Oil, Gas, and Geothermal - Idle Well Program
Idle Well Program
California has over 23,000 idle oil and gas wells, about half of which have been idle for more than 10 years. The risk of a well becoming a threat to the public health and the environment increases the longer a well remains idle. In addition, long-term idle wells often become “deserted”, meaning there is no financially responsible operator to plug and abandon the well. This results in plug and abandonment costs that exceed the amount appropriated to the Division for this purpose. To track the number of idle wells in the state, the Division of Oil, Gas, and Geothermal Resources maintains an idle-well inventory that may be downloaded in Acrobat PDF or Excel formats. The Division’s program encourages operators to reactivate or permanently plug and abandon idle wells.
On September 9, 2016, Governor Brown signed into law Assembly Bill 2729 (Williams, Salas, and Thurmond; Chapter 272, Statutes of 2016). AB 2729 changed the definition of “idle” and “long-term idle” wells. It also changes the regulatory practices and fees associated with idle wells. The intended purpose of Assembly Bill 2729 is to reduce the state’s inventory of idle wells and to ensure protection of public health and the environment.
A portion of the bill’s requirements took effect on beginning January 1, 2017. Most of the new requirements, however, will not go into effect until January 1, 2018. This lag time will provide the Division with the time needed to develop the Idle Well Program and promulgate idle well regulations, as well as preparation time for operators to adapt to the new requirements.
Effective January 1, 2017, an idle well is defined as
"any well that has not been used for the production of oil and gas, the production of water for the purposes of enhanced oil recovery or reservoir pressure management, or injection for a period of 24 consecutive months"
(PRC Section 3008 [d]).
Active observation wells are no longer excluded from the definition of idle wells (PRC Section 3008 [d]), and operators are required to file annual reports to maintain them in active status.
A long-term idle well is now defined as
"any well that has been an idle well for eight or more years" (PRC Section 3008 [e]).
Idle Well Management Plans and Idle Well Fees
Beginning January 1, 2018, all operators must either 1) file and comply with an idle well management plan (IWMP) approved by the Division for addressing long-term idle wells or 2) pay annual fees for each idle well. This requirement applies to all operators regardless of the amount of bonding they may have in place. The IWMP and idle well fee requirements, and other information about new requirements, can be found in the Notice to Operators here.
Under the new law, operators who submit an IWMP must comply with the following elimination schedules/rates:
- Operators with 250 or fewer idle wells are required to eliminate 4 percent of their long-term idle wells each year and in no case less than 1 long-term idle well.
- Operators with 251 - 1,250 idle wells are required to eliminate 5 percent of their long-term idle wells each year and, in no case less than 1 long-term idle well.
- Operators with 1,251 or more idle wells are required to eliminate 6 percent of their long-term idle wells each year and in no case less than 1 long-term idle well.
Operators who choose to pay idle well fees rather than file an IWMP shall file an annual fee with the Division no later than January 31 of each year for each idle well that was idle in the last calendar year. Idle well fees are as follows:
- One hundred fifty dollars ($150) for each well that has been an idle well for three years or longer, but less than eight years.
- Three hundred dollars ($300) for each well that has been an idle well for eight years or longer, but less than 15 years.
- Seven hundred fifty dollars ($750) for each well that has been an idle well for 15 years or longer, but less than 20 years.
- One thousand five hundred dollars ($1,500) for each idle well that has been an idle well for over 20 years or longer.