M-ICR0006

Early Decommissioning of Marginal Oil and Gas Wells in the United States

Public consultation on the first version from 22. February 2024 - 19. March 2024

Sectoral scope:

  1. Mining/mineral production

Status:

Under development

Current stage:

Public consultation

ID:

M-ICR0006

Summary:

Climate specialists estimate that there are no more than 500 billion metric tons of CO2-e emissions remaining in Earth’s carbon budget. Known fossil fuel reserves total 2,900 billion tons if combusted unabated. That’s ~7x greater than the carbon budget, according to the Global Registry of Fossil Fuels. Continuation of aging oil and gas wells is therefore a big setback to concerted global climate action and to efforts targeted to meet earth’s warming within 1.5°C compared to that of the preindustrial time. To limit warming to 2°C or below, and without new drilling, existing oil and gas wells will need to retire 10 to 25 years earlier than the historical average operating lifetime. The purpose of this methodology is to avoid the emissions related to old oil and gas wells by plugging these wells early and keeping hydrocarbons underground. Consequently, this will avoid the emissions associated along the lifecycle of these resources (upstream, midstream, and downstream), such as the extraction, processing, transportation, refining and end-use.

The methodology intends to identify marginally productive wells located in the United States that meet the additionality and eligibility conditions. For each well, a qualified third-party Professional Petroleum Engineering Firm (PPEF) certifies the economically remaining reserves and ensures permanence by establishing certain geological criteria. Based on the certified economic reserves report, an open-source and reliable set of LCA models defines the baseline emissions. The decommissioning related activities (Project Emissions) will be assumed to be 0, as the plugged activity is legally enforced regardless of the Project activity of earlier plugging. Accurate permanence and/or leakage adjustments can be deducted from the GHG emission mitigations. Together, these attributes create a conservative emission reduction for crediting on any given project. Ex-ante credits are issued once, at project completion (well plugging), while an ongoing annual monitoring, reporting, and verification procedure provides for permanent carbon sequestration.

There are over 700,000 marginal and old oil and gas wells in the United States that produce less than 15 barrels of oil per day. According to the Environmental Defense Fund, these marginal wells make up less than 6% of US production but over 50% of oilfield methane emissions Shutting these wells down early would impact less than 3% of oil and gas production, while addressing over 50% of onshore oilfield emissions- potentially over 7Bn tons of CO2-e.

As the world transitions to a carbon-neutral economy, and existing wells continue to age, the number of wells that need to be plugged will likely increase. Remediation of marginal wells in the near term could result in immediate positive environmental impacts on the quality of water, air, climate, and human ecosystem health with the added societal benefits such as the wellbeing of nearby communities, jobs creation and economic stimulation. Other gases besides methane can be emitted from O&G wells5. While these gases may not contribute to GHG emissions, the plugging and abandoning of these wells will provide quantifiable, local air quality benefit.

This methodology may be periodically updated to reflect regulatory changes, monitoring protocol revisions, or expanded eligibility criteria. Before beginning a project, the Project Proponent shall ensure that the latest version of the methodology and any relevant Errata and Clarifications are being used.