Sander Kushen, sander.kushen@sierraclub.org, (949) 456-2853
Sacramento, California — A new report from the Sierra Club reveals that two-thirds of California’s inactive and unplugged wells are owned by just three companies — Chevron, Aera Energy (formerly owned by Shell and Exxon) and California Resources Corporation. Despite a regulatory system that allows these oil companies to avoid prompt payment to clean up these wells, the report finds in 2022 alone they earned just under fifteen times the $10 billion needed to plug and remediate the state’s entire inventory of inactive wells, which counts idle and orphan wells.
California faces a mounting crisis of inactive oil wells leaking hazardous pollution, from planet-warming greenhouse gasses to carcinogenic benzene, that disproportionately impact low-income communities of color predominantly clustered in Kern, Los Angeles, Ventura, Fresno and Santa Barbara counties. State law allows oil wells to sit idle for years or even decades, and over one-third of the state’s wells have sat idle for eight or more years.
For Chevron, the top holder of idle wells in California, it would cost a mere 4.8% of their 2022 profits to plug its share of inactive wells, according to the report, The $23 Billion Question: What created California’s idle and orphan wells crisis and how to solve it.
“Oil giants like Chevron, Exxon and Shell have created a crisis of inactive oil wells in California, and our analysis shows they have the resources necessary to solve the problem,” said Jasmine Vazin, Sierra Club Dirty Fuels Senior Campaign Representative. “California needs to protect families and taxpayers by forcing Big Oil to provide timely clean-up of wells and foot the bill for the mess they created.”
The state has the authority to hold oil companies accountable for orphan oil well clean up, including previous owners dating back to 1996. California Resources Corporation was spun-off from Occidental Petroleum in 2014. Under current law, the state could hold Occidental responsible for cleanup if CRC is unable or unwilling to pay.
Unfortunately, that ability is undermined by California’s current regulatory regime which enables oil companies to significantly delay capping these idle oil wells, ultimately threatening local communities with air pollution and safety risks if not plugged quickly.
“This new report provides more evidence that California’s idle well crisis requires immediate and bold action to force billionaire polluters to clean up their mess,” said Hollin Kretzmann, a senior attorney at the Center for Biological Diversity. “The state needs to require oil companies to pay for this pollution cleanup before they try to escape their legal obligations to plug these dangerous wells.”
Under current state law for idle wells, oil companies can choose to pay an annual fee that ranges from $150 to $1,500 annually to keep from plugging idle wells, cheaper than the average cost of full well site remediation at about $227,000 per well, according to the report. Alternatively, they can file an Idle Well Management Plan with the state, which only requires plugging 4% to 6% of long-term inactive wells annually.
Since California instituted management plans, the number of in-state idle wells has actually grown from just about 29,000 in 2018 to more than 36,000 in 2023, according to state data. This is due in part to more and more wells becoming idle yearly, with oil production plummeting by 42% since 2014 and California wells only producing an average of 3.9 barrels per day of oil.
About 40% of the more than 100,000 onshore oil wells in California are currently no longer productive, according to state data. Gov. Gavin Newsom has set a goal of phasing out all oil extraction by 2045. To plug all of California’s active and inactive oil wells today would cost roughly $23 billion, according to the report analysis.
California’s regulatory paradigm is not set up to meet this reality, having been heavily influenced by lobbying from key industry players, led by the Western States Petroleum Association and the California Independent Petroleum Association. By comparison, states less known for being climate leaders such as Pennsylvania and West Virginia have one-year deadlines for oil companies to plug idle wells.
“These idle wells are just numbers on a page for oil executives seeking to get out of paying to clean them up, but for local communities in Kern, Fresno and LA County, this is a day-to-day risk,” said Cesar Aguirre, an organizer with the Central California Environmental Justice Network. “These wells are in our backyard, and their fumes are making us sick. There's a human cost to this crisis, and it’s on the state to enforce the laws on the books and mandate a fast clean-up of these oil wells.”
If the state got tough on wealthy oil companies it would not only protect air and water quality, but it could be a financial boon for struggling communities long impacted by pollution from oil wells. For example, the report found plugging inactive wells could create more than 24,000 jobs across the state, benefiting communities of color which are predominantly underserved. Plugging wells in Kern County alone, where the highest number of inactive wells reside, would create roughly half of those opportunities, largