Orphan Well Carbon Crediting Methodologies: A Review of Quantification Practices and Proposal to Incorporate Leak Forecasting
Orphan Well Carbon Crediting Methodologies: A Review of Quantification Practices and Proposal to Incorporate Leak Forecasting
PAYNE INSTITUTE COMMENTARY SERIES: COMMENTARY
June 25, 2026
EXECUTIVE SUMMARY
Hastening the plugging of orphan wells in the U.S., for climate, environmental and human health purposes, is encouraging the pursuit of private sources of financing through the voluntary carbon market (VCM). Benefiting from iterations, active orphan well carbon crediting methodologies arguably collectively contain the elements to reflect adequate conservativism with respect to crediting volume, in the sense of the aggregate methane emissions that can be avoided by plugging an orphan well. This is (1) because the methodological bases either reflect a current leak rate, which is likely to grow over time, or an expected emissions rate, which is underpinned by the long history of oilfield experience, and (2) due to explicit steps layered on to these methodologies to haircut the number of credits issued per project.
The author of this paper submits that the largest remaining challenge to the integrity of orphan well crediting methodologies is timing, or when the plugged well would likely have emitted methane. Avoiding emissions today is more important, and therefore more valuable, than avoiding emissions tomorrow. Therefore, it is the author’s contention that the methodologies should seek to more accurately reflect the avoided emissions expected during the first twenty years post plugging.
Estimating the timing of emissions from orphan wells is dependent on the condition of the wellhead and related hardware that is “capping” the well and constraining what leaks from it. This hardware is compromised (hence the leaks that are found that make the well eligible for carbon crediting). But the extent to which it is compromised and expectations for how it will degrade further have a direct impact on expectations of how the leak(s) will evolve, i.e., grow, over time.
One of the active methodologies, that of BCarbon, explicitly reflects this idea — that the wellhead is constraining the flow of emissions — into its derivation of credit volumes; its approach appreciably lowers how many credits BCarbon issues for every project. There is merit in this approach, including its relative simplicity.
This paper suggests an alternate approach to address this timing challenge: forecasting leak progression. This alternate approach would incorporate the condition of the wellhead and how it can be expected to degrade further to inform the rate at which leaks can be expected to grow over time if the well remains unplugged, until the well’s emissions mirrors its “natural”, i.e., unconstrained emissions rate. Such leak forecasting requires further consideration/research before implementation in a methodology, but this paper hopes to encourage such research.
As a grounding for this suggestion, the paper first reviews the current methodologies’ practices for quantification, i.e., how they derive credit volumes to be issued for a project. It also reviews the various means the methodologies use to haircut credit volumes from the derived starting point.
Table of Contents
HOW METHODOLOGIES DERIVE CREDIT VOLUMES TODAY
Determining the Starting Point
Extrapolation of Leak Approach
Haircutting Crediting Volumes for Conservatism or Uncertainty
MORE EXPLICITLY ESTIMATING THE TIMING OF EMISSIONS
Appendix I: Select Glossary of Oilfield and Carbon Crediting Terms
Measurement of the Methane Leakage
Appendix II: Overview of Two Methodological Approaches
Expected Emissions (from Breach)
Appendix III: Select Characteristics of “Public” Orphan Carbon Crediting Methodologies
Unplugged, or inadequately plugged, orphan wells are an environmental hazard and cause a danger to human health, leaking contaminated brines and volatile organic compounds (VOCs), including benzene, a known carcinogen. They also contribute to global warming through release of methane into the atmosphere.
A recognition of the need to hasten the plugging of orphan wells in the U.S. is encouraging the pursuit of private sources of financing through the voluntary carbon market (VCM). To facilitate participation in the VCM, several sets of rules, or methodologies, related to generating carbon credits from plugging orphan wells have emerged. These methodologies mandate different practices as they seek to balance integrity with cost/practical application.
The argument that orphan well carbon crediting can be of high integrity is underpinned by several factors. These include, but are not limited to, that the climate impact of plugging orphan wells is quantifiable, that those benefits will last for decades if not longer (permanence), that most of the wells addressed by these methodologies would not have been plugged had the funds not been raised (additionality) and that the environmental and community/societal benefits of plugging a leaking well are clear. Industry confidence in the ability to reasonably quantify the avoided methane and the permanence of the solution stems from the fact that the oil and gas industry engages in reservoir estimation and plugging oil and gas wells every day and has built up knowledge in these areas on a vast scale through operations dating back over 100 years.
Not all orphan wells are the same. If most are orphaned after having been produced to a point at which they are no longer economic to keep active, and which therefore can be expected to leak small quantities of methane, there are exceptions. These exceptions have greater subsurface energy than the depleted wells; they may have been orphaned because operators have gone bankrupt. And therefore it can be expected that these wells will leak “material” amounts of methane if left unplugged, particularly as the hardware at the surface which is constraining that leakage, such as wellheads, corrodes due to both elements in the reservoir, such as carbonic acid that forms with the presence of CO2 and water, and ambient conditions.
Related, there is variability in how much is known about individual orphan wells; this is generally also a function of their age as operators of wells drilled more recently report their production to the relevant jurisdiction and there is more documentation available about the well’s reservoir conditions. It can also reflect changes in subsurface conditions since the well was abandoned (ceased producing).
The determination of how many credits are issued in a project, i.e., the quantification of the climate mitigation impact, must reflect high integrity and yet also acknowledge that much is often not known about the project well. In other words, for wells with little or no known history, a methodology must allow for standardized assumptions, albeit set conservatively enough that most wells are not over-credited. These assumptions can be informed by the vast history of oil production and profiles of wells that produce for several decades and longer.
Current crediting methodologies for plugging orphan wells share some features, including that they are well-specific and that they issue most of credits upon successful plugging of the well. This is consistent with the nature of the job — in that capital is spent up-front to stop future emissions — yet it does therefore require the determination of impact up-front and does limit the ability to reflect changes in conditions that might affect the number of credits issued.
Estimating a well’s avoided methane emissions volumes, rests in large part on one or more of three parameters: (1) the existing leak rate; (2) the condition of the well and the well capping hardware if any is in place, which informs a view of how the leak(s) will evolve (increase) over time as the hardware degrades; and (3) the expected emissions from the well over time assuming it remains unplugged, which is a function of the natural forces in the subsurface “pushing” methane up through the wellbore.
Current methodologies take one of two approaches for quantification: (1) extrapolating from the current leak rate and (2) determining the expected emissions over time. The Expected Emissions approach has raised concern about over-crediting because quantifying the impact involves opening production valves to determine the well’s current state. Yet prescribed testing conditions first relieve flush production and only then measure for stable flow; notably, choke valve settings (that constrain a well’s flowrate) are commonly set to small fractions of an inch. Further, current methodologies apply a “decline curve-type” analysis to approximate how a well can be expected to emit over time; this is consistent with known oil well behavior.
From there, the active methodologies take specific measures to bring conservatism to derived crediting volumes. Most limit the crediting period to 20 years (which, among other rationale, reflects the idea that the relevant jurisdiction may eventually plug the well). BCarbon’s methodology also haircuts project volumes by (1) integrating consistent probability-weighted assumptions that it will take up to 100 years for the well to leak the expected volumes (and still cutting the volume off at 20 years), (2) capping issuance at 300,000 credits and (3) 5% as a buffer against potential plug failure. Open Carbon Protocol’s methodology haircuts volumes by 5% unless the developer can establish that there are no other wells within the setback distance limits that prevail in the project’s jurisdiction, to mitigate against leakage risk. And American Carbon Registry’s (ACR) now paused methodology haircut volumes by 5% to allow for general uncertainty.
After describing the quantification practices for these methodologies, this paper concentrates on a narrow, but in the author’s view critical, issue surrounding quantification of the climate impact of orphan well plugging, i.e., the timing of the emissions assumptions implicit in a methodology that is based on expected emissions. The paper explains the implicit timing mismatch between how the expected emissions method derives a total expected emissions volume and what can be considered a more realistic emissions timing profile. And it suggests that integrating a leak progression forecast can create a more realistic profile and offset the risk of over-crediting the timing mismatch creates. This suggestion requires further consideration/research before implementation in a methodology; this paper hopes to encourage such research.
It is important to note that even with the application of high integrity elements, there will remain uncertainty regarding crediting volumes. Therefore, a high integrity methodology must be set conservatively enough that the chances for over-crediting are minimized — for an individual project and, more importantly, in the aggregate. The rules also must be fully transparent to allow buyers and other constituents to assess these areas of uncertainty. Some of the elements of this uncertainty, regarding quantification but also around, e.g., plugging permanence, can likely be minimized over time through continued research.
Throughout this paper, details are provided about how four methodologies (three of which are active and one, issued by ACR no longer accepts new projects) approach quantification. The three active methodologies are quite different. One, issued by CarbonPath, extrapolates from current leaks. The other two operate on an Expected Emissions basis. BCarbon’s methodology is applicable to wells about which much is known and it establishes credit volume based on that well specific information. The other, issued by Open Carbon Protocol (OCP), addresses wells about which far less can be known; this methodology establishes credit volumes using standardized metrics. For reference purposes, the paper also offers three appendices. Appendix I is a glossary of oilfield and carbon crediting terms. Appendix II discusses the two crediting methodology approaches (Extrapolation of Leak and Expected Emissions). And Appendix II is a tabular summary of select characteristics of each of the four “public” crediting methodologies.
HOW METHODOLOGIES DERIVE CREDIT VOLUMES TODAY
A well plugging job is presumed to result in zero emissions going forward; thus, the crediting amount equals the Baseline (emissions in the business-as-usual or counterfactual scenario) minus the project emissions. Determining the baseline for orphan wells involves multiple steps. In the currently active methodologies, these steps include:
- Selection of a methodological approach (Extrapolation of Leak or Expected Emissions, see Appendix II for more on these two approaches) that sets the appropriate procedures for estimating the avoided volume — the starting point and how the well is expected to emit over time.
- Estimation of the avoided volume
- Decisions to bring conservatism to the evaluation; these include:
- a crediting period
- a leak profile (BCarbon only)
- “haircuts” to address specific risks.
Each of these steps are considered below.
An important note: measuring leaks is likely possible for most orphan wells. However, sometimes assessing leaks becomes more complicated. In these cases, which generally are high energy wells with greater emissions potential than a “typical” orphan, once a breach (leak) is identified, it is critical that the well be secured for safety purposes because there is endangerment to worker safety by virtue of the leak (this temporary elimination of leaks is a non-negotiable per OSHA’s General Duty Clause). This means that any additional measurements done on the well are intended to either (1) replicate the original leak or (2) establish a stable rate to use a starting point for future calculations.
As an aside, the methodologies are intentionally agnostic to the technology used to take flow rate measurements to provide flexibility and allow for technology advances. Nevertheless, the methodology should provide some minimal requirements such that the equipment must be designed to measure either volumetric flow rate or mass flow rate, operate within the environmental conditions and the flow rate at the time of the test and must have been established to meet minimum accuracy standards (see Appendix I for some examples of measurement technologies).
Determining the Starting Point
Extrapolation of Leak Approach
Determining the starting point for the Extrapolation of Leak approach involves taking a measurement of the current leak, or leaks, at the well or, as noted above, seeking to replicate the leak rate if the well had to be shut-in for safety purposes.
If the latter, the rate of the original leak must be inferred by experienced field technicians during initial observation by assessing system conditions, such as atmospheric exposure of the wellbore versus the presence of flow constraints. This is admittedly not straightforward, as well production is predictable over longer time frames but is not smooth from hour to hour or day to day[vi]. The developer then opens the well back up (now under safe conditions) using the choke setting to mirror the estimated original leak. This leak rate should be stable at a consistent choke setting of the primary release valve for the entirety of the test.
Expected Emissions Approach
The Expected Emissions approach starts with an effort to determine where the well is in its assumed lifecycle, i.e., where it “sits” on its natural decline curve. Similar to the condition described above in which the well has been shut in, in seeking to establish current “would-be” production rates, the developer now must re-open the well, using the choke setting to manage flow and measure the resulting flow rates, using appropriate equipment, and associated flowing pressures.
The developer seeks to establish a flowing rate and pressure that is stable — at a consistent choke setting of the primary release valve — which can denote that the developer has found the current “natural” steady-state/production rate of the well. This flow rate stability test is standard oil and gas industry practice, often performed by operators to determine a well’s current capacity to produce.
A key factor is that the flow test must be long enough, and occur after a blow-down period, to avoid characterizing flush production as steady-state; flush production occurs when pressure has built up behind the wellhead. At the same time, a methodology must bear in mind that extended flow tests are expensive, particularly relative to low leak-rate wells, and thus should not be so long as to impose an undue burden on the developer.
The public methodologies have handled this stability testing as follows. ACR’s methodology called for two hours of relative stability of both flow and pressure, with measurement increments of every 10 minutes, per test. Stable or rising pressure as well as flow is a means of establishing that such flows will be maintained; the alternative, falling pressure, suggests that there has been flush production that will not be sustained. The rules allowed for 10% fluctuation across the measured averages through the testing period and for removal of an outlier. This test was to be repeated after 30 days to determine that a similar stable flow rate can be established. Full documentation of test results and data handling was required.
The OCP methodology took ACR’s basis and added time for larger flowing wells: rather than the collective four hours mandated across the two tests, OCP required up to 10 hours for its largest well flow category. The OCP methodology’s logic is that the longer duration is needed to address the concerns of over-crediting due to the higher crediting volumes associated with large emitters.
The ACR’s two-hour-per-test steady state requirement may be sufficient for wells exhibiting low leak rates, for which the risk of significant flush production — and subsequent over-crediting — is minimal; the requirement was borne out of and was consistent with measurement of old, very low emission wells that often lacked well capping hardware[vii]. The determination of whether the collective 10 hours in the OCP methodology adequately mitigates flush production risk warrants further analysis.
It should be noted that the more production history the better, as it can help inform volume estimates. While historic production is not particularly valuable when extrapolating an ongoing leak, the data can be a valuable “gut check” for orphan wells using the Expected Emissions approach and there must be a sound reason for derivation. Surface and subsurface drivers and a likely substantial gap in history due to its orphan status make requiring a direct match to latest production rates unreasonable. Nevertheless, it is important to establish that the measured rate is within the boundaries of the well’s capability to produce.
The BCarbon methodology does not require on-site measurement to estimate the avoided emissions from well plugging. Instead, it mandates that a project well have a minimum of 42 months of production history, from which it determines the starting point as well as the annual decline rate to use for credit generation (see Estimating Volume subsection immediately below).
Estimating Volume
While each of the orphan well methodologies take a slightly different approach to avoided or reduced emissions, the mechanism for calculating volumes associated with each is similar. A starting point is established, using measurement, historic production, or a combination of both as discussed above, and a forecast is applied into the future over a crediting period.
For CarbonPath’s Extrapolation of Leak methodology approach, the decline rate is zero, i.e., the leak rate is assumed to remain constant throughout the crediting period. This does not have to be the case; for example, it might be established that further erosion of the well-capping hardware can have a bearing on that rate (discussed later in this report).
For the Expected Emissions methodology approach, a percentage rate of decline is applied to the starting point to calculate a volume of hydrocarbons that would have been emitted where the well to remain unplugged — see Appendix II: Overview of the Two Methodological Approaches for more detail on terminal decline rates. In other words, the avoided volume in year one is assumed to be based on the steady state emissions rate established during the measurement period. The avoided volume in year two would be the year one volume minus the assumed percentage decline and so on. And thus, the total credit volume would reflect the cumulative avoided emissions for the crediting period, with every year generating fewer credits than the year before it.
For BCarbon, that annual decline rate is determined on a well-to-well basis, based primarily on that well’s recent production behavior. For OCP, the decline rate is assigned to the project based on where the tested flow rate sits within four flow ranges[1] (see Table 1). Notably, the decline rate is higher for larger flowing/emitting wells. These rates correspond to the idea that larger wells tend to be younger and therefore are still in relatively earlier stages of decline and have higher decline rates; they also add conservatism to larger projects, for which the risk of over-crediting can be presumed to be higher.
Table 1: Open Carbon Protocol’s Well Classification and Decline Rates for Crediting Purposes
| Average Methane Emissions Rate | Well Classification | Terminal Decline Rate |
| <10 MCF/d | Minor Emitter | 4.9% |
| >=10 to <30 MCF/d | Small Emitter | 5.8% |
| >=30 to <100 MCF/d | Large Emitter | 6.4% |
| >=100 MCF/d | Super Emitter | 7.3% |
Terminal Decline Rate = The annual rate of decline to be applied to each well’s assumed emissions volume for the purposes of carbon credit issuance
Source: Open Carbon Protocol
Haircutting Crediting Volumes for Conservatism or Uncertainty
The Expected Emissions approach is designed to consider how much methane would be expected to leak from an orphan well if it is left unplugged. Yet the imperative to be conservative in crediting volumes and some inherent uncertainty in the approach has encouraged including other elements that serve to lower the number of credits issued for a given plugging project. These include (1) a specific crediting period (all), (2) a leak rate estimate (BCarbon), (3) a hard cap (BCarbon)[2] and (4) allowing for the risk of methane leakage from nearby wells (ACR, BCarbon, Open Carbon Protocol). These are discussed below.
In theory, a crediting period does not need to be set in an Expected Emissions crediting approach. The fixed decline rate eventually makes the additional emissions de minimis. The methodologies also rightly point out that the experience with many wellbores allows that a well will emit/leak for many decades and so early cutoff years can exclude a meaningful portion of potential emissions.
With that said, the methodologies specifically call out that defining a period adds a measure of conservatism and thus can act as a hedge against over crediting. The ACR, BCarbon, CarbonPath and OCP methodologies have (had) crediting periods of 20, 20, 50 and 20 years, respectively.
Although these cutoffs are artificial, they do appear to fulfill the obligation to add conservativism. Note that CarbonPath, which as discussed above issues credits using the Extrapolation of Leak approach, generally has a much lower annual credit issuance than the other two. With that said, the CarbonPath methodology does make it clear that it selects 50 years to balance issuing enough credits to support projects and bringing some conservatism to assumptions[viii].
The impact on the credit volume of cutting off the crediting period will depend on the well and the decline rate applied. But to offer an illustration, for a well with a natural emissions state of 15MCF per day and applying the Open Carbon Protocol’s prescribed decline rate, the cumulative credit volume over 20 years is 20% less than for 40 years (see Figure 1).
Figure 1: Illustrative Credit Volume Impact of a 20-Year Crediting Period
Source: Payne Institute
Constrained Emissions Rate
The expected emissions approach should develop a realistic assessment of what the well will ultimately leak/emit (the “area under the curve” as reflected in Figure 1 and the Figures in Appendix II). But a decline curve-based analysis clearly differs from the condition at the project well currently. The well is emitting less today because of the constraining effect of the wellhead and related hardware sitting on top of the wellbore.
Among the current methodologies, only BCarbon’s incorporates thinking about leak rate relative to what the well would emit without constraint. In its methodology the aggregate volume is determined using a decline curve analysis of no more than 30 years. It then takes that volume and creates two alternate profiles. The first, dubbed the low-leak scenario, assumes that total volume is emitted over 100 years and is assigned a 90% probability of occurrence. The second profile, dubbed the high-leak scenario, assumes that total volume is emitted over 50 years and is assigned a 10% probability of occurrence. The weighted average of the two, still curtailed to include the first 20 years of emissions (i.e., it is curtailed for the crediting period), is the determined crediting volume (the green shaded area in Figure 2).
Figure 2: Illustrative BCarbon Credit Volume Determination
Source: Payne Institute
[3]
To establish robust protocols for orphan well plugging projects that accurately quantify avoided emissions and prevent unintended consequences, stakeholders must address the issue of leakage. Leakage can occur from the plugged well in the event of a plug failure. Plug failure risk is outside the scope of this paper, but there is ongoing, warranted work considering the conditions that might precipitate failure of plugging jobs over the long term and whether different plugging practices might be warranted, at least in those conditions[ix].
Leakage can also occur as a result of subsurface reservoir connectivity that allows methane to escape through neighboring wells. It is a recognized principle in petroleum engineering that subterranean reservoir continuity can facilitate hydraulic communication between adjacent wellbores operating within the same geological formation. This communication means that operational changes or interventions in one well can dynamically alter the pressure regimes and fluid/gas migration patterns in nearby wells. Key technical issues that need to be considered include:
- Well spacing: Modern regulatory frameworks typically enforce minimum inter-well spacing requirements (setback compliance) to manage reservoir interference. However, legacy wells often predate these regulations, resulting in spatial proximity that increases the risk of connectivity.
- Pressure Management and Stimulated Flow: Plugging a well can alter localized reservoir pressure. In cases of high connectivity (permeability) and insufficient separation, this alteration may induce a “back pressure” effect on an unplugged offset well, potentially stimulating or increasing the flow of hydrocarbons, including methane, to the surface through the unplugged wellhead.
- Defining Project Boundaries and Accounting for Leakage: Any incremental methane release from an unplugged offset well constitutes “leakage.” This leakage must be quantified as a deduction from the anticipated emission reductions achieved by the primary plugging project (the project boundary) to maintain the integrity of the total climate benefit calculation. Protocols must mandate site assessments that evaluate inter-well spacing, reservoir conditions, and the potential for induced flow to ensure accurate emissions accounting.
Arguably, this risk of leakage could be addressed through active measurement of the unplugged neighboring wells (before the plugging job(s) in the project and after) and reserves/a buffer appropriate to the level of risk can be established pending the outcome of such measurements. However, such measurement may be difficult — even finding these wells may not be easy. To the extent that the methodology needs to balance the practical with principle, it seems reasonable that a fixed reserve/buffer of credits can be established based on what is known about the area, with no obligations to seek out and/or test such neighboring wells. If there is no effort undertaken to establish if there is in fact leakage, the reserve would not be subject to reversal, i.e., those credits would never be issued.
OCP requires a 5% buffer for leakage unless it is established that there are no wells within the jurisdiction’s required setback distance. BCarbon’s methodology requires a 5% buffer for plug failure. ACR’s methodology required a 5% deduction in credits to allow for leakage as well as uncertainty regarding the long term integrity of well plugs (see Appendix III).
