Louisiana Methane Abatement

CNaught maintains a very high quality standard for all projects in the portfolios we manage. To ensure that a project meets this standard, we perform due diligence that’s backed up by third-party ratings agencies’ own due diligence.
Additionality:
This project is highly additional, meaning it is unlikely that this project activity could have occurred in the absence of carbon funding. Carbon finance is the sole revenue stream for the proponent, who relies on it to cover both capital and operational expenses, with no alternative financial incentives to conduct plugging activities outside of government contracts. Louisiana’s Oilfield Site Restoration fund is capped at USD 14 million in annual collections against an estimated USD 542.9 million needed to address the state’s documented orphaned wells, and at historical plugging rates it would take over 30 years to clear the existing list. Furthermore, the policy environment has become increasingly unfavorable following the January 2025 executive order rescinding key federal guidance and freezing Bipartisan Infrastructure Law allocations, significantly reducing the likelihood of state-led plugging within the crediting period. However, two of the project wells are located near residential areas, which could have elevated their priority on the state’s plugging list, and both were formally designated as orphaned only recently, introducing a modest degree of additionality risk. We find this risk to be limited given the chronic underfunding of state plugging programs, and BeZero agrees citing the trend of newly documented orphaned wells consistently outpacing the number plugged each year, and the deteriorating federal policy environment, all of which make state intervention within the 20-year crediting period unlikely for the majority of project wells.
Over-Crediting:
This project has a low risk of over-crediting. While the project applies a static baseline leakage rate over the 20-year crediting period, this assumption is supported by literature demonstrating that orphaned wells can leak for decades before exhausting their reservoirs, and the proponent’s practice of surveying hundreds of wells to identify high emitters lends credibility to the measured rates. The omission of cement and material footprints from project emissions is negligible, constituting an estimated 0.6% of issued credits, and the application of a GWP value of 28 rather than the current IPCC value of 29.8 results in a conservative underestimation of potential credit issuance by approximately 6%, further reducing over-crediting risk. Leakage risks are minimal given the orphaned and inactive status of all project wells, with no meaningful risk of activity displacement or market leakage. While some uncertainty remains regarding whether the two wells drilled in 1954 and 1956 would have continued leaking at the recorded rate for the full crediting period, we find this risk to be limited given the broad evidence that orphaned wells sustain emissions over long timeframes and the conservative nature of several other accounting parameters.
Durability:
This project activity is highly durable as its emissions reductions are considered permanent, since the methane leaks from orphaned wells are permanently eliminated once the wells are properly plugged with cement. The project’s durability risks are limited due to top-tier plugging practices, supportive regulation, ongoing methane monitoring, economically unviable reservoir re-drilling, and low potential for well communication. Wells are plugged by cementing the wellbore, completely sealing hydrocarbon bearing zones to permanently eliminate all future production and emissions. Plugging with cement creates an impermeable seal that can withstand high pressure and temperature, ensuring that no fluids can escape from the well.
Double-Counting:
The project credits have a very low risk of being double counted. There are no regulatory obligations being met by the project activity and the project’s registry, ACR, has mechanisms in place to ensure that the project is not registered in any other programs.