvis also fears the commission, if granted the discretion to grant exemptions, might overuse it and dilute the reform’s effectiveness as a way to delay the inevitable pain that comes from such a substantial policy change.

“The lack of reform over the last 40 years has created a backlog of liabilities that will come due sooner or later, and it will be painful,” Purvis said. “There's no getting around the fact that it's going to be painful.”

This story was originally published in the Houston Chronicle on April 10, 2025.

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