In this episode, Sarah Armitage, an assistant professor at Boston University, sits with host Daniel Raimi to share findings from a working paper she wrote with coauthors about the transfer sales of oil and gas wells and why this practice of oil and gas companies selling wells to each other can lead to negative consequences of “unplugged,” or “orphaned,” or abandoned wells. Armitage explains why unmaintained oil and gas infrastructure, such as orphaned wells, can lead to negative environmental consequences if not “plugged” or sealed after use; these abandoned wells often contain pollutants that can leak into the environment. She also lays out key factors behind project financing that can mitigate a mismatch in business incentives and environmental safety. Given that oil and gas wells, new and old, are spread across the United States, Armitage points to the continued challenges of navigating the state regulations and potential financial solutions that can make proper maintenance easier for old oil and gas wells. Policies that ensure some level of financial assurance, Armitage and coauthors find, can help fill a gap in incentives and put a plug on pollution before it starts.

References and recommendations:

“Cutting Costs or Cutting Corners: Asset Reallocation in Oil and Gas Production” by Sarah C. Armitage, Judson Boomhower, and Catherine Hausman; https://www.nber.org/papers/w34961

“Junkyard Planet: Travels in the Billion-Dollar Trash Trade” by Adam Minter; https://www.bloomsbury.com/us/junkyard-planet-9781608197934/

“The World for Sale: Money, Power, and the Traders Who Barter the Earth’s Resources” by Jack Farchy and Javier Blas; https://global.oup.com/academic/product/the-world-for-sale-9780197651537

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