Consistent with other carbon market protocols, it is appropriate to net the emissions associated with performing the well plugging job(s) against the emissions avoided by doing the job. The existing methodologies identify the project emissions areas as (1) materials emissions from cement used, (2) fuel used and (3) methane vented during the baseline measurement. For the first two, the cement and fuel used is tracked/determined and U.S. Environmental Protection Agency (EPA) unit emissions factors associated with each are applied. The third is a measured quantity.
The BCarbon methodology also offers a flat-rate project emission total of 200 tons of CO2e, consistent with its assessment of a typical project; the developer must be able to support why it believes its project is “typical.” CarbonPath does not require deduction of project emissions.
While BCarbon’s approach allowing for leaks clearly adds a layer of conservatism by (meaningfully) haircutting crediting volumes, it is worth noting that it does not estimate a leak profile per se. As such, although it may assuage concerns about over-crediting, it, like the other Expected Emissions methodologies, doesn’t address the question of when the leaks would likely have occurred had the well remained unplugged.
Integrating an explicit leak rate into the baseline calculations is one way to directly give credit for leaks that can be expected in the nearer vs. longer term. The process would involve performing an assessment of the current condition of the wellhead and related equipment and considering how that hardware can be expected to degrade. Although corrosion rates of oilfield equipment are not widely studied, there are decades of more generic assessments of corrosion of carbon steel, which can inform understanding[x].
If a well is leaking, it would be expected that such pathways for leaks would grow over time as the wellhead assembly and in-wellbore constraints corrode. This corrosion drives an increase in the rate of those emissions; the leak rate would increase until the leak is no longer constrained by hardware and is instead set by the naturally occurring physical forces in the sub-surface.
The trajectory that could form the basis for crediting volume is reflected in the green dashed line of Figure 3. From a starting point (see point A in the Figure) of an estimate/measurement of the current leak rate, steady degradation of the capping hardware would allow an increasing amount of methane to leak from the well over time. The growing leak rate would intersect with the well’s natural decline curve at some point (B). At that point, the natural forces that set the decline curve rate would prevail and dictate its emissions rate going forward (BàC). The area represented in the green shade reflects the associated volume of credits.
Figure 3: Illustrative Crediting Volume Using a Leak Rate/Corrosion Estimate Method
The initial determined leak rate, (reflected in point A) is expected to rise over time as the wellhead erodes further and any subsurface cracks in the cement in the annulus between the well and the surrounding rock widen. The leak rate rises until its rate is determined by the natural forces in the subsurface as opposed to being constrained by any of the well hardware (point B). Because little gas has leaked in years 1-5 in this example, point B might not be that far below the decline curve in year 0 in the unconstrained analysis. At this point, the leak rate is set by those natural subsurface forces and is expected to decline in line with the terminal production decline rate of the well (traverse from B to point C).
Source: Payne Institute
As with other elements of the methodologies, this assessment includes subjectivity in making the judgement on hardware degradation. Third party expertise must be engaged to bring greater credibility to the process. It is also encouraged that there be more longitudinal study with aging, leaking wellheads to understand their erosion.
CONCLUSION
This paper has discussed the practices used by the “public” methodologies to derive the number of credits issued per orphan well project. This includes steps associated with the base approach (Extrapolation of an existing Leak or Expected Emissions) and steps associated with haircutting the credit volumes that flow from that approach to discount for uncertainty or, in the case of BCarbon, leak rate. The author submits that the elements in the three active methodologies combine to bring adequate conservatism when considering the aggregate avoided emissions associated with plugging orphans. In other words, the credits issued when combining the elements to bring conservatism in the active methodologies appear likely not to overstate the total climate benefit of the activity.
With that said, this paper recommends consideration of a more likely counterfactual condition, i.e., an estimation of the leak profile of a well, as a basis for credit issuance. This recommendation is borne out of the imperative to reflect the nearer-term impact of plugging orphans, as opposed to an aggregate impact that may span several decades. Pursuing this recommendation will involve research into the erosion rates of well (capping) hardware that is already compromised. A better appreciation of how long and under what conditions such hardware degrades would better allow this phenomenon to be integrated into a high integrity methodology.
The author acknowledges that confidence in well plugging methodologies can be bolstered further. For the measured Expected Emissions approach, currently supported in the Open Carbon Protocol methodology, it is not clear to civil society that the flow tests (that were lengthened from ACR’s original methodology) are long enough to capture an accurate depiction of the well’s natural production potential; this is at least in part due to inherent short term fluctuations in well production. Further, although outside the scope of this paper, there is concern about the permanence of well plugging, as history points to well failures, sometimes not many decades after the plugging job, which can result from subsurface or job execution conditions. Bolstering permanence may involve changes to plugging execution and/or from including additives to what is traditionally Portland cement. Research with respect to such additives is ongoing.
Appendix I: Select Glossary of Oilfield and Carbon Crediting Terms
Oilfield
General
Oil & Gas Well: A wellbore is drilled to access a reservoir of oil and natural gas. As the well is drilled, sections of heavy steel pipe called casing are cemented in place to maintain its integrity and prevent intrusion of groundwater; given that multiple sections of casing are used, cement is deployed between the casing and the surrounding rock and in between sections of casing (see Figure 1 part A for schematic of a vertical well during drilling). Once the wellbore accesses the reservoir, the pressure and flow of oil and gas production is controlled by a combined set of valves, spools and fittings known as a wellhead and Christmas tree (see Figure 1, part B). The operator then uses production tubing inside the well casing to extract oil and gas.
Figure A1. Typical Well Components, Drilling Stage (A), and Production Stage (B)
Source: Richard Davies, et. al.[xi]
Plugging-and-Abandonment (P&A). Plugging a well permanently seals it off after oil and gas production has ceased to prevent migration of fluids into underground aquifers and to the surface[xii]. This process includes (1) removing the casing and tubing in the wellbore, placing cement and mechanical plugs at appropriate depths, removing surface equipment, and restoring (reclaiming) the surrounding area to its original state. The number, extension and location of the plugs depend on the depth of the well and its fluid dynamics. A surface plug is also placed to prevent access to the wellbore and surface water from entering the well.
