California Governor Gavin Newsom recently signed a new law known as the Orphan Well Prevention Act, which aims to close loopholes that allow oil companies to abandon wells that no longer exist. profitable but still poses environmental and safety risks. Under the new law, buyers of oil wells must provide a cleanup fund before regulators approve the sale, effectively preventing the transfer of wells without accountability. to clean.
While the law will help reduce the number of abandoned and orphaned wells, which currently stand at approximately 5,300, it will do little to solve the problem of unlimited wells leaking methane, a gas that contributes to global warming as well as being toxic. In California, there are approximately 38,800 inactive wells that have not been sealed but are still claimed by operators. These wells pose risks to communities, especially low-income and predominantly Latino communities, and contribute to the climate crisis.
The California Geological Energy Management (CalGEM) agency allows companies to leave wells unsealed by paying a small annual fee instead of covering the cost of sealing the wells. However, these wells are unlikely to return to production. A report by the Carbon Bulletin Initiative found that 39% of all wells in the state are inactive, and more than 50% have not produced oil in at least 15 years. Some wells have been inactive for over a century.
The risks associated with inactive wells were highlighted earlier this year when a significant number of leaking wells were discovered near the cities of Arvin and Lamont in the southern San Joaquin Valley. These wells, owned by companies such as Sunray Petroleum and Blackstone Oil and Gas Co., have not produced oil for years but have not been shut down because of annual fees paid to the companies.
The new law addresses the problem of wells that are left unaccounted for, but there is a gap between the funds needed to seal the wells and the funds currently available. Cleanup costs for wells and associated infrastructure are estimated at $21.5 billion, while California only has about $1,000 per well available. This places the financial burden on taxpayers rather than responsible companies.
California’s approach to dormant wells differs from other states, with stricter warranty rules and guidelines for how long a well can be held to be potentially productive. For example, North Dakota requires companies to seal wells that have not produced oil or natural gas “in useful quantities” for a year unless an extension is filed.
The new law represents a step toward solving the problem of abandoned oil wells in California. However, more action is needed to address the ongoing risks posed by unfinished wells and ensure that cleanup costs are covered by responsible parties.