PRIVATE PROFITS, PUBLIC RISKS

The report identifies 19 private equity firms investing in 35 oil and gas companies that have received federal drilling permits since 2017. It estimates that U.S. taxpayers could face up to $384 million in cleanup costs for nearly 2,700 wells operated by these private-equity-backed companies across eight states, with Colorado and New Mexico facing the highest liabilities. The authors argue that the private equity business model—characterized by high leverage and quick exits—combined with outdated federal bonding requirements (averaging only $2,122 per well) and bankruptcy laws, allows firms to externalize environmental costs. The document also highlights 'greenwashing' strategies, such as the promotion of 'certified gas,' used to maintain investor support despite ongoing fossil fuel expansion.

• U.S. taxpayers could be responsible for up to $383.7 million in cleanup costs for approximately 2,685 oil and gas wells on federal and tribal lands operated by private equity-backed companies. Current bonding is severely insufficient, providing only about $5.7 million, or 1.5% of the high-end cleanup estimate.
• Colorado and New Mexico represent the highest potential cleanup liabilities. Colorado's potential bill is up to $161.2 million, and New Mexico's is up to $107.8 million. Since 2017, private equity-backed operators received 78% of approved federal drilling permits in Colorado and 50% in Utah.
• The report identified 19 private equity firms—including Blackstone, Carlyle Group, Apollo Global Management, KKR, and Warburg Pincus—that invested in 35 oil and gas companies receiving federal drilling permits since 2017. These firms paid the Interior Department nearly $2 billion in drilling royalties during this period.
• Federal bonding requirements for well reclamation are outdated and insufficient. The average bond held by the Bureau of Land Management in 2019 was $2,122 per well, while actual cleanup costs are estimated between $20,000 and $145,000 per well. Consequently, 84% of bonds are insufficient to cover even the lowest cleanup estimates.
• Private equity firms use high-leverage business models and bankruptcy laws to avoid environmental liabilities. The report notes that many cleanup obligations are not legally categorized as debts, meaning they may not survive bankruptcy proceedings, shifting the cost to the public.
• Fossil fuel investors employ 'greenwashing' tactics, such as promoting 'certified gas' and 'net zero' commitments based on carbon offsets, to maintain political and investor support. The report cites research by Earthworks suggesting that certification standards, such as those from Project Canary, may fail to capture significant methane releases.
• Tax subsidies, specifically the percentage depletion allowance, make otherwise uneconomic drilling profitable. This provision allows smaller producers to deduct 15% to 25% of revenue from pretax income and is estimated to cost $14 billion over the next decade.

APA

Private Equity Stakeholder Project (2023). PRIVATE PROFITS, PUBLIC RISKS. https://pestakeholder.org/wp-content/uploads/2023/08/PESP_PublicCitizen_Report_PrivateProfits-PublicRisks_2023.pdf

Chicago

Private Equity Stakeholder Project. PRIVATE PROFITS, PUBLIC RISKS. 2023. https://pestakeholder.org/wp-content/uploads/2023/08/PESP_PublicCitizen_Report_PrivateProfits-PublicRisks_2023.pdf.

Wikipedia

{{cite report |author=Private Equity Stakeholder Project |title=PRIVATE PROFITS, PUBLIC RISKS |date=August 2023 |url=https://pestakeholder.org/wp-content/uploads/2023/08/PESP_PublicCitizen_Report_PrivateProfits-PublicRisks_2023.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{privateequitystakeholderproject2023private, author = {{Private Equity Stakeholder Project}}, title = {{PRIVATE PROFITS, PUBLIC RISKS}}, institution = {Private Equity Stakeholder Project}, year = {2023}, month = aug, url = {https://pestakeholder.org/wp-content/uploads/2023/08/PESP_PublicCitizen_Report_PrivateProfits-PublicRisks_2023.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }