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California Bill Would Tighten Regulation of Idle Oil, NatGas Wells

A legislative proposal in the California Assembly (AB 2729) would bolster regulation of an estimated 21,000 idled oil and natural gas wells.

With the experience at Southern California Gas Co.'s (SoCalGas) Aliso Canyon underground gas storage field still fresh, the concerns have grown among regulators, elected officials and consumers regarding the threat of leaks from long-idled but not permanently sealed wells. Estimates indicate there may be thousands of these wells, according to state officials.

AB 2729 calls for "responsible" well management practices to fill the gap in current state law that does not allow assurance of "timely remediation" of idle wells. Unlike production wells, idle wells may have leaks and damage that go unnoticed for years, according to an assessment by the state Department of Conservation (DOC).

Citing potential public health and environmental risks that idle wells pose, Assembly members Das Williams and Tony Thurmond said their legislation is focused on three areas:

  • Redefining “idle wells" and "long-term idle wells" to require ongoing testing and monitoring;
  • Increasing bonding requirements to ensure costs of plugging/abandonment are covered; and
  • Increasing idle well fees and providing alternatives to paying fees for operators that develop and implement plans to reduce their idle well inventory.

"While most oil and gas producing states allow for extensions of idle well limits if specified conditions are met, California is the only state that allows wells to remain idle indefinitely with minimal testing," said the DOC analysis.

California's current laws don't require operators to maintain bonds to cover well plugging and remediation of the landscape after drilling activity ceases. "The lack of sufficient financial assurances is of special concern when oil prices are low," the DOC said.

"While operators have legitimate economic reasons for idling wells in the short-term, loopholes in current law allow wells to remain idle for long periods of time," state officials said.

Of California’s idle wells, half have been idle for more than 10 years, statistics show. About 4,700 wells have been idle for 25 years or more, DOC said. "The longer a well remains idle, the more likely it is to be deserted by the operator," it said.

"Idle wells can threaten the environment and public health, and, when deserted, can present significant costs for the state to plug wells and remediate any environmental damage."

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