Decommissioning Orphaned and Abandoned Oil and Gas Wells: New Estimates and Cost Drivers.

Millions of abandoned oil and gas wells are scattered across the United States, causing methane emissions and other environmental hazards. Governments are increasingly interested in decommissioning these wells but want to do so efficiently. However, information on the costs of decommissioning wells is very limited. In this analysis, we provide new cost estimates for decommissioning oil and gas wells and key cost drivers. We analyze data from up to 19,500 wells and find median decommissioning costs are roughly $20,000 for plugging only and $76,000 for plugging and surface reclamation. In rare cases, costs exceed $1 million per well. Each additional 1,000 feet of well depth increases costs by 20%, older wells are more costly than newer ones, natural gas wells are 9% more expensive than wells that produce oil, and costs vary widely by state. Surface characteristics also matter: each additional 10 feet of elevation change in the 5-acre area surrounding the well raises costs by 3%. Finally, we find that contracting in bulk pays: each additional well per contract reduces decommissioning costs by 3% per well. These findings suggest that regulators can adjust bonding requirements to better match the characteristics of each well.

Managing Environmental Liability: An Evaluation of Bonding Requirements for Oil and Gas Wells in the United States.

Inactive oil and gas wells present an environmental hazard if not properly plugged. Upon drilling a well, operators are required to post a bond, which ensures that the operator has an incentive to plug and abandon (P&A) at the end of the well's life, and that, if the state is left with the liability of managing "orphaned" wells, it can cover the cost of P&A. Using data from 13 state agencies on their orphaned well plugging expenditures, we provide new estimates of P&A costs in the United States and compare them to bond amounts. Current state bonding requirements are insufficient to cover the average P&A cost of orphan wells in 11 of these 13 states. These should be reviewed and revised where necessary. We also examine the factors influencing P&A costs using detailed data on orphaned wells in Kansas. Given the variability of P&A costs, bonds would be more effective if they varied by factors that are meaningful in explaining P&A costs, such as well depth, location, and proximity to groundwater. State regulators can use the statistical approach developed in this paper to improve bonding requirements and to better predict the P&A costs of their orphaned wells.

Policy Analysis: Valuation of Ecosystem Services in the Southern Appalachian Mountains.

This study estimates the economic value of an increase in ecosystem services attributable to the reduced acidification expected from more stringent air pollution policy. By integrating a detailed biogeochemical model that projects future ecological recovery with economic methods that measure preferences for specific ecological improvements, we estimate the economic value of ecological benefits from new air pollution policies in the Southern Appalachian ecosystem. Our results indicate that these policies generate aggregate benefits of about $3.7 billion, or about $16 per year per household in the region. The study provides currently missing information about the ecological benefits from air pollution policies that is needed to evaluate such policies comprehensively. More broadly, the study also illustrates how integrated biogeochemical and economic assessments of multidimensional ecosystems can evaluate the relative benefits of different policy options that vary by scale and across ecosystem attributes.

Valuing vaccines using value of statistical life measures.

Vaccines are effective tools to improve human health, but resources to pursue all vaccine-related investments are lacking. Benefit-cost and cost-effectiveness analysis are the two major methodological approaches used to assess the impact, efficiency, and distributional consequences of disease interventions, including those related to vaccinations. Childhood vaccinations can have important non-health consequences for productivity and economic well-being through multiple channels, including school attendance, physical growth, and cognitive ability. Benefit-cost analysis would capture such non-health benefits; cost-effectiveness analysis does not. Standard cost-effectiveness analysis may grossly underestimate the benefits of vaccines. A specific willingness-to-pay measure is based on the notion of the value of a statistical life (VSL), derived from trade-offs people are willing to make between fatality risk and wealth. Such methods have been used widely in the environmental and health literature to capture the broader economic benefits of improving health, but reservations remain about their acceptability. These reservations remain mainly because the methods may reflect ability to pay, and hence be discriminatory against the poor. However, willingness-to-pay methods can be made sensitive to income distribution by using appropriate income-sensitive distributional weights. Here, we describe the pros and cons of these methods and how they compare against standard cost-effectiveness analysis using pure health metrics, such as quality-adjusted life years (QALYs) and disability-adjusted life years (DALYs), in the context of vaccine priorities. We conclude that if appropriately used, willingness-to-pay methods will not discriminate against the poor, and they can capture important non-health benefits such as financial risk protection, productivity gains, and economic wellbeing.

Shale gas development impacts on surface water quality in Pennsylvania.

Concern has been raised in the scientific literature about the environmental implications of extracting natural gas from deep shale formations, and published studies suggest that shale gas development may affect local groundwater quality. The potential for surface water quality degradation has been discussed in prior work, although no empirical analysis of this issue has been published. The potential for large-scale surface water quality degradation has affected regulatory approaches to shale gas development in some US states, despite the dearth of evidence. This paper conducts a large-scale examination of the extent to which shale gas development activities affect surface water quality. Focusing on the Marcellus Shale in Pennsylvania, we estimate the effect of shale gas wells and the release of treated shale gas waste by permitted treatment facilities on observed downstream concentrations of chloride (Cl(-)) and total suspended solids (TSS), controlling for other factors. Results suggest that (i) the treatment of shale gas waste by treatment plants in a watershed raises downstream Cl(-) concentrations but not TSS concentrations, and (ii) the presence of shale gas wells in a watershed raises downstream TSS concentrations but not Cl(-) concentrations. These results can inform future voluntary measures taken by shale gas operators and policy approaches taken by regulators to protect surface water quality as the scale of this economically important activity increases.

Ancillary human health benefits of improved air quality resulting from climate change mitigation.

BACKGROUND: Greenhouse gas (GHG) mitigation policies can provide ancillary benefits in terms of short-term improvements in air quality and associated health benefits. Several studies have analyzed the ancillary impacts of GHG policies for a variety of locations, pollutants, and policies. In this paper we review the existing evidence on ancillary health benefits relating to air pollution from various GHG strategies and provide a framework for such analysis. METHODS: We evaluate techniques used in different stages of such research for estimation of: (1) changes in air pollutant concentrations; (2) avoided adverse health endpoints; and (3) economic valuation of health consequences. The limitations and merits of various methods are examined. Finally, we conclude with recommendations for ancillary benefits analysis and related research gaps in the relevant disciplines. RESULTS: We found that to date most assessments have focused their analysis more heavily on one aspect of the framework (e.g., economic analysis). While a wide range of methods was applied to various policies and regions, results from multiple studies provide strong evidence that the short-term public health and economic benefits of ancillary benefits related to GHG mitigation strategies are substantial. Further, results of these analyses are likely to be underestimates because there are a number of important unquantified health and economic endpoints. CONCLUSION: Remaining challenges include integrating the understanding of the relative toxicity of particulate matter by components or sources, developing better estimates of public health and environmental impacts on selected sub-populations, and devising new methods for evaluating heretofore unquantified and non-monetized benefits.

International perspectives on air quality: risk management principles for policy development--conference statement.

This statement is the result of discussions held at the 2005 NERAM IV Colloquium "International Perspectives on Air Quality: Risk Management Principles for Policy Development" and represents the collective views of 35 delegates, including international air quality policy analysts, academics, nongovernmental organizations, industry representatives, and decision makers from Mexico, Canada, the United States, the United Kingdom, Brazil, Hong Kong, and The Netherlands on principles for global air quality management. The objective of the colloquium was to "establish principles for air quality management based on the identification of international best practice in air quality policy development and implementation." This statement represents the main findings of a breakout group discussion session, presentations of an international panel of speakers from Canada, the United States, Mexico, and Hong Kong and views of the delegates expressed in plenary discussions. NERAM undertook a transparent process to try to ensure that the statement would accurately reflect the conference discussions, including documenting the proceedings and inviting delegates' comments on draft versions of the statement.

Challenges to managing air pollution.

There is never enough money, time, or resources to do all the things that need to be done--a statement that is true both for governments and individuals. For governments, this fact implies that (1) priorities need to be established; (2) goals are essential to be set to address these priorities, partly with an eye toward maximizing the net benefits to society; and (3) policies need to be implemented to reach those goals efficiently and effectively. In this article, major challenges of managing air pollution in each of these areas are examined.

Regional air quality: local and interstate impacts of NO(x) and SO2 emissions on ozone and fine particulate matter in the eastern United States.

While the U.S. air quality management system is largely designed and managed on a state level, many critical air quality problems are now recognized as regional. In particular, concentrations of two secondary pollutants, ozone and particulate matter, are often above regulated levels and can be dependent on emissions from upwind states. Here, impacts of statewide emissions on concentrations of local and downwind states' ozone and fine particulate matter are simulated for three seasonal periods in the eastern United States using a regional Eulerian photochemical model. Impacts of ground level NO(x) (e.g., mobile and area sources), elevated NO(x) (e.g., power plants and large industrial sources), and SO2 emissions are examined. An average of 77% of each state's ozone and PM(2.5) concentrations that are sensitive to the emissions evaluated here are found to be caused by emissions from other states. Delaware, Maryland, New Jersey, Virginia, Kentucky, and West Virginia are shown to have high concentrations of ozone and PM(2.5) caused by interstate emissions. When weighted by population, New York receives increased interstate contributions to these pollutants and contributions to ozone from local emissions are generally higher. When accounting for emission rates, combined states from the western side of the modeling domain and individual states such as Illinois, Tennessee, Indiana, Kentucky, and Georgia are major contributors to interstate ozone. Ohio, Indiana, Tennessee, Kentucky, and Illinois are the major contributors to interstate PM(2.5). When accounting for an equivalent mass of emissions, Tennessee, Kentucky, West Virginia, Virginia, and Alabama contribute large fractions of these pollutants to other states.