Officials on Monday countered allegations in a report that California regulators and the oil and gas industry are not prepared to handle a backlog of idle wells tied to declining production.
A recent joint investigative report by the Los Angeles Times and The Center for Public Integrity contends that California is at risk environmentally and from a public health and safety standpoint because of a lack of adequate funding and attention to the wells, which number around 35,000.
However, the energy industry, as well as regulators in the Department of Conservation (DOC) and Division of Geologic Energy Management (CalGEM) said the report misrepresents the situation for which regulations were created two years ago.
DOC spokesperson Teresa Schilling said legislation for well oversight was enacted under Assembly Bills 2729, 1057 and 1328, as well as Senate Bill 551, which followed a study by the California Council on Science and Technology.
DOC estimated idle well liability at about $530 million, with nearly 30,000 idle wells, including 17,576 defined as long-term idle wells.
“Recent legislation already has resulted in a significant reduction of idle, deserted, and orphan wells,” said Schilling, who added that in the most recent reporting period CalGEM recorded 1,346 idle wells that were plugged.
"The California legislature has passed multiple laws in recent years that authorize CalGEM to review and update requirements for idle wells and for bonding or other financial assurance," said California Resources Corp. (CRC) spokesperson Richard Venn. CRC is the state's largest oil and gas producer. "Some of these laws just took effect last month.
"These laws will take time to implement in a manner that appropriately prioritizes both state and operator resources, and preserves the rights of property owners to access their minerals. CalGEM has already been assigned specific tasks by the legislature, and we are cooperating with them in this process.”
Organizations representing California’s producers said the state is not paying for wells that no longer have viable owners; instead the current operators pay into a fund that supports remediation.
“Recent legislation requires operators to shrink their inventory of idle wells annually,” said CEO Rock Zierman of the California Independent Petroleum Association. “Bonding requirements also have been increased. The state’s fund for plugging orphan wells is paid for entirely by industry. It’s hypocritical for extremists to call for stopping in-state production because that would only force more operators out of business and eliminate the funding for well abandonment.”
Western States Petroleum Association President Catherine Reheis-Boyd said the news report included “significant accounting errors and unreasonable assumptions” about the future role of oil and gas in California. The new report’s scenario is “exceptionally unlikely, even impossible” that all of the large operators in California would go out of business and leave a string of abandoned wells.
“Producers generate nearly $2 billion in tax revenue for California each year, and mandated bonds help cover well plugging costs to meet our legal obligations, environmental responsibilities, and most importantly, our commitment to the communities where we operate.”