Well Types
Producing wells. Oil and/or natural gas flows to the surface from these wells. These hydrocarbons are then gathered and put into distribution lines for eventual sale.
Marginal wells. These wells are either still producing or can produce hydrocarbons but not in large quantities. These wells produced at higher rates earlier in their lives, but that production has declined over time through natural forces. Because their economic value has diminished, it is not uncommon for the operator/owner to take measures to decrease their ongoing expenses of managing the well – leaving it less adequately maintained than in its previous years.
Marginal wells are the target for separate carbon crediting methodologies as they have a set of considerations relative to carbon offset crediting that are distinct from orphan or abandoned wells and are not addressed in this paper.
Abandoned wells. No longer producing, abandoned wells are still the formal responsibility of an operator. These wells, because they are perceived by their operator to have no further economic value, receive little-to-no maintenance. These wells may also be addressed using the BCarbon or CarbonPath methodologies discussed in this paper. There is some distinction to be made in how an abandoned well satisfies the crediting integrity, particularly with respect to additionality, but most of the practical elements of carbon offset crediting for abandoned wells are the same as they are for orphan wells.
Orphan wells. Similar to abandoned wells in that they are no longer producing, orphans do not have an operator and are therefore the responsibility of the state, tribe, or federal government. A lack of operator often means wells’ hardware is in disrepair – leading to leaks (breaches). In many states, the same jurisdictional body tasked with regulating operated wells are now responsible for its orphan wells.
There is a potentially large subset of abandoned oil and gas wells that are effectively orphans. They have a listed operator, but it is no longer solvent and therefore cannot realistically fulfill its plugging obligations. Depending on the methodology, it may be necessary for the project developer to work with the state to have their well designated as an orphan.
Measurement of the Methane Leakage
Techniques to measure methane emissions from a well or portion of a well include:
Flux chamber. Placed over the wellhead surface where a leak is occurring, flux chambers capture gases as they escape from the well.
High-Flow Sampler. Attached to valves on the wellhead, high-flow sampling equipment captures readings of pressure and methane concentration to calculate the methane emission rate.
These techniques can detect methane emissions at leak rates of one gram per hour or lower, making them suitable for orphaned well sites[xiii]. The high flow sampler is also capable of measuring much higher leak/flow rates, making it suitable for the Expected Emissions approach to credit volume determination discussed in this paper.
Carbon Crediting
General
Additionality. The idea that greenhouse gas (GHG) emission reductions or removals from the mitigation activity would not have occurred in the absence of the incentive created by carbon credit revenues.
Carbon Credits. The units of accounting in carbon markets. Each unit represents one ton of CO2-equivalent (CO2e) that has either not been emitted to the atmosphere or that has been removed from the atmosphere. Note: non-CO2 greenhouse gases are converted to CO2e based on their global warming potential (GWP).
Carbon Market. Carbon credits are tradeable in carbon markets. There are compliance carbon markets and voluntary carbon markets (VCM). The VCM supports trading of carbon credits issued and purchased on voluntary basis.
Carbon Crediting Methodology. A set of rules for project developers to follow to allow standard setters to issue carbon credits.
Leakage (Physical). The idea that GHG emission reductions or removals from the mitigation activity might be offset by increased emissions elsewhere as a result of the mitigation activity. For orphan wells, this includes the risk that methane stopped from leaking through the plugged wells could migrate and leak from a nearby unplugged well.
Permanence. The idea that GHG emission reductions or removals from the mitigation activity shall be permanent or, where there is a risk of reversal, there shall be measures in place to address those risks and compensate reversals.
Registry. The platform that enables trading of carbon credits. A registry lists details of registered carbon projects and maintains the status of carbon credits issued, purchased and retired.
Actors in Carbon Crediting
Standard Setting/Credit Issuing Organization. A body that vets and publishes carbon crediting methodologies and then reviews submissions under those methodologies to issues carbon credits. Standard setting organizations also frequently manage a registry.
Project Developer. The sponsor of an individual climate mitigation project. The project developer follows the rules laid out in a carbon credit methodology and submits evidence of having adhered to those rules to the prevailing standard setting organization.
Carbon Credit Rating Agency. An independent body that reviews the project and publishes an assessment of its opinion as to the quality of the project. The primary assessment is of the likelihood that the project will deliver on the promised climate mitigation impact.
Validation and Verification Body (VVB). An independent body hired by the project developer to (1) validate the climate mitigation impact claimed by the project developer and verify that appropriate standards are being met and that the appropriate number of credits are being issued.
Appendix II: Overview of Two Methodological Approaches
There are two approaches that have emerged in carbon credit methodologies for determining crediting volumes from an orphan well: (1) Extrapolation of an Ongoing Leak and (2) Expected Emissions from a breach. Either can serve as a basis, but the principle must be made clear and adequate provisions for conservatism must be brought to all methodology types.
Extrapolation of Leak
The extrapolation of an ongoing leak is the more straightforward of the two approaches, at least as it relates to the starting point for the purposes of determining crediting volume. A well is determined to be leaking. A leak rate can be determined using conventional techniques that are widely used by the industry (see the Glossary in Appendix I for examples); it can be considered if the methodology should put conditions related to the technology used to measure leaks.
From that starting point, the existing methodologies (CarbonPath and ACR when it was still active) assumed that the measured rate will remain unchanged for decades (see select characteristics of the methodologies in Appendix II). This conclusion of a “flat” rate of emissions is consistent with longitudinal study field work of very old wells in Appalachia, although no studies have spanned long periods[xiv]. It was also intended to keep matters simple, relative to an approach (such as expected emissions) that involves more forecasting.
