News Release #2019-02
March 21, 2019
SACRAMENTO – The California Department of Conservation (DOC) today announced final approval of new regulations
that will protect the environment and ensure that the oil and gas industry is financially responsible for testing, remediating, and, if necessary, permanently sealing idle oil and gas wells. The new regulations were processed by the Office of Administrative Law, forwarded to the Secretary of State for chaptering, and will become effective on April 1.
“Idle wells that are not properly maintained pose a threat to the environment and surrounding communities, including potential contamination of groundwater,” DOC Director David Bunn said. “These new regulations make the industry more accountable, both environmentally and financially.”
The regulations were developed as directed by Assembly Bill 2729 (Williams, Salas, and Thurmond), signed into law in 2016. Key elements include:
- A comprehensive well testing regime to prevent leaks.
- An aggressive compliance schedule for testing or plugging and abandoning (that is, permanent sealing) idle wells.
- The collection of data necessary to prioritize testing and sealing idle wells.
- Requirements for long-term idle well management plans.
- Engineering analysis for each well idled 15 years or longer to demonstrate that the well is viable for future use.
- Requirements for active observation wells (wells used to monitor changes in groundwater levels over a period, or more specifically during a pumping test).
In California, an idle well is one that has not been used for two years or more and has not yet been permanently sealed pursuant to Division of Oil, Gas, and Geothermal Resources (DOGGR) regulations. Permanently sealing a well involves cleaning out any debris and plugging the wellbore with cement to isolate the oil- and gas-bearing geologic formation from water-bearing formations.
There are nearly 30,000 idle wells in California, and roughly half of those have not operated in 15 or more years. Neglect of these long-term idle wells is a concern because pipes and tubing can deteriorate if unattended and open the risk of a path for oil, gas, or other contaminants to migrate through the well and into underground sources of drinking water or to the surface.
In some cases, idle well owners become insolvent and desert their idle wells. The state often assumes responsibility to permanently seal these orphan wells if no responsible party can be found. Since 1977, DOGGR has permanently sealed about 1,400 orphan wells at a cost of $29.5 million from an assessment on production. Generally, there has been a significant gap between the number of orphan wells and the funding available to do the work.
AB 2729 increased the fees assessed on operators to better reflect potential costs associated with permanently sealing wells. The fee increases the longer a well has been idle – upwards to $1,500 annually for each well idled 20 years or longer. In 2018, DOGGR collected $4.3 million in idle well fees. Since passage of AB 2729, more than 1,000 idle wells were permanently sealed in 2018, 476 of them in compliance with an idle well management plan.
“Oil has been produced in California since the late 1800s but has been on a steady decline since the mid-1980s,” State Oil and Gas Supervisor Ken Harris said. “As California transitions from being a national leader in oil production to a more marginal production state, it is only prudent to ensure that adequate financial assurances are in place to protect both the environment and the public from liability associated with idle wells and facilities.”
In 2015, DOGGR released its Renewal Plan, detailing how it would improve its regulation of the industry. Since that time, DOGGR has finalized some of the most robust regulations in the nation for the use of well stimulation, underground injection, underground gas storage, and pipeline testing; established a new enforcement unit; and worked with the State Lands Commission and other regulatory agencies to begin decommissioning two idled offshore production facilities, Platform Holly and Rincon Island.
“We utilize the best science available and strive for transparency in our regulatory efforts,” DOC Director Bunn said. “Our emphasis is making sure that the industry’s legacy does not leave damaging footprints on the land or in state waters.”