We don't even need a nuke probably: a couple (dozen? hundred?) of shaped MOABs, for instance could do it. And if we do use a nuke, most if not all of the radiation will be under ground.
After we fix this, a more long term solution is to switch every developed country to nuclear power. It won't reduce the amount of fuel used in cars and trucks (at least not until a microwave-sized nuclear reactor is invented), but without all the oil-based power plants the demand of oil will go down quite a bit, which should reduce the demand for oil and by extension, the drilling. Hopefully that will reduce the likelihood of something like this happening again in the future.
Oh, and if it comes to nukes: screw the arms treaties. We're saving the planet, not starting a freaking war.