Cost Estimates for Abandonment of Wells and Decommissioning of Facilities
Public Resources Code section 3205.7 requires each operator of a well to submit a report to CalGEM estimating the cost to plug and abandon all its wells, decommission all attendant production facilities, and complete site remediation. The cost estimate reports provided by operators will provide a mechanism for CalGEM to assess the full costs associated with these activities.
The cost estimate reports must be prepared in accordance with criteria established by CalGEM. The criteria are described in the proposed regulations.
These reports will be considered by the Operator Financial Security Program in assessing the reasonable costs associated with the cost to plug and abandon an operator’s wells, decommission attendant production facilities, and complete site remediation. For more information on additional financial securities under PRC section 3205.3, please visit the Operator Financial Security Program page.
Request for Voluntary Submission of Operator Cost Data
On November 19, 2021, CalGEM issued a Notice to Operators
requesting voluntary submission of cost data to validate and inform state generated cost estimates. Operators are encouraged to provide available cost data to:
Although the notice provided a deadline of February 1, CalGEM will continue to accept this data for the foreseeable future.
CalGEM has developed a set of criteria for operator cost estimates that will be promulgated via regulation. The Discussion Draft of the regulations was released for public comment on April 4, 2022 and would require approximately 1,200 operators submit their costs estimates during the first reporting period.
Cost estimate reports would be required on the following schedule (BOEPDPW = Barrels of oil equivalent per day per well):
- Operators who were not assessed due to lack of production in calendar year 2021.
- 1104 operators with 3,060 wells
- Reporting date: No later than July 1, 2023
- Operators who were assessed based upon production of less than an average of 0.8 BOEPDPW for calendar year 2021.
- 99 operators with 3,173 wells
- Reporting date: July 1, 2023
- Operators who were assessed based upon production of an average from 0.8 through 3.5 BOEPDPW for calendar year 2021.
- 99 operators with 13,415 wells
- Reporting date: No later than July 1, 2024
- Operators who were assessed upon production of an average of more than 3.5 BOEPDPW for calendar year 2021.
- 87 operators with 80,283 wells
- Reporting date: No later than July 1, 2026
- For offshore wells
- 3 operators with 1502 wells and 101 conductors without wells
- Reporting date: No later than July 1, 2027