Louisiana’s Orphaned Wells: A New Approach to Financial Responsibility

Louisiana has seen the number of orphaned wells (wells without a responsive operator) in the state increase rapidly in the past decade – from around 3,000 to more than 6,400 recently. That increase is despite additional federal funding for plugging orphaned wells to supplement the work of the state’s Oilfield Site Restoration Program. A significant driver of both numbers and costs of orphaned well projects is the historical lack of financial security requirements funding set aside in case an operator cannot or does not plug its wells. 

In 2024, the Louisiana Legislature created the Natural Resources Trust Authority (NRTA) to help improve the state’s approach to financial security for oil and gas operators and, by extension, better manage the orphaned well population. One of the core improvements provided by the creation of the NRTA is the establishment of a board and staff made up of people with training and expertise in finance.

Working within the authority of the Office of State Resources and State Mineral and Energy Board, the NRTA serves as a true finance arm for the agency, with an overarching mission of developing a strategic plan to identify financial challenges facing the energy industry and natural resources-related projects. A significant part of that mission involves determining the appropriate bond amounts and instruments that drilling companies should provide to ensure funds are available to clear well sites if operators are unable to meet their obligations. Another important NRTA function is deciding the best ways to allocate funding dedicated to plugging orphaned wells.   

Current priorities for the NRTA are re-evaluating the state’s rules for blanket bonds and increasing financial assurance requirements where necessary so that operators, not the state program, are primarily responsible for the cost of plugging abandoned wells.