New Mexico Orphan-Well Plugging Costs Up 750% Since 2020

New Mexico Orphan-Well Plugging Costs Up 750% Since 2020

New Mexico’s orphan-well plugging costs have jumped more than 750% since 2020. Permian Basin Oil & Gas Magazine reports that an IEEFA analysis finds the state’s inactive-well pipeline growing faster than its plugging program.

Market Impact

The Institute for Energy Economics and Financial Analysis (IEEFA) released the report Sept. 24. It says the costs of plugging, remediation and reclamation have risen steadily per well in recent years. The number of approved orphan wells has stayed roughly constant over that period, so the cost increase is not a volume effect.

The pipeline behind those wells is growing. The annual average number of wells entering inactive status, meaning the last production was more than a year earlier, quadrupled between 2016 and 2025. More than 300 wells were added to the state’s inactive list in 2025 alone.

“The agency division tasked with managing, plugging, and remediating these sites is much smaller than other oil- and gas-producing states,” said Trey Cowan, IEEFA energy finance analyst and report author. “Given that more than 300 wells were added to the state’s inactive list in 2025, the pace of likely orphan wells is growing three times faster than New Mexico’s well-plugging program.”

IEEFA argues the state should revisit its system so operators can plug wells on time, and should get a better handle on plugging and remediation costs so the New Mexico Oil Conservation Division is ready for new orphan wells. As a matter of arithmetic, a 750% increase means current per-well costs are roughly 8.5 times the 2020 level. That figure is our calculation, not IEEFA’s.

What It Means for Subcontractors

• Plugging crews: The more than 300 wells added to the inactive list in 2025 are the likely feedstock for future state-managed plugging work. Because the Oil Conservation Division is far smaller than comparable agencies in other producing states, per Cowan, expect it to lean on outside contractors. Check the division’s procurement postings for plugging packages.
• Wireline and cementing providers: Costs up more than 750% since 2020 point to a repriced market. Rebuild your New Mexico plugging bid sheets from current rates, not 2020 to 2022 pricing, so you do not underbid orphan-well scopes.
• Surface-restoration and reclamation crews: IEEFA counts remediation and reclamation in the cost escalation, not just downhole plugging. Price site cleanup as its own line item rather than folding it into the plugging bid.
• Operator-facing work: IEEFA wants timely plugging by operators enforced. Plugging contractors who serve operators with wells that have been inactive for more than a year may see demand before those wells ever reach the orphan list. Target operators with idle wells in your service area now.
• Cost data: The IEEFA findings as reported by Permian Basin Oil & Gas Magazine do not include per-well dollar figures, total well counts or funding amounts, and no bid portal is named. Pull the full IEEFA report for the per-well numbers before you set pricing or capacity targets.