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How the infrastructure law creates state oil winners and losers

Summary

The distribution of $4.7 billion for oil well plugging under the 2021 Infrastructure Investment and Jobs Act has raised questions about how states define and prevent orphaned wells. States have different metrics for categorizing orphaned wells, leading to widely varied counts of orphaned wells being reported to the Department of the Interior. The lack of a standardized definition has implications for the allocation of federal funds. Critics argue that the varying definitions could lead to federal funds being used to plug active wells that already have operators responsible for them. The issue of bonding requirements for preventing orphaned wells is also discussed, with some states having more stringent bonding policies than others. Alabama is highlighted as a model state for preventing orphaned wells due to its well-insurance policies and efforts to track responsible parties.

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