Decommissioning a Wind Turbine vs. Plugging & Abandoning an Oil Nicely – Watts Up With That?

Guest “Coin toss” by David Middleton

A recurring theme in comments sections of WUWT posts are arguments about the costs of decommissioning wind turbines vs the costs of plugging and abandoning oil wells; so I thought I would take a look at the numbers…

Wind Turbines

The Cost of Decommissioning Wind Turbines is Huge

NOVEMBER 1, 2019

In Minnesota, Xcel Energy estimates conservatively that it will cost $532,000 (in 2019 dollars) to decommission each of its wind turbines—a total cost of $71 million to decommission the 134 turbines in operation at its Noble facility. Decommissioning the Palmer’s Creek Wind facility in Chippewa County, Minnesota, is estimated to cost $7,385,822 for decommissioning the 18 wind turbines operating at that site, for a cost of $410,000 per turbine.


Institute for Energy Research

Retiring worn-out wind turbines could cost billions that nobody has

Feb 21, 2017

By: RICK KELLEY Staff Writer

Valley Morning Star

HARLINGEN – This is a story about death and resurrection, and as with all such stories, faith plays its part.

Texas is by far the leading wind energy producer in the United States, generating more than 20,000 megawatts of electricity each year. That is about one-fourth of the nation’s wind-energy production.

We can expect the Texas winds to blow forever, but the colossal turbines which capture the breeze and transform it into electricity will not turn forever. Like all mechanical things devised by man, no matter how clever, they eventually wear out.

But the question is, what will this mean to the landscape and future of the Rio Grande Valley and, in particular, the counties of Willacy and Cameron?


Wind turbine: The life and death

The life span of a wind turbine, power companies say, is between 20 and 25 years. But in Europe, with a much longer history of wind power generation, the life of a turbine appears to be somewhat less.

“We don’t know with certainty the life spans of current turbines,” said Lisa Linowes, executive director of WindAction Group, a nonprofit which studies landowner rights and the impact of the wind energy industry. Its funding, according to its website, comes from environmentalists, energy experts and public donations and not the fossil fuel industry.

Linowes said most of the wind turbines operating within the United States have been put in place within the past 10 years. In Texas, most have become operational since 2005.

“So we’re coming in on 10 years of life and we’re seeing blades need to be replaced, cells need to be replaced, so it’s unlikely they’re going to get 20 years out of these turbines,” she said.

Estimates put the tear-down cost of a single modern wind turbine, which can rise from 250 to 500 feet above the ground, at $200,000.


In Texas, with virtually no regulatory oversight of wind farms, there is no requirement for wind companies to set aside any funds for decommissioning.


Energy Central

It appears that the cost to decommission a single wind turbine in the U.S. can range from $200,000 to $532,000.

Salvage Value

The decommissioned wind turbines will have some salvage value. Some claim that the salvage value will exceed the decommissioning costs. Since most U.S. wind turbines were installed since 2005, there doesn’t appear to be a lot of data on actual salvage values realized. The Decommissioning Report in the 2008 application for the Buffalo Ridge II Wind Farm in South Dakota, projected an average decommissioning cost of $90,805 per wind turbine, with an average salvage value of $79,355 per wind turbine.

Decommissioning estimate for the Project:
General Conditions   $   1,433,620
Operation & Maintenance Buildings   $        94,804
Substation Deconstruction   $        64,349
Towers, Wind Turbine Deconstruction Access Road Preparation   $      780,249
Blade Disposal   $   2,030,463
Foundation Removal   $   2,556,964
Site Restoration   $   2,633,421
Tower Dismantle and Salvage Preparation   $   6,387,298
Transmission Line and Pole Removal   $      155,495
Total estimated decommissioning cost   $ 14,543,889
Total estimated decommissioning cost/turbine   $        90,805
Salvage value/wind turbine   $       (79,355)
Total net decommissioning cost per wind turbine minus salvage value   $        11,450


The estimated future salvage value was ~87% of the estimated decommissioning cost in this permit application. Let’s apply this to the more recent decommissioning estimates.

Decom. Cost Salvage Val. Net Cost
 $      200,000  $      (174,781)  $ 25,219
 $      532,000  $      (464,918)  $ 67,082

Assuming a robust salvage value, the net decommissioning cost would range from $25,000 to $67,000 per wind turbine.

Oil Wells

Since the cost of plugging and abandoning (P&A) oil wells can vary widely and most are responsibly P&A’ed by their operators, I will focus on “orphaned wells.”

Abandoned Wells
What happens to oil and gas wells when they are no longer productive?

Petroleum and the Environment, Part 7/24
Written by E. Allison and B. Mandler for AGI, 2018


In 2017, there were one million active oil and gas wells in the United States.1 When a well reaches the end of its productive life, or if it fails to find economic quantities of oil or gas, the well operator is required by regulators to remove all equipment and plug the well to prevent leaks.2 Usually, cement is pumped into the well to fill at least the top and bottom portions of the well and any parts where oil, gas, or water may leak into or out of the well. This generally prevents contamination of groundwater and leaks at the surface. State or federal regulators define specific plugging procedures depending on the local conditions and risks, and may monitor the plugging operation.

However, there are many cases in which wells are not properly plugged before being abandoned, especially if the well operator goes bankrupt, leaving its wells “orphaned”.3 This is more common when oil prices fall rapidly, making many wells uneconomical, as in the 1980s oil glut, the 2008 financial crisis, and the 2014 downturn.

In the late 1980s, the U.S. Environmental Protection Agency estimated that 200,000 of 1.2 million abandoned wells may not have been properly plugged.4 Since then, tens of thousands of orphaned wells have been plugged by state and federal regulators, as well as some voluntary industry programs. These efforts are ongoing, and many orphaned wells have yet to be properly plugged. The exact number is not known: some 3.7 million wells have been drilled in the U.S. since 1859,6 and their history is not always well documented. Older wells, especially those drilled before the 1950s, are particularly likely to have been improperly abandoned and poorly documented.


Abandoned Well Plugging Campaigns

For several decades, states have increased enforcement of plugging and cleanup requirements. States generally require a performance bond or other financial assurance from the operator that a well will be plugged and the well site restored. However, bond amounts may not meet the plugging and cleanup expenses if an operator goes bankrupt.11 Most states therefore collect fees or a production surcharge from operators specifically for remediation of orphaned wells and associated surface equipment.12 For example, Pennsylvania adds an orphaned well surcharge to drilling permit application fees,14 while Texas adds a 5/8-cent Oil Field Cleanup surcharge to the state’s 4.6% oil production tax.15 The Oklahoma Energy Resources Board remediates abandoned well sites using voluntary industry contributions amounting to 0.1% of oil and gas sales.16


American Geosciences Institute

Orphaned wells are a problem. It is mostly associated with very old, poorly documented wells. Wells can also be orphaned when the operators go bankrupt. States currently require some level of bonding and levy taxes and surcharges specifically to fund P&A work on orphaned wells. States also carry out ongoing P&A programs for orphaned wells. AGI sites specific numbers for state and federal P&A programs. Carbon Tracker, an AGW agitator group, claims that the cost to P&A an average orphaned well is nearly $150,000.

Let’s compare Carbon Tracker’s fantasy to the real world.

 Total P&A Liability   Wells   P&A/Well 
Carbon Tracker  $      117,000,000,000    783,000  $     149,425
TX 1984-2008  $              163,000,000      35,000  $         4,657
TX 2017  $                11,600,000            918  $       12,636
OK since 1994  $              100,000,000      15,000  $         6,667
CA since 1977  $                27,000,000         1,350  $       20,000
BLM 1988-2009  $                   3,800,000            295  $       12,881
Real World  $              305,400,000      52,563  $         5,810

A presentation at the 13th Annual Ryder Scott Reserves Conference cited Texas Railroad Commission numbers for 2013-2017:

 Wells    Cost (millions)   P&A/Well 
2013             778  $                 20.9  $       26,900
2014             563  $                 15.0  $       26,600
2015             692  $                 10.7  $       15,500
2016             544  $                   8.5  $       15,700
Jan-June 2017             223  $                   2.4  $       10,800
Real World         2,800  $                 57.5  $       20,536

$5,800 to $20,500 per well is just a bit less than $150k/well. But, P&A costs for individual wells can vary widely.

What happens to orphaned wells? At least four things can happen, only one of which involves taxpayer money.

Things that can happen to Orphaned Wells
• Plugged or brought back to production by
current operator
• Brought back to production by a new operator
• Surface owner can plug well
• Railroad Commission plugs well

Ryder Scott

Where do states get the money to P&A orphaned wells?

Sources of Money used by RRC to fund
orphan well plugging

• Recovered from responsible party
• Recovered from salvaged equipment
• Recovered from performance bonds, letters of
credit, and cash deposits
• Taxes and fees paid by industry and public

13th Annual Ryder Scott Reserves Conference

Between 1997 and 2014, it cost the State of Wyoming $11 million in total to plug orphaned wells, and only $3 million was covered by bonds. The other $8 million came from the conservation tax fund—a state tax levied on oil and gas production that funds the regulatory agency that oversees the industry and pays for things like well plugging.

The Rising Cost Of Cleaning Up After Oil And Gas

From 2007-2019, Texas oil & gas well operators paid the state over $149 billion in taxes and royalties on oil & gas production.

New Record: Texas Oil and Gas Industry Paid $16.3 Billion in Taxes and State Royalties in 2019, Most in Texas History

“Last year alone, the Texas oil and natural gas industry paid the equivalent of $38 million a day to fund our schools, roads, universities and first responders,” said Todd Staples, president of TXOGA. “More tax and royalty revenue from the oil and natural gas industry means our lawmakers have more to work with to meet the needs of our growing state.”

In fiscal year 2018, Texas school districts received $1.24 billion in property taxes from mineral properties producing oil and natural gas, pipelines, and gas utilities.  Counties received $366.5 million in oil and natural gas mineral property taxes.

“In addition to taxes and royalties, Texas oil and natural gas companies are investing billions in advanced technologies that are protecting and improving our environment – proof that we can grow our economy, protect the environment and enhance our energy security at the same time,” Staples said. U.S. CO2 emissions are near 20-year lows and methane emissions from oil and natural gas systems are down 14 percent since 1990 – all while production has skyrocketed.

State royalties paid by the oil and natural gas industry in fiscal year 2018 increased 18 percent to a total of $2 billion, money that is used to capitalize the Permanent School Fund (PSF), which benefits the public schools of Texas, and the Permanent University Fund (PUF), which benefits public higher education in Texas. Oil and natural gas royalties constitute the only substantive new money deposited annually to the PSF and PUF, according to Staples.

“What’s remarkable to me is that the Texas Permanent School Fund, seldom recognized outside of Texas, leads the pack among ALL educational endowments in the country,” he said. “With a balance of $44 billion at the end of fiscal year 2018, the PSF is the largest educational endowment in the nation – bigger than Harvard University’s endowment worth $39.2 billion.”

Texas Oil and Natural Gas Industry Paid More than $14 Billion in Taxes and Royalties in 2018, Up 27% from 2017

What’s even more remarkable than the fossil fueled Texas Permanent School Fund being the largest educational endowment in the country? Over-educated idiots at the University of Texas in the Peoples Republic of Travis County are actually demanding that the UT System divest from fossil fuels. I schist you not.

In 2019, Texas oil & gas producers paid over $16 billion in taxes and royalties. This is how the state spent 25% of the revenue:

FY2019  Billions 
Taxes & Royalties Paid  $    16.28
Spent %
School Districts  $       1.54 9%
Counties  $       0.40 2%
Permanent University Fund  $       1.02 6%
Permanent School Fund  $       1.11 7%
TX RRC P&A  $       0.03 0.21%
TX RRC Pollution Clean Up  $       0.00 0.01%

In FY2019, the Texas Railroad Commission spent about $35 million on P&A work for orphaned wells and about $2 million on oil & gas related pollution abatement. This amounts to less than 0.3% of the taxes and royalty revenue the state generated from oil & gas production.

 Total    Wells   P&A/Well 
FY2019  $  34,942,911          1,710  $       20,434

The average P&A cost over recent years has been around $20,000 per well. Taxes and fees already paid by oil & gas producers comfortably cover these costs.


Comparisons of wind turbine decommissioning costs and oil well P&A work are somewhat “apples & oranges”. However, they both appear to fall into similar ranges. The main difference is that oil & gas producers generally pay far more in taxes, specifically designed to cover orphaned wells, than the actual abandonment costs. As nearly as I can tell, wind farm operators aren’t burdened with similar taxes.

The oil well abandonment section was largely reproduced from this post: Carbon Tracker Fantasy: “Cleanup of abandoned oil and gas wells could cost Texans $117 billion”

Like this:

Like Loading…

Comments are closed.