new-orphan-wells/docs/chapter5-variables.md

Chapter 5 Variable Reference

The Costs of Transition: Financial and Climate Liabilities of Orphaned Wells

---

Research Questions

1. What are the estimated plugging and remediation costs, and how do they vary by state?
2. How large is the unfunded liability gap, and which states carry the greatest exposure?
3. How does IIJA/BIL funding compare to estimated need?
4. How do financial liabilities translate into political debates over who bears transition costs?
5. How does financial exposure connect to climate and equity concerns?

---

Core Financial Variables

Per-Well Cost Estimates

All cost estimates are in nominal USD. The Raimi et al. (2021) figures are the primary reference for this project.

Estimate	Per Well (Low)	Per Well (Mid)	Per Well (High)	Source
EPA OLEM (2018)	$5,000	$25,000	$85,000	Older; widely considered low
Raimi et al. (2021)	$9,000	$76,000	$280,000	Primary reference
Carbon Tracker (2020)	$20,000	$82,000	$300,000	Investor/financial risk focus
IOGCC (2023)	$5,000	$33,000	$150,000	State-reported; inconsistent method
PA DEP (2022)	$10,000	$68,000	$220,000	Actual contract data; PA-specific

Full citations in docs/data-sources.md and plugging_cost_references table.

State Liability Variables

Variable	DB Location	Description
well_count_dow	state_liability	USGS DOW well count per state
est_liability_low_usd	state_liability (generated)	well_count × $9,000
est_liability_mid_usd	state_liability (generated)	well_count × $76,000
est_liability_high_usd	state_liability (generated)	well_count × $280,000
iija_phase1_formula_usd	state_liability	Phase 1 formula grant allocation
iija_phase2_perf_usd	state_liability	Phase 2 performance grant (populate as awarded)
Unfunded mid	Calculated in view	est_liability_mid_usd - iija_phase1_formula_usd
iija_covers_pct_mid	v_ch5_liability_summary	IIJA Phase 1 as % of mid-range liability

National Totals (from v_ch5_national_totals)

Metric	Value
Total documented wells	117,672
National liability (low)	~$1.06 billion
National liability (mid)	~$8.94 billion
National liability (high)	~$32.95 billion
IIJA Phase 1 total	~$310 million
IIJA Phase 1 coverage of mid estimate	~3.47%
Unfunded gap (mid)	~$8.63 billion

---

Key Queries

Full state liability table

SELECT * FROM v_ch5_liability_summary;

National totals

SELECT * FROM v_ch5_national_totals;

States where IIJA Phase 1 covers more than 5% of mid-range liability

SELECT state, state_name, well_count_dow,
       iija_covers_pct_mid, unfunded_mid
FROM v_ch5_liability_summary
WHERE iija_covers_pct_mid > 5
ORDER BY iija_covers_pct_mid DESC;

Liability per well (for cross-state comparison)

SELECT state, state_name, well_count_dow,
       est_liability_mid_usd / well_count_dow AS mid_per_well_usd,
       iija_phase1_formula_usd / well_count_dow AS iija_per_well_usd
FROM state_liability
ORDER BY well_count_dow DESC;

Cost estimate sensitivity analysis

SELECT r.source_name, r.source_year,
       r.cost_mid_usd AS per_well_mid,
       117672 * r.cost_mid_usd AS national_mid_estimate
FROM plugging_cost_references r
ORDER BY r.cost_mid_usd;

Combine governance framework with liability

SELECT sg.framework_type,
       count(DISTINCT sg.state)        AS states,
       sum(sg.well_count_dow)          AS total_wells,
       sum(sl.est_liability_mid_usd)   AS total_mid_liability,
       sum(sl.iija_phase1_formula_usd) AS total_iija,
       round(
           sum(sl.iija_phase1_formula_usd)::numeric /
           sum(sl.est_liability_mid_usd) * 100, 2
       )                               AS iija_coverage_pct
FROM v_state_governance sg
JOIN state_liability sl ON sg.state = sl.state
WHERE sg.framework_type != 'Unclassified'
GROUP BY sg.framework_type
ORDER BY total_wells DESC;

---

Analytical Strategy (Chapter 5)

Section 1: The Scale of the Problem

• Table: state-level liability (low/mid/high) — v_ch5_liability_summary
• National headline: $8.94B mid-range vs. $310M funded = 3.47% coverage
• Sensitivity analysis: show how the number changes across the 5 cost references
• Note: DOW dataset is documented wells only. Undocumented wells could multiply national liability 3–10×

Section 2: The IIJA and Its Limits

• Bar chart: IIJA Phase 1 allocation vs. estimated liability by state
• Key argument: even the largest recipients (OH, PA, OK, KY, WV, TX at $25M each) cover only 1.6–5.6% of their mid-range liability
• Discuss Phase 2 performance grants as the main mechanism — but competitive, not guaranteed
• Note the perverse incentive: states must document and begin plugging to qualify for Phase 2

Section 3: Stranded Asset Framing

• Connect to plugging_cost_references — use Carbon Tracker framing for investor risk angle
• Argument: inadequate bonding requirements made this liability invisible until it became public
• state_liability.bonding_required and bonding_adequacy fields (to be populated from literature)

Section 4: Who Bears the Cost?

• Cross-tab: framework_type (from Chapter 4) × funding coverage percentage
• Do engineering-frame states receive proportionally more or less IIJA funding?
• EJ angle: are high-density tracts in low-income communities concentrated in states with largest unfunded gaps?

Section 5: Climate Liability

• Methane emissions from unplugged wells — reference EPA Greenhouse Gas Inventory
• Each orphaned well emits estimated 0.1–10 tonnes CO₂e/year (wide variance by well type and age)
• Can connect well_type_normalized to EPA emission factor ranges
• Spatial overlap: high-density tracts × Census tract air quality data (EJScreen API if available)

---

Data Limitations for Chapter 5

1. Liability estimates are for documented wells only. The USGS DOW dataset is the most comprehensive national compilation but excludes millions of undocumented pre-regulatory wells (estimated 2M+ nationally per API). National liability could be 10–20× higher.

2. Raimi et al. cost estimates are national averages. Per-well costs vary enormously: shallow, simple onshore wells may cost $5,000–$15,000; deep, complex, or offshore wells can exceed $500,000. State-level averages mask this heterogeneity.

3. IIJA Phase 1 allocations are approximate. Exact per-state grant amounts should be verified against official OSMRE grant award letters before publication. The Phase 2 allocation process is ongoing; check OSMRE for updates.

4. No bonding data yet. The state_liability.bonding_required and bonding_adequacy fields are not yet populated. These are essential for the stranded asset argument and should be populated from IOGCC bonding reports or state regulatory research.

5. Inflation not applied. Raimi et al. (2021) costs are in approximately 2020 dollars. Post-2021 inflation (particularly construction and materials costs) has likely increased per-well costs substantially. Consider applying BLS PPI for construction to update estimates.

6. Phase 2 grants not yet final. As of March 2026, Phase 2 performance grant awards are ongoing. Query OSMRE for current state of awards before the manuscript goes to press.