WV enters public-private partnership with Diversified Energy for plugging oil, gas wells

by Caity Coyne, West Virginia Watch
October 17, 2025

The state of West Virginia is entering into a “first of its kind” public-private partnership with Diversified Energy to ensure oil and natural gas wells owned by the company are properly retired.

The collaboration, called the Mountain State Plugging Fund, will see Diversified invest $70 million toward plugging its non-producing wells across the state over the next 20 years. That $70 million will be put into a fund held by OneNexus, an “insurance provider of financial assurance for asset retirement obligations,” per a news release. The state of West Virginia will be designated as a third-party beneficiary for the fund.

Gov. Patrick Morrisey said the collaboration and the creation of this fund could help set a “new national standard for how energy producing states can lead with both strength and responsibility.” 

“We must be responsible stewards of the state’s environment. Historically, in West Virginia and across the country, it’s been a challenge to retire abandoned and orphaned gas wells in a responsible manner,” Morrisey said. “We know that these abandoned wells can pose a significant risk to our environment and to our people. Most of the time in the past, people would look to the taxpayers to bear that cost [of plugging them]. Well today we’re going to change that direction.”

Diversified expects to see at least 1,500 of its wells retired over the next 20 years through the investment, according to Diversified Energy CEO Rusty Hutson, Jr. By 2046, the company plans to increase its plugging capacity to 250 wells annually.

As part of the collaboration, Hutson said Diversified will “bolster” its resources for Next LVL Energy, a Diversified subsidiary located in Bridgeport. Morrisey said the investment will create between 50 and 100 new jobs with an average salary of $75,000 plus benefits.

Hutson said Diversified would like to see other oil and natural gas companies join the effort to plug wells responsibly when they’re taken offline.

Department of Environmental Protection Secretary Harold Ward said earlier this year that there are more than 21,000 abandoned and orphaned wells in the state of West Virginia that can pose varying levels of environmental or health risks for the people and communities near them. 

Those risks include oil and gas leaks, methane emissions and groundwater contamination that can impact drinking water, among other things.

Oil and natural gas wells are considered to be abandoned in West Virginia if they are idle for 12 months or more. If there is no known operator for the wells — thousands have been created over the last 150 years — then they are considered orphaned. It is the state’s responsibility to remediate these wells.

According to the abandoned well mapping tool from the DEP, the cost of plugging each well varies, but generally comes in near or above $100,000.

A majority of wells plugged in the state are paid for using federal dollars allocated over recent years, specifically through the Infrastructure Investment and Jobs Act in 2021 and the Inflation Reduction Act in 2022. Per the DEP, both of those federal programs — passed and allocated under former President Joe Biden — are a “significant boon” for the state’s attempts to identify and plug abandoned wells as they provide “substantial” funding to West Virginia that is “crucial” to supporting the state Office of Oil and Gas.

State funds — allocated to the OOG through industry permit fees, bond forfeitures and severance taxes — also go toward plugging wells, but existing bond rates are too low to cover the costs, leaving the remaining fees on taxpayers.

State money covered plugging 18 abandoned wells in 2023 and about 32 in 2024, per the DEP.

Meanwhile, federal funds covered plugging more than 200 abandoned or orphaned wells in 2023 and 2024 respectively. If the federal funding from the IIJA remains active and available, it’s estimated that the state will be able to plug at least 1,200 abandoned wells through 2030.

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