Costs and Benefits of Decommissioning Orphaned Oil and Gas Wells: Evidence from Six States

This paper evaluates some of the key environmental and economic outcomes of federal spending to plug orphaned oil and gas wells, finding that the costs of cleaning up most wells exceeded the benefits to society, but that better targeting of wells could reverse this result.

Date

April 15, 2026

Authors

Daniel Raimi and Christina Cilento

Publication

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In 2021, the US federal government provided billions of dollars to decommission orphaned oil and gas well sites. This program was touted by federal policymakers from both major political parties as a "win-win" for the environmental and economic benefits it would provide. In this analysis, we examine the costs and benefits of that program using data from roughly 2,150 well sites across six states. We estimate the effects of this spending on employment, methane abatement, and property values. On average, decommissioning costs were roughly $67,000 per well site, but with wide variation. Nine sites exceeded $1 million, while five sites reported the lowest costs of just $1,000. Total costs were roughly $145 million, and we estimate benefits on the order of $30 to $40 million, mostly from higher property values. For the small number of wells where methane was measured, decommissioning costs exceeded the social benefits of methane abatement in 75 to 80 percent of cases. Our results should be interpreted with caution because of extensive data limitations and the sensitivity of results to key methodological assumptions. Prioritizing decommissioning for wells with the highest environmental impacts, such as high rates of methane emissions, would easily pass cost-benefit tests in most cases.

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