Groups celebrate Orphan Well Prevention Act-to make polluters pay to clean-up idle wels

October 7, 2023

Sacramento, Calif. — Groups dedicated to the transition away from fossil fuel use celebrated as Governor Newsom signed climate bills including AB 1167, the Orphan Well Prevention Act authored by Assemblymember Wendy Carrillo, building on his momentum to take on Big Oil and make polluters pay to clean up their idle well messes. 

The Orphan Well Prevention Act would require oil companies to take out full bonding to cover the clean-up cost of idle and marginally-producing wells when they are transferred in ownership, helping to solve the growing orphan well crisis. Last week, Environment California released a new interactive map to show the breakdown of idle and orphan wells and the threats wells posed to groundwater in California by county, Senate and Assembly district, as well as estimated costs for clean-up.

“Elected Officials to Protect America applauds the Legislature for passing, and Governor Newsom for signing Assemblymember Carillo’s AB 1167. This bill continues the bold climate leadership Californians need to hold Big Oil accountable for cleaning up its own mess, and ensuring our health and safety is protected,” said Meghan Sahli-Wells, California Director for Elected Officials to Protect America and former Culver City Mayor.

According to Consumer Watchdog, there are currently about 5,400 orphan wells in California — idle wells which owners have abandoned their responsibility to clean up — leaving them for California taxpayers to address. Current bonding rules only require oil companies to take out a minimal bond to cover the cost of cleaning up oil wells at the end of their life, sometimes amounting to as little as a few hundred dollars per well. However, the average cost statewide to clean up a well according to the California Council on Science and Technology is $68,000.

“We’re thrilled that Gov. Newsom took the next step in holding the oil industry accountable for its messes by making it put up enough funds to clean up the riskiest oil and gas wells. It’s only fair for oil companies to foot the bill for the abandoned wells that endanger our neighborhoods -- not the residents who unfairly have had to live with the pollution from these wells. We thank Gov. Newsom for his consistent, strong climate leadership and his willingness to hold oil companies accountable,” said Laura Deehan, Environment California’s state director.

With nearly 70,000 idle and marginally-producing wells across the state, many at high risk of becoming orphaned, taxpayers are vulnerable to pay exorbitant fees to clean up wells that rightfully should be paid by the companies responsible for the oil wells. 

AB 1167 is specifically designed to address the prevalent practice of larger oil companies transferring their idle and marginally-producing wells to smaller and potentially less solvent companies, creating a risk that these smaller companies will lack the means to properly close the wells. This in fact occurred several years ago when Greka Energy’s Rincon Island Limited Partnership (RILP) acquired a large set of offshore wells that had been drilled by a major oil company, but ultimately went bankrupt and left taxpayers to foot a bill of $27 million thus far to pay for the cleanup. A law was subsequently passed requiring full-cost bonding for offshore oil wells, but it did not apply to onshore wells.

Other states, including Arkansas and Colorado, already have laws in place requiring full cost bonding for idle or marginally-producing wells.  

“By signing AB 1167, Governor Newsom has catapulted California into a position of leadership on the growing national crisis of orphan wells and made good on his continuing commitment to hold the oil industry accountable. Finally, communities and taxpayers in California have a measure of protection from the efforts of the oil industry to run away from its obligation to clean up after itself,” said  Ann Alexander, senior attorney Natural Resources Defense Council.

Groups are also celebrating Newsom’s veto of SB 842 (Bradford), a last minute push by the oil industry to undermine the Governor’s price gouging penalty law, SBX1-2, to establish a watchdog and increased oversight for the state's refiners.

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“The Governor took a strong stand against gouging at the pump by refusing to weaken his price gouging protections and vetoing this eleventh hour self-serving bill from the refiners.  The state needs the power to keep refineries open if gas prices are going to be bought down. Oil drillers will now also rightfully need to post bonds in order to cover their clean-up costs. It’s only fair.  If they want to drill it they need to cover the cost of plugging it when the drilling is done to protect taxpayers from covering clean-up costs,” said Jamie Court, President of Consumer Watchdog.

SB 842 was opposed by over 55 organizations as it would have made it more cumbersome to assess and control price spikes consumers face at the pump during oil refinery maintenance periods.