North Dakota officials say they want to repurpose $16 million in federal coronavirus aid and spend it on grants to encourage fracking instead of using it to clean up abandoned oil well sites.
Regulators have presented the proposal as a way to create jobs and help stabilize state revenue, while some in the environmental community view it as a bailout for the oil industry, the Bismarck Tribune reported.
Under the proposal before the North Dakota Emergency Commission, oil companies would be eligible for a $200,000 reimbursement per well they complete. They could use the money for acquiring and disposing of water used in the hydraulic fracturing process, in which water, sand and chemicals are injected underground to crack rock and release oil.
State Mineral Resources Director Lynn Helms said oil companies have been hit hard by the price drop resulting from the pandemic, leading to slow work in the state’s oil fields.
The Sierra Club, however, called it “totally inappropriate” to put some of the $1.25 billion the state received under the coronavirus rescue package toward fracking.
“A direct subsidy payment to oil companies to drill for oil is outrageous,” said Wayde Schafer, spokesman for the organization in North Dakota.
Earlier this year, state leaders designated $66 million of the aid for plugging and cleaning up 380 abandoned well sites. Helms expects the state to finish plugging all 380 wells this year but only complete cleanup work at about half the sites. Repurposing the $16 million will keep 500 to 1,000 people employed through the end of the year, he said.
“There’s nothing inappropriate about using CARES Act money to create jobs in the oil service industry,” he said.
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