The California Department of Conservation, Geologic Energy Management Division (CalGEM) is embarking on the largest State Abandonment project in its history – the permanent and safe closure of approximately 171 orphan oil and gas wells and attendant production facilities in Santa Barbara County.
Site investigation, methane sampling, planning, and permitting commenced in Fall of 2022. Plugging is expected to commence in February 2023, and work is expected to occur through the end of 2024. CalGEM is working closely with state and local partners to ensure the project complies with all regulatory requirements. The project is the first State Abandonment project in California to receive orphan well remediation grant funding from the federal Bipartisan Infrastructure Law.
In September 2021, CalGEM
issued 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.
In 2019, HVI Cat Canyon Inc. filed a bankruptcy petition under Chapter 11. In 2020, the federal bankruptcy court approved a plan for HVI Cat Canyon, Inc. to abandon various assets, including the wells. The end result: HVI Cat Canyon, Inc. (formerly Greka) left the state with approximately 210 orphan wells as a liability.
CalGEM determined these wells are orphan wells and has found the wells are a public nuisance, and plugging and abandonment is required to mitigate, minimize, and eliminate their danger to life, health, and natural resources.
The 171 wells to be plugged and permanently sealed is the first phase of this State Abandonment project. The remaining 39 wells will be addressed separately as they may require more complex remedial work. The work to remediate the 171 wells will also include the proper closure and removal of associated pipelines and facilities.
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.
What is the cost of the project and who is paying for it?
The estimated cost for the first phase of the HVI Cat Canyon State Abandonment project is approximately $34 million, which will be paid for by state and federal funding. Much of the state funding is expected to come from sources derived from industry assessments and fees.
Who should I contact if I have questions about the project?
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 has been determined to be deserted as demonstrated through a final plugging and abandonment order, but has not yet been definitively determined to be orphan because a determination of financial resources held by legally responsible current or prior operators has not yet been completed.
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.