Decline of oil industry leaves a toxic legacy in California
Deserted wells pose a health risk. Cleaning thousands in the state may cost billions that drillers haven’t put up.
ARVIN, Calif. — Across much of California, fossil fuel companies are leaving thousands of oil and gas wells unplugged and idle, potentially threatening the health of people living nearby and handing taxpayers a multibillion-dollar bill for the environmental cleanup.
From Kern County to Los Angeles, companies haven’t set aside anywhere near enough money to ensure these drilling sites are cleaned up and made safe for future generations, according to a months-long data analysis and investigation by the Los Angeles Times and the Center for Public Integrity.
Of particular concern are about 35,000 wells sitting idle, with production suspended, half of them for more than a decade. Though California recently toughened its regulations to ensure more cleanup funds are available, those measures don’t go far enough, according to a recent state report and the Times/Public Integrity analysis. California’s oil industry is in decline, which increases the chances that companies will go out of business. That in turn could leave the state with the costs for cleaning up their drilling sites, which if left unremediated can contaminate water supplies and waft fumes into people’s homes.
Under federal, state and local laws, fossil fuel companies are required to post funds, called bonds, to ensure that wells are ultimately plugged and remediated. These set-aside funds are a response to the oil industry’s history in the U.S., in which thousands of companies went out of business without banking enough financial reserves to pay for remediation.
Industry representatives
say they are doing their part to pay for cleanup in California, but their bonds are woefully inadequate to meet the expected costs. The Times/ Public Integrity investigation found that bonds posted to the state by California’s seven largest drillers, which account for more than 75% of oil and gas wells, amount to about $230, on average, for every well they must decommission. Other bonds held by federal and local regulators don’t significantly raise those amounts.
By contrast, the average per-well cost for capping wells and dismantling associated surface infrastructure in California is $40,000 to $152,000, depending on whether a well is in a rural or urban area, according to a study released in January by the California Council on Science and Technology.
The result is a yawning gap between what the industry has provided and what ultimately will be needed. Companies have given the state only $110 million to clean up the state’s onshore oil and gas wells, the council found. By contrast, it could cost roughly $6 billion for that cleanup, according to a Times/Public Integrity analysis of state data provided to the science and technology council.
Decommissioning offshore oil wells and platforms, which is not included in those figures, will cost several billion dollars.
“These liabilities are hiding in plain sight,” said Clark Williams-Derry, an energy finance analyst at the Institute for Energy Economics and Financial Analysis. “They’re huge, but somehow they’ve become invisible to us.”
A key question is whether California’s oil industry — once a top-three U.S. producer — has the resources and staying power to pay for future cleanups.
Industry representatives contend that they will be in the state as long as Californians consume fossil fuels. “There are significant projects that are being proposed,” said Rock Zierman, chief executive of the California Independent Petroleum Assn., adding that the state’s oil industry supports roughly 18,000 jobs.
But California oil production has fallen nearly 60% from its peak in 1985, in part because the state’s deposits of heavy crude can’t compete in a world that prefers cheaper natural gas.
If output continues to drop, more communities may be left in the predicament of Arvin, a largely Latino town of 20,000 in Kern County that’s dotted by drill sites. Many of those wells sit idle or produce little.
Until such wells are plugged, they can release toxic emissions and flammable gases from both their casings and the pipes that connect to them. Elvia Garcia knows that all too well.
In 2014, flames shot out of wall sockets in Garcia’s home. Her pregnant daughter suffered from sudden blackouts. Government inspectors drilled test holes in lawns and found explosive levels of gas leaking from a pipe servicing wells at the end of the block.
They gave residents one hour to evacuate. It was nine months before Garcia’s family was allowed to return.
“We smelled strong odors of something decaying, and that smell was coming from the outlets,” she said in Spanish. “We thought there was something in between the walls that had died.”
More than 350,000 Californians live within 600 feet of unplugged wells, a Times/ Public Integrity analysis of census data found. That’s the distance at which people are exposed to degraded air quality, according to a 2019 report from the office overseeing oil and gas in Los Angeles.
Oil wells are known to emit likely carcinogens including benzene and formaldehyde. Uncapped, these wells also release methane, a potent greenhouse gas that helps drive climate change.
The Times/Public Integrity investigation raises questions about the effects of these ongoing emissions if more of the state’s idle wells are deserted without enough money to clean them.
It has long been industry practice to let wells go temporarily idle — for maintenance purposes, for example, or when commodity prices are low. But according to data maintained by the California Geologic Energy Management Division, or CalGEM, the agency that regulates oil and gas producers, the oil industry since its peak-production days has doubled the instances in which it idles wells for at least two years at a time.
Most cases of oil and gas wells going idle in California are short-term. But once a well has been dormant for just 10 months, there’s a 50-50 chance it will never produce again, a Times/Public Integrity analysis of 40 years of state data found. By the time federal regulators begin raising concern — at five years of inactivity — the chance that a well is ever active again falls to 1 in 4.
Industry critics say lax state regulations are allowing oil companies to walk away from wells and the liability they represent.
“All they want to do is rape the land and leave,” said state Sen. Hannah-Beth Jackson, a Santa Barbara Democrat deeply involved in attempts to regulate the oil and gas industry. “They are taking the resources of California, monetizing them and leaving us with the mess.”
Zierman, of the California Independent Petroleum Assn., rejected such claims, arguing that the use of cleanup bonds and fees on both idling and production means companies bear their share of costs.