The work at HVI Cat Canyon is the first State Abandonment project in California to receive orphan well remediation grant funding from the federal Bipartisan Infrastructure Law. It is also the largest State Abandonment project in California's history, comprising the permanent and safe closure of approximately 171 orphan oil and gas wells and attendant production facilities in Santa Barbara County.
CalGEM works closely with state and local partners to ensure the project complies with all regulatory requirements.
Current Status
As of April 26, 2024, 167 of the 171 wells included in the first phase of the HVI Cat Canyon State Abandonment project have been plugged. Work is ongoing and expected to continue through 2024.
- The work to remediate these wells includes the proper closure and removal of associated pipelines and facilities.
Link to more information on State Oil and Gas Well Plug and Abandonments projects.
Timeline
- September 13, 2021: CalGEM issues an Order to HVI Cat Canyon, Inc. to plug and abandon the 210 wells in the Casmalia, Cat Canyon, and Santa Maria Valley Oil Fields, decommission production facilities and restore lease and well sites pursuant to current state regulations.
- Most of these wells have been idle since before 2019, some as early as the 1980's.
- HVI Cat Canyon Inc. undergoes Chapter 7 bankruptcy.
- In 2020, the federal bankruptcy court approves a plan for HVI Cat Canyon, including its wells.
- The end result: HVI Cat Canyon, Inc. (formerly Greka) leaves the state with approximately 210 orphan wells as a liability.
- CalGEM classifies these wells, which no longer have a financially capable and compliant operator, as orphan. Because the wells are a potential danger to public health, safety, and natural resources, it is necessary to permanently seal them.
- Fall 2022: Preliminary work starts and includes site investigation, methane sampling, planning and permitting.
- January 30, 2023: Plugging work commences.
- Work is expected to take approximately 2 ½ years to complete
The 171 wells to being plugged and permanently sealed are only the first phase of this State Abandonment project. The remaining 39 wells will be addressed separately as they may require more complex remedial work.
Location
The 171 wells and facilities are located in the Cat Canyon, Santa Maria Valley, and Casmalia oil fields in the northern section of Santa Barbara County near the cities of Santa Maria and Orcutt.
Projected Cost and Funding
The estimated cost for the first phase of the HVI Cat Canyon State Abandonment project is approximately $36 million, which will be paid for by state and federal funding, after CalGEM seized a $1 million bond from the company and applied it to the work Much of the state funding is expected to come from sources derived from industry assessments and fees.
In July 2023, CalGEM revealed a draft expenditure plan to use state and federal funds to plug and abandon many orphan wells across the state. This plan includes the funds already set aside for the first phase of the HVI Cat Canyon State Abandonment project. You can learn more about the expenditure plan
here. Public comment on the draft expenditure plan will be accepted through August 11.
The breakdown of funding for the HVI Cat Canyon State Abandonment project is as follows:
- The largest share of the decommissioning work -- $22.5 million -- is federal funding. Another $2.5M in federal funding will cover administrative costs and other work, such as unexpected costs and cultural and biological monitoring.
- $9,344,656 is coming from funds earmarked for well abandonment in the state budget.
- $2,850,825 is coming from assessments on the California oil and gas industry.
HVI Cat Canyon had a $1 million bond that CalGEM seized and is part of the assessment funds. Additionally, CalGEM will continue to pursue cost recovery through the bankruptcy process and any other avenues available under state law.
For project questions, please contact the CalGEM Northern District at:
CalGEMNorthern@conservation.ca.gov or the CalGEM Public Transparency Office at: CalGEMPublicTransparencyOffice@conservation.ca.gov.
Key Terms
Idle Well: a well that has not been used for two years or more and has not yet been properly plugged and abandoned (sealed and closed).
Deserted Well: a well that CalGEM has ordered to be permanently plugged but that is still awaiting a final determination as to whether there's a financially responsible current or former operator to pay for the work.
Orphan Well: a deserted well determined to have no legally responsible current or prior operator with sufficient financial resources to fully cover the costs of plugging and abandonment.
