TOXIC ASSETS

The report argues that the oil and gas industry is in an inevitable decline, leaving behind millions of unplugged wells that pose severe risks to public health and the environment. It highlights how inadequate bonding requirements and bankruptcy laws in the US and Canada enable companies to offload decommissioning costs onto taxpayers. The document warns that unconventional drilling, such as fracking and deepwater projects, is significantly more expensive to close than conventional wells, creating material financial risks for investors and governments. It concludes that a just transition requires strict enforcement of the 'polluter pays' principle and the closure of legal loopholes to ensure companies, rather than the public, fund the remediation of toxic assets.

• The oil and gas industry is in a long-term decline, evidenced by major companies like ExxonMobil writing off nearly one-third of proven reserves and BP and Shell acknowledging that oil demand likely peaked in 2019.
• Unplugged and improperly closed wells leak methane and other toxic substances into air, water, and soil, disproportionately affecting low-income communities and communities of color.
• In the United States, there are approximately 1.1 million decommissioned and 2 million inactive but unplugged onshore wells, though some independent studies estimate the combined total as high as 4 million.
• Financial security (bonding) for well closure in the US and Canada is systematically inadequate, with some estimates suggesting the cost of closing all documented active and inactive US wells could be up to 100 times greater than the bonds set aside.
• Bankruptcy laws, particularly in the US, allow companies to shed environmental liabilities through 'abandonment' or by transferring marginal assets to unstable successor companies during reorganization.
• Publicly funded well-plugging programs in North Dakota and Alberta have functioned as industry subsidies by covering costs for solvent operators rather than focusing exclusively on truly orphaned wells.
• Decommissioning costs for unconventional wells are significantly higher than conventional ones; fracked wells can cost around USD 300,000 to plug, while deep offshore wells can cost between USD 5 million and USD 11 million per well.
• In Guyana, a Production Sharing Agreement with an ExxonMobil-led consortium allows companies to deduct future decommissioning costs as current operating expenses without requiring a dedicated security fund, effectively shifting the financial risk to the government.
• Global examples from Nigeria's Ogoniland, Ecuador's Lago Agrio region, and the North Sea demonstrate that abandoned infrastructure causes lasting environmental damage and methane leakage regardless of geography.

APA

Eisen, N., Feit, S., & Reisch, N. (2021). TOXIC ASSETS. Center for International Environmental Law. https://www.ciel.org/wp-content/uploads/2021/04/Toxic-Assets-Report.pdf

Chicago

Eisen, Nathaniel, Steven Feit, and Nikki Reisch. TOXIC ASSETS. Center for International Environmental Law, 2021. https://www.ciel.org/wp-content/uploads/2021/04/Toxic-Assets-Report.pdf.

Wikipedia

{{cite report |last1=Eisen |first1=Nathaniel |last2=Feit |first2=Steven |last3=Reisch |first3=Nikki |title=TOXIC ASSETS |publisher=Center for International Environmental Law |date=2021 |url=https://www.ciel.org/wp-content/uploads/2021/04/Toxic-Assets-Report.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{eisen2021toxic, author = {Eisen, Nathaniel and Feit, Steven and Reisch, Nikki}, title = {{TOXIC ASSETS}}, institution = {Center for International Environmental Law}, year = {2021}, url = {https://www.ciel.org/wp-content/uploads/2021/04/Toxic-Assets-Report.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }