An Unwelcome Poster Child for Orphan Well Cleanup

Last week, news broke that two idled oil wells close to residential neighborhoods in Bakersfield were found by a citizen-researcher to be spewing massive volumes of methane. 

The situation has more scary elements than a Stephen King novel. One of the wells was leaking methane at a concentration of over 50,000 parts per million. This is quite literally off the charts, as the highest level that an inspector’s device can record; of a substance known to present an explosion risk, not to mention being 80 times more potent than carbon dioxide as a driver of climate change. As documented by FracTracker Alliance and shown on the map below, the leaking wells are located approximately 370 feet from homes, and close to a school and day care center. When FracTracker submitted a complaint to the San Joaquin Valley Air Pollution Control District, they were told – accurately, sadly—that this massive atmospheric pollution dump falls within a regulatory loophole, such that there is nothing the district can do except ask the owner nicely to fix it. Which we can only wish them luck with, because it turns out the owner, Sunray Petroleum, filed for bankruptcy in 2011 and has a history of failure to pay its idle well fees or conduct required testing.

Poster children are disturbing; but they serve the important function of waking us from our torpor and challenging us to act. And these nightmarish leaking wells are clearly poster children for the need to address California’s orphan well crisis. 

An orphan well, as the name implies, is a well that is idle—not producing any oil—and has no economically viable owner or operator to pay to permanently close it through a process known as “plugging and abandonment.”  As California’s economy shifts away from oil – in response to climate policy, and also as a consequence of years of declining production in its aging oil fields – it is inevitable that the number of orphan wells will continue to grow. Already, as of several years ago, the California Council on Science and Technology has documented that there are 5,540 wells in California that are “likely orphan wells or at high risk of becoming orphan wells” The California Geologic Energy Management Division (CalGEM), thinks the number may be even higher now.

And the heart of the problem is, right now there is not enough money available to get those wells cleaned up. CCST estimates the cost of cleaning up currently-identified orphan wells at about at half a billion dollars. But California has not been requiring oil producers to provide remotely enough financial security to cover those costs. So when operators like Sunray go belly up, the state is left holding the bag for those costs.

Fortunately, there are at least short term solutions in the offing. Significant federal money—north of $100 million—is expected to flow to California soon from the Infrastructure Investment and Jobs Act, which set aside funds for orphan well cleanup.

But with the state facing massive liability that the federal money won’t be sufficient to cover—CCST estimates the cost of the inevitably required plugging and abandonment all wells in the state at a cool $9 billion—the Newsom administration is proposing in this year’s budget that $200 million in state funds be allocated for orphan well cleanup. 

This is great news, if the legislature approves it. It is high time the state started putting real resources into this problem. But it is essential that this cash infusion not simply function as an industry bailout, with the perverse effect of freeing up more industry money to drill more wells that will eventually be abandoned. While an immediate funding allocation is important and necessary to deal with the type of crisis-level danger posed by the leaking Bakersfield wells, the industry should not be allowed to stick taxpayers with the bill. 

Hence SB 1295, introduced by Senator Monique Limon and cosponsored by multiple additional senators (Sens. Allen, Becker, Hertzberg, Kamlager, Laird, McGuire, Stern, and Wieckowski), is designed to ensure that the state’s $200 million appropriation from the general fund be structured in such a way that CalGEM can recoup the money from the oil industry as a whole via its annual fee assessment.  This bill, which also makes a start toward protective standards for the workforce implementing orphan well cleanups, is an essential set of guardrails to ensure that the $200 million is money well spent.

But beyond throwing money at the orphan well problem—as absolutely necessary as that is—it is going to be essential as we move forward to take steps to prevent more catastrophes like the ongoing one in Bakersfield.  For one thing, California has got to do something to increase the level of financial security required of operators.  CCST estimates the average cost of cleaning up a well in California at $68,000, but the average posted bond funding per well at just over $1000.  This is not ok.  And as discovered by FracTracker, there are loopholes you could drive an oil tanker through in the laws governing idle well emissions monitoring and remediation.  This is also not ok.

And most of all, it is imperative to remember the First Rule of Holes: When you’re in one, stop digging. The very last thing our state needs right now is to keep permitting new oil wells in a business as usual fashion, thereby birthing the next generation of orphan well poster children to threaten our communities and our planet. The only way out of that cycle is for California to stop functioning as a petro-state and accelerate the phaseout of oil production altogether.