Oil & Gas News

Taxpayers Should Not Foot the Bill for California’s 35K+ Idle Oil Wells.

California, Oil, Taxpayer

By: Desert Sun – Central California residents once again found themselves blindsided and alarmed last month when a state task force found more than two dozen idle oil wells leaking methane in Kern County – some close to schools. Compounding shock into outrage, many oil companies admitted they have no intention of repairing the leaking wells, more than a dozen of which are gushing methane at explosive levels.

It’s the latest stunning example of oil companies’ impunity when it comes to the costs – and dangers – of more than 35,000 idle wells in California.

As the state’s oil industry dies out, operators often leave wells unsealed and unattended. Surveys last year found dozens of these idle or orphan wells leaking methane near Bakersfield. These methane leaks revealed how rarely state regulators actually inspect idle wells near homes, schools, and churches. Only a tiny fraction of these wells have been tested, and many have gone unchecked for more than a decade.

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This negligence is dangerous because, in addition to methane, new research found that many abandoned oil and gas wells leak harmful chemicals like benzene, classified by the Environmental Protection Agency as a known human carcinogen with no safe level of exposure.

Oil companies’ idle wells are not only a public health and climate hazard, but a ticking financial timebomb for California taxpayers. According to a recent report by Carbon Tracker, it will cost at least $21.5 billion to properly clean up California’s existing oil and gas wells. Yet the oil industry has set aside a mere $106 million – peanuts compared to the total cost of cleanup.

The report also reveals that oil companies in California can’t possibly generate enough cash to cover their own astronomical cleanup costs, even if they produce and sell every last drop of oil they claim to have access to.

What’s more, over half of the industry’s remaining potential profits will be generated in the next two years. The clock is ticking for the state to make sure the oil industry is saving for its cleanup obligations. Instead, companies are showering executives and shareholders with lavish payouts.

Before these corporations bilk taxpayers for billions to clean up thousands of their dangerous, polluting wells, Gov. Gavin Newsom and lawmakers need to act fast. There are several steps they can take.

The governor and state regulators can start by halting new oil and gas permit approvals. Drilling new wells will only compound this crisis. Regulators must also redouble efforts to identify leaking wells, especially those close to homes and schools, and force operators to fix them immediately.

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The Legislature must overhaul California’s oil and gas laws that allow operators to keep dangerous wells idle indefinitely.

The state should require oil companies to put up bonds that cover the entire amount of cleanup costs so that the industry – not the public – has enough money put aside to pay for them. The industry’s current bonding amounts to less than 1% of its cleanup obligations. That’s unacceptable.

California leaders should also set a firm deadline for plugging wells that become idle, ensure idle wells near communities are prioritized for cleanup, and require operators to plug 10% of their existing idle wells per year so that all of their wells are plugged within the next 10 years.

Finally, the state should increase fees to ensure the industry pays for wells that are abandoned by insolvent operators. We can’t keep repeating what happened last year when the public picked up the tab for cleanup when one oil company failed to plug its leaking wells near neighborhoods.

Without these critical changes, Californians risk paying for the harm to our health, our climate, and our budget while the industry walks away with the profits.

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