A new report by PESP and Public Citizen reveals that Investments by private equity firms in nearly 2,700 oil and gas wells on federal and tribal lands across the western United States could leave taxpayers with a cleanup bill of up to $380 million. The investigation was featured in stories by High Country News, Mother Jones, and the Williston Herald.
High Country News August 9, 2023: Private equity gets into oil and gas
Mother Jones August 14, 2023: Private Equity Is Snapping Up Gas and Oil Firms. What Could Go Wrong?
Williston Herald August 12, 2023: Private equity gets into oil and gas
Without significant changes in financial protections mandated by the U.S. government, the drillers backed by private equity buyout firms on federal lands will only set aside $5.7 million to clean up after the wells are depleted, the study found, a meager 1.5 percent of the potential cleanup costs. The study’s scope includes wells that either have been drilled or are projected to be drilled based on federal drilling permits approved since 2017. The $380 million cleanup bill represents a slice of the total cost of cleaning up from oil and gas drilling on public lands, which has been estimated to be at least $6 billion, and potentially much more.
The report identified 19 private equity firms, including Blackstone, Carlyle Group, Apollo Global Management, KKR, and Warburg Pincus, that have invested billions of dollars into fossil fuel companies in recent years. These firms have invested in 35 different oil and gas companies that received permits to drill on federal lands since 2017.
PESP climate researcher Nichole Heil told HCN that the conventional private equity approach, characterized by significant debt-fueled investments and swift company turnovers to maximize quick profits, is undermining responsible public resource management. Potential subsequent bankruptcies could lead to substantial costs borne by the public.
“The fact that the private equity model looks to find outsized profits in a short amount of time doesn’t allow a lot of room for how we think about the plugging of oil and gas wells,” Heil told HCN.