A West Texas lawmaker wants to redirect millions of tax dollars to plug abandoned wells, curb emissions

State Rep. Brooks Landgraf, R-Odessa, wants to spend millions of tax dollars collected from oil and gas companies to help clean up West Texas after years of oil and gas production. (Credit: Evan L'Roy/The Texas Tribune)

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ODESSA — A West Texas lawmaker wants to provide a financial boost to clean up environmental damage caused by a century of oil and gas production that made Texas one of the world’s leading energy producers.

State Rep. Brooks Landgraf, an Odessa Republican, introduced a set of bills this week that would provide millions of dollars to the state to seal abandoned wells, which, in some instances, are causing massive blowouts of toxic liquid and creating pools of wastewater.

To become law, the package needs approval from both legislative chambers, the governor and voters in the fall of 2025.

Currently, taxes collected from oil and gas companies are divided among the state’s savings account, often known as the “rainy day fund,” schools and highways. If enacted, the legislative package would largely reallocate the money that goes to the state’s savings account — which currently sits at $21 billion — to new spending.

It would set aside 1% of all taxes from oil and gas production to plug the wells, an effort overseen by the Texas Railroad Commission, which regulates the oil and gas industry. Another 1% would go to the Texas Commission on Environmental Quality to bolster emission reduction efforts.

The sweeping rewrite of the state’s severance tax laws, which Landgraf is calling Texas STRONG, also directs up to $500 million for infrastructure repairs, expanding emergency, health care, and educational services and workforce development programs. That money would be distributed through grant programs to counties where oil and gas production is prolific.

[State oil regulator requests $100 million to tackle West Texas well blowouts]

The rest of the money that would otherwise go to the savings account would be redirected to ease property taxes statewide.

The taxes collected from oil and gas that already help pay for public schools and highways would largely go unchanged.

In the last fiscal year, between September 2023 and August 2024, Texas collected north of $8 billion in oil and gas taxes.

“The Texans who live and work in those counties pay a high price in the form of higher costs of living, over-utilized infrastructure, overcrowded schools and unique environmental concerns,” Landgraf said in a statement. “In practice, if enacted, Texas STRONG would address issues like teacher and nursing shortages, road repairs, and enhanced public safety, with additional resources for enforcing commercial vehicle laws.”

The proposal comes as the Railroad Commission told state lawmakers it could not afford to keep up with the expenses of plugging abandoned wells that have unexpectedly burst with briney water in the Permian Basin, which supplies 42% of the nation’s oil.

In November, the agency asked for an additional $100 million — almost half of its entire two-year budget. Danny Sorrells, the commission’s executive director, said in a letter that the agency's $226 million budget was not enough to address the growing cost of plugging leaking and erupting wells in the state’s oil fields.

Sorrells, who asked Lt. Gov. Dan Patrick and House Speaker Dade Phelan to consider their request, said it would use the money to address actively leaking wells and prevent emergencies.

The commission uses a priority system to determine which wells to plug first. Priority 1 wells pose environmental, economic and safety risks — wells it would typically seal first. However, Sorrells said the commission was spending more money cleaning up uncontrolled flows of water erupting from abandoned wells, an event that constitutes an emergency.

Sorrells said it has become unsustainable.

“These high-priority wells need to be taken care of before they themselves become emergency wells,” he said.

Congress set aside $4.7 billion to plug orphan wells in public and private lands in the Bipartisan Infrastructure Law passed in 2021. Texas received $25 million and an additional $80 million in January.

The commission spent the money on 737 wells, which account for 10% of the estimated orphaned wells in Texas. Through another state-funded initiative worth $63 million, the commission plugged 1,754 wells in 2023. In 2024, the commission plugged 1,012 more.

Wells continue to erupt despite the commission’s efforts.

At least eight erupted with briny water since October 2023, said Sarah Stogner, an oil and gas attorney and district attorney-elect of the 143rd judicial district, which includes Ward, Loving and Reeves counties..

In December 2023, an orphaned well blew out in Imperial, a community roughly 63 miles southwest of Odessa. That well alone took more than two months and $2.5 million to clean up. Another well in Toyah erupted in October this year, releasing a furious torrent of water that took an oil and gas company weeks to contain. Kinder Morgan, the company that plugged the well, did not say how much it cost.

Sorrells' letter said that regulators need the money to staff a team of inspectors who can investigate the cause of the blowouts, which they associate with produced water injections. Sorrells said the agency's ability “to assess, characterize and evaluate these events is limited by the currently available resources.”

Sorrells said that plugging wells requires labor and materials like cement and rigs, whose cost has increased by 36% since 2022.