The assumption of a constant rate over an extended period creates obvious concerns. First there has been research that has detected significant variability in emissions rates from orphan wells[xv]. A procedural response to this implied uncertainty, adopted by ACR in an amendment to its methodology, has been that project developers must establish emissions rates that are determined to be stable (this topic is addressed more fully below). Second, it can be imagined that there will be “structural” change in leak rate over time given that subsurface and surface conditions can also change. The direction of that change isn’t clear, however, and thus it isn’t clear if the assumption of stable is conservative or aggressive. It can be imagined that a reservoir charging the leak could peter out further. But it can also be imagined that the leak rate can grow over time as the wellhead that is constraining the leak corrodes (this topic is also addressed more fully below).
Expected Emissions (from Breach)
The expected emissions from breach principle is grounded in a well-known reservoir engineering phenomenon. Older oil and gas well production typically follows an exponential decline profile, called a terminal decline, as the subsurface forces that drive the hydrocarbons to the surface gradually diminish, generally over the course of decades (see Figure 1)[4]. This allows for a predictable decline trend that can be used to forecast production volumes over time (or emissions in the case of an uncapped abandoned well). That is, the volume of emissions from a well can be calculated by applying a terminal decline to a measured starting point.
While each well’s behavior is unique to that well, there is evidence of a relative consistency in the rate of terminal decline; for example, one recent study of 14,000 wells, performed at the Payne Institute for Public Policy at Colorado School of Mines, found a band of terminal decline rates, ranging from 2.9% to 9.4% (P20 and P80, respectively), averaging 6.4%[xvi],[5].
Source: Payne Institute
The methodologies that use an Expected Emissions derive the number of credits by calculating a volume of emissions based on the terminal decline curve discussed above. The project developer must establish a starting point, where the well would emit in a stable manner that approximates the its current lifecycle stage (i.e., where along the curve represented in Figure 1), and thus how many additional molecules of methane can be reasonably expected to be emitted over the natural life of the well (see Figure 2).
It is expected that for a comparable crediting period the Expected Emissions approach will yield more credits than the Extrapolation of Leak approach over the same period. This reflects the Expected Emissions’ development of a counterfactual scenario that the well will eventually leak the methane that is driven to the surface by natural subsurface pressure and other conditions. By comparison, the Extrapolation of Leak’s point-in-time measurement reflects the constraining impact of the current well-capping hardware. This is discussed in greater detail in the Robust Quantification section.
Figure 2: Expected Emissions = Forecasted, Naturally Occurring Production Volumes
Source: Payne Institute
It should be noted that, although production history, when available, should be used as a check throughout these calculations, extrapolating from historical production is the same as not decline curve analysis. There are a variety of circumstances and influences — gaps in production, the use of artificial lift, or well-work to name a few — that make historical data difficult to rely on for forecasting purposes. Rather, a reliable terminal decline established across a broader set of wells, like the aforementioned analysis performed by the Payne Institute, should provide a more reliable basis for volume estimation.
The expected emissions from breach principle explicitly underpins the BCarbon and OCP methodologies, but in different ways. BCarbon’s approach is well-specific and is geared to wells about which much is known. It requires at least 42 months of historical production ending at the point at which the well was abandoned. From that history, the methodology derives an expected emissions volume that forms the basis of crediting volumes.
OCP, in contrast, is designed to address wells with no/little production history. The methodology calls for establishing a proxy for the well’s “natural state” through flow and pressure testing that establishing stable levels of both. From this starting point, the methodology prescribes “creating” a decline curve to determine expected emissions and crediting volume. (More specifics regarding how the methodologies determine credit volumes are provided in the Quantification section below.)
Appendix III: Select Characteristics of “Public” Orphan Carbon Crediting Methodologies
| Methodology | Well Type | Countries | Max Crediting Pd. (yrs.) | Crediting Principle | Requires Production Data? |
Volume Determination |
Project Stage[6] at Which Issue Credits | GWP Factor for CO2e[7] | Buffer (Purpose) | Deduct Project Emissions? | Requires Site Remediation? |
| American Carbon Registry | Orphan | U.S. & Canada | 20 | Potential to Emit | N |
-Measurement (2x before P&A) -Flat with Measured Rate |
100% upon P&A | 100 yrs. |
5% (Uncertainty) [8] |
Y | N |
| BCarbon | Orphan & Abandoned | U.S. & Canada | 20 | Potential to Emit | Y (42 months) |
– Decline Curve Analysis – Declines from Initial Rate -Discounted by Leak Probability -Capped at 300K credits |
80% upon P&A; 20% >1 year | 20 yrs. |
5% (Plug Failure) |
Y | Y |
| CarbonPath | Orphan & Abandoned | U.S. | 50 | Current Leak Rate | N |
-Measurement (1x before P&A) or Default -Flat with Measured Rate |
100% upon P&A | 100 yrs. | None | N | Y |
| Open Carbon Protocol | Orphan | U.S. | 20 | Potential to Emit | N |
-Measurement (2x before P&A) -Declines from Initial Rate
|
70% less holdback upon P&A; balance >12 mos. | 100 yrs. |
5% (Leakage, if required) |
Y | N |
[1] OCP’s decline rates match the Payne Institute’s study’s average decline rates across the four flow-rate ranges. It is reasonable to consider if using, e.g., the 80th percentile rate would be more appropriate to ensure greater conservatism. With that said, a follow up study, for example to assess decline rates in even older wells (the Payne study only evaluated each well’s first 30 years of production) or a more targeted study of wells with similar characteristics to the well(s) being plugged, might allow for refinement of that decline rate to a value that is more tailored to that well.
