Conservation & Energy officials tell committee orphan well inventory has grown and federal grants are being deployed

Department of Conservation and Energy officials outlined a FY27 recommended budget of $201.3 million and described how federal grant inflows and program consolidation are reshaping the agency’s work.

Secretary Dustin Davidson told senators the department’s budget growth in recent years reflects large federal grants tied to plugging orphan wells, energy rebate programs, and grid resilience work under federal programs such as the Infrastructure Investment and Jobs Act and Department of Energy grants. The budget recommendation includes a net reduction relative to the FY26 existing operating line after accounting for one‑time carryforward adjustments.

Davidson said the number of orphan wells has increased to just above 6,000, up from about 4,200 earlier, as operators go orphan or companies exit the business. To speed plugging, the department said it is dedicating federal funds to the most expensive sites while using the Oilfield Site Restoration (OSR) fund to address high‑volume problems. Officials described efforts to use federal grants more rapidly and to consider delivery methods such as construction manager at risk (CMAR) contracts.

On the front end of permitting, the department described strengthened financial‑security oversight through the Natural Resources Trust Authority: site‑specific trust accounts (money stays with a site), annual letters of credit that are verified with banks, and monitoring of financial instruments to avoid the failures of past arrangements. Davidson said the department plans to update regulations and bond amounts to account for inflation.

Senators also pressed the department about creative financing, including whether plugging orphan wells could generate carbon‑credit opportunities that private companies would buy to meet sustainability goals. Davidson said the department is exploring mechanisms that would allow companies to fund plugging in exchange for credits, which could expand private funding for plugging activity.

On a separate safety topic, senators asked about structural integrity at a salt cavern (Cavern 7) operated by Westlake Chemical. The department said modeling and public meetings have been held, and under the worst‑case modeled scenarios they do not expect impacts to underground drinking water and the agency is coordinating evacuation planning and federal assistance where needed.