"State regulators could have asked oil companies California Resources Corp. and Aera Energy for an estimated $2.4 billion to guarantee wells are plugged but decided they didn’t have the authority to do so."
"Last October, California passed the nation’s strongest law to address the glut of oil and gas wells that are unplugged and ownerless, many leaking pollutants into the environment.
The legislation required that, as part of any sale or transfer of wells, the purchasing company set aside enough money in financial instruments known as bonds to cover the entire cleanup cost of low-producing wells if the companies go out of business without plugging them. It was a striking departure from the piecemeal steps taken by other state legislatures and federal agencies to reduce the number of orphan wells. California lawmakers repeatedly cited ProPublica’s work on the subject as a reason to act.
But in its first major test, California regulators sidestepped the law.
The California Geologic Energy Management Division, the state’s oil regulatory body, announced in late June that the law does not apply to the merger of California Resources Corp. and Aera Energy, two of the three companies that account for the vast majority of the state’s oil and gas production. If the law had been enforced, the deal would have provided billions of dollars in new bonds to ensure taxpayers weren’t eventually left with the cleanup bill."
Mark Olalde reports for ProPublica July 24, 2024, co-published with Capital & Main.
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