Can States Turn Old Wells Into Climate Wins?

Faster federal rules are speeding orphan-well cleanup and lifting firms chasing methane-cutting credits

21 Aug 2025

The US Department of the Interior has issued revised guidance for state grant programmes aimed at closing the country’s large inventory of orphaned and unplugged oil and gas wells, giving regulators greater certainty over project timelines and funding flows.

The changes apply to the Orphaned Wells State Matching Grant and State Formula Grant schemes, both created under recent infrastructure legislation. By removing several nonstatutory requirements and easing conditions on how states sequence projects, the department has reduced paperwork that had delayed the release of federal funds. State agencies say the adjustments should help them approve work plans and contract plugging crews more quickly while maintaining environmental standards.

Companies have begun responding to the policy shift. Zefiro Methane, an environmental services group that links well plugging with methane monitoring and carbon credit generation, recently completed the first sale of carbon offsets created under the American Carbon Registry orphan well methodology from a project in Oklahoma. The credits, delivered to Mercuria Energy America, signal that a commercial market for verified emissions reductions from well remediation is taking shape. Investors and policy analysts view the updated federal guidance as supportive for firms converting long-standing liabilities into measurable climate gains.

Nonprofits see similar momentum. The Well Done Foundation, which focuses on plugging high-priority orphan wells, has expanded its work with the US Fish and Wildlife Service to close more than 100 wells across several National Wildlife Refuges. The group marked the plugging of its fiftieth well nationwide and its first in Oklahoma in April. Clearer federal rules, it said, allow philanthropic funding, private capital and government grants to be aligned more effectively on the same sites.

States must still prepare detailed work plans, manage limited labour and equipment, and compete for contractors able to scale up for larger projects. Analysts caution that the national backlog is so extensive that even a smoother system will take years to produce visible improvement in many regions.

But sentiment has shifted as guidance solidifies and early activity in methane credit markets gains attention. As more states revise their programmes and more projects integrate plugging, emissions monitoring and carbon finance, the US effort to address its orphaned well legacy is moving from pilot initiatives toward a more durable national cleanup market.