[2] BCarbon implements a maximum crediting volume of 300,000 tons of CO2-equivalent; this appears to fulfill a goal of being conservative and was derived through an assessment of the accuracy threshold of its decline curve models.
[3] Refers to Leakage as considered in carbon crediting, i.e. that the climate impact of the project is offset in some way. Leakage can occur in various ways for differing carbon mitigation activities (e.g. stopping forest destruction for logging purposes in one area might “result” in logging being taken up more aggressively in another area). In this case, leakage does in fact imply leakage of methane though an outlet other than the plugged wellbore.
[4] It is worth noting that the exponential rate of decline for production exhibited by oil and gas wells follows an initial period that is best characterized by hyperbolic decline. In 1944, J.J. Arps published what is now called the Arps Equation to describe and predict the production rate of a producing well under constant bottomhole flowing pressure. The Arps equation includes a constant b-factor (between 0 and 1), which results in a continually decreasing (assumed) decline rate. Operator experience, however, has suggested that it is prudent to take a more conservative approach to estimating future value as the well settles into its most predictable stage following the early years of production. Instead of continuing to approach zero, or a no-decline forecast, a consensus has emerged that the decline should be held constant over time as the well moves towards the end of its life.
[5] Elements of this study included: (1) each well produced oil and/or natural gas for at least 30 years, although production history beyond 30 years was not included; (2) Terminal Decline Rate was calculated to begin at year 10, based on analysis that segmented decline rates into three periods (Initial, Mid and terminal Decline) based on the most significant year-to-year changes in the second derivative (i.e., the rate of change in decline rates)
[6] “Upon P&A” or after a period means upon a successful test that demonstrates the plugging job has stopped any leakage and other P&A responsibilities have been fulfilled at those points
[7] GWP=Global Warming Potential (30x CO2 over 100 years; 84x CO2 over 20 years)
[8] Including risk of Plug Failure and Leakage; leakage relates to leakage from neighboring wells
REFERENCES
[i] American Carbon Registry. Methodology for the Quantification, Monitoring, Reporting and Verification of Greenhouse Gas Emissions Reductions and Removals from Plugging Orphaned Oil & Gas Wells in the U.S. and Canada. V1.0 May 2023
[ii] American Carbon Registry (ACR). Update about Plugging Orphaned Oil and Gas Wells Methodology v1.0. 5/16/25
[iii]CarbonPath. Methodology for Methane Emission Removal Via Permanent Decommissioning of Orphaned and Abandoned Oil and Natural Gas Wellbores. V1.3. August 2024
[iv] BCarbon. BCarbon Methane Emissions Elimination Through Well Plugging (MEEWP) Protocol. V2.0. April 15, 2025
[v] Open Carbon Protocol. Plugging Orphaned Oil and Gas Wells in the United States.V1.2. May 2026
[vi] Stuart Riddick et. al. International Journal of Greenhouse Gas Control vol. 100. Variability observed over time in methane emissions from abandoned oil and gas wells. September 2020
[vii] Mary Kang et. al. PNAS vol. 113, no. 48. Identification and characterization of high methane-emitting abandoned oil and gas wells. November, 2016
[viii] CarbonPath methodology appendix
[ix] National Academies Science Engineering Medicine. National Academies Press. Technologies and Practices for Plugging and Remediating Orphan Oil and Gas Wells. Prepublication copy. June 2026.
[x] C. De Waard et. al. Corrosion The Journal of Science & Engineering. Carbonic Acid Corrosion of Steel. May 1975
[xi] Richard Davies et. al. Marine and Petroleum Geology 56. Oil and gas wells and their integrity: Implications for shale and unconventional resource exploitation. September 2014
[xii] Environmental Protection Agency. Well Plugging. N.d.
[xiii] U.S. Department of the Interior Orphaned Wells Program Office. Assessing Methane Emissions from Orphaned Wells to Meet Reporting Requirements of the 2021 Infrastructure Investment and Jobs Act. July 2023
[xiv] Mary Kang et. al. PNAS vol. 113, no. 48. Identification and characterization of high methane-emitting abandoned oil and gas wells. November, 2016
[xv] Stuart Riddick et. al. International Journal of Greenhouse Gas Control vol. 100. Variability observed over time in methane emissions from abandoned oil and gas wells. September 2020
[xvi] Brad Handler et. al. Payne Institute for Public Policy, Colorado School of Mines. A Study of Terminal Decline Rates of Oil & Gas Wells. June 2025
Brad Handler is currently Director of the Energy Finance Lab of the Payne Institute for Public Policy of Colorado School of Mines. The Payne Institute primarily focuses on energy and mineral security; the responsible production of energy, including methane emissions reduction; socioeconomic development; and Native American sovereignty. The Energy Finance Lab conducts finance and economics research supporting the Payne initiatives with emphasis on oil & gas, mining, carbon capture & storage and geothermal. It seeks to help catalyze private capital investment, including with market-based solutions, to meet energy security and climate goals.
Prior to joining Payne, Brad worked as an Equity Research Analyst at several investment banks for 20 years covering the Oilfield Services & Drilling sector. While on Wall Street, Brad published regularly on the state of the sector including demand implications of changes in the global energy markets (and the Shale Revolution), additions to OFS capacity and the competitive landscape, the financial health of individual companies and the opportunities and challenges presented by technology innovation. External recognition includes being ranked Top 3 Oilfield Services analysts in the annual Institutional Investor magazine survey, the most widely recognized survey of Sell Side analysts by asset management professionals, and he has presented at numerous industry conferences and company seminars.
Brad’s experience prior to equity research includes business line management and strategic analysis at an industrial gases firm and commercial lending. Brad has a B.A. in Economics from Johns Hopkins University and an M.B.A. from the Kellogg School of Management at Northwestern University.
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