Michigan to receive $25 million initial federal grant to address orphan wells

Michigan’s effort to seal abandoned oil and gas wells has received a major funding boost through a $25 million Department of the Interior grant.

Made possible by the federal Infrastructure Investment and Jobs Act 2021 (IIJA), also known as the Bipartisan Infrastructure Law Section 40601, the IIJA stimulus funding includes three tranches of money that states can apply for including an initial grant of up to $25 million, a formula grant, and regulatory improvement grant.

The Jablonski 01 orphan oil well, formerly operated by Northeastern Energy Corporation, in Casco Township, St. Clair County. 

"We need to use every available resource to protect drinking water for Michiganders," said Governor Gretchen Whitmer. "This funding will help us plug orphan oil and gas wells, which will prevent the emission of harmful gasses, create jobs, ensure that more sites are made available for productive use by businesses and property owners, and protect the water supply for families. In the budget I signed last month, we dedicated additional resources to help clean up orphan oil and gas wells, and I will work with anyone to protect our communities."

Orphan wells are abandoned or improperly plugged wells for which there is no known solvent existing owner or operator. They pose significant risks to human and environmental health by leaking toxic chemicals to the air, contaminating groundwater and emitting methane, the powerful greenhouse gas.

EGLE’s Oil, Gas, and Minerals Division (OGMD) successfully applied for a $25 million initial grant and has also filed a Notice of Intent to apply for a formula grant estimated to be valued at $5.8 million.  When added to the current $1 million state Orphan Well Program, EGLE’s fiscal year 2023 appropriation for addressing more than 400 abandoned wells across the state rises dramatically to $32 million – the single biggest funding increase in the program’s history.

Consistent with the Bipartisan Infrastructure Law, EGLE’s principal orphan well project goals are protecting human health and the environment, reducing methane emissions, and creating good paying jobs.

Nearly 30 years ago, OGMD worked with the oil and gas industry for the passage of Act 308, P.A. 1994, which established the current Orphan Well Fund within the Michigan Department of Treasury. OGMD utilizes the fund, paid for by revenue created by a severance tax on the oil and gas industry, to plug and remediate orphan well sites. To date, roughly 400 abandoned wells have either been plugged or remediated.

“We still have 447 orphaned wells across the state,” said Adam Wygant, director of EGLE’s OGMD. “Through this boost in funding, we hope to do 25 years’ worth of work in the next few years. This additional federal infrastructure money allows us to hire two new staff dedicated to the Orphan Well Program and cap these wells at a rate eight times faster than before.”

Eligible activities authorized under the initial grant include plugging wells, reclaiming lands impacted by associated development activities, and the removal of infrastructure associated with the wells on federal, state, tribal, and private property. Orphan well projects are ranked through a multi-component scoring system based on public health and safety risk, potential for or known environmental contamination, land use, and environmental justice screening tools. Generally, the projects will be completed in order from highest to lowest score.  The IIJA initial grant money will reduce the estimated timeframes for plugging the backlog of documented orphan wells by decades.

"EGLE's commitment to cleaning up orphan oil and gas wells is key to unlocking new economic development opportunities and ensuring more projects are built on time and on budget," said Zach Kolodin, chief infrastructure officer for the Michigan Infrastructure Office. "This $25 million grant award will help jumpstart efforts to clean up the 447 known orphan gas wells throughout Michigan. The Michigan Infrastructure Office looks forward to working with communities and stakeholders across our state to identify even more funding opportunities that will enable them to invest in critical infrastructure projects that have a lasting impact on Michigan's future."

OGMD will post on its website a list of wells plugged, facilities decommissioned, and costs incurred as the projects progress.