SALEM, Ohio — Efforts to plug abandoned oil and gas wells in West Virginia are ramping up after the state announced a “first-of-its-kind” partnership with oil and gas company Diversified Energy to establish a well plugging fund.
The Mountain State Plugging Fund will be made up of $70 million in funding from Diversified Energy, which is expected to grow to $650 million through interest payments over time.
The fund will be “the first-of-its-kind,” giving the state financial assurance that if the company’s efforts do not live up to the state’s expectations, there will still be money to plug its wells, Diversified Energy spokesman John Sutter told Farm and Dairy.
Diversified Energy is the largest owner of oil and gas wells in the state, with 20,179 active and abandoned oil and gas wells in West Virginia.
According to Diversified Energy, the Mountain State Plugging Fund ensures the company’s wells will be retired at “no cost to taxpayers.”
“This fund sets a new standard of financial assurance for the industry and reflects our shared vision for responsible energy development in West Virginia,” said Rusty Hutson Jr., Diversified Energy CEO, at a press conference announcing the news on Oct. 16.
Well plugging
The company’s success was built on its ability to rehabilitate and continue using older conventional wells across Appalachia, but this business model has also gotten it into hot water with the courts.
Diversified was ordered by a West Virginia judge in a lawsuit last year to plug 2,600 wells over the next 10 years in six states, including West Virginia, Ohio, Pennsylvania, Kentucky, Virginia and Tennessee.
The lawsuit was brought on by West Virginia landowners in 2022, who have abandoned oil and gas wells on their property owned by Diversified Energy. According to the landowners, the unplugged wells reduce the enjoyment of their property, lower its value and present health and environmental risks.
In West Virginia, well owners are required to plug abandoned wells — non-producing wells with a known owner. Currently, well-plugging efforts in the state are financed through federal grants and the WV DEP’s Abandoned Well Plugging Program, funded by industry permit fees, bond forfeitures and severance taxes.
There are currently 21,000 abandoned and orphaned oil and gas wells in West Virginia. The cost to plug an abandoned oil and gas well can be expensive. In West Virginia, the average cost is up to $100,000, reports the West Virginia Department of Environmental Protection.
Through the new program, well-plugging operations will be conducted by Next LVL Energy, a subsidiary of Diversified Energy. The company uses over 20 rigs, with plans to expand this number and hire new employees as its well-plugging efforts grow.
Already, Next LVL Energy — the largest well-plugging company in Appalachia — has plugged almost 1,335 wells in the Appalachian Basin, plugging roughly 360 wells in 2025.
As part of the well-plugging fund, Diversified Energy agreed to retire at least 1,500 of its wells in the next 20 years, and hopes to eventually plug 250 wells each year.
West Virginia Gov. Patrick Morrisey praised the fund, specifically for the economic benefits it is expected to bring to the state.
“The Mountain State Plugging Fund is a bold step forward — delivering high-paying jobs, as well as environmental and economic benefits for our communities while showcasing West Virginia’s leadership in energy innovation,” Morrisey said at the Oct. 16 press conference. “This initiative sends a clear message: West Virginia can both be a leader in energy dominance and in environmental solutions.”
The fund leaves the door open for other oil and gas operators to contribute similar funds for well-plugging operations for non-producing or existing orphan wells.
(Liz Partsch can be reached at epartsch@farmanddairy.com or 330-337-3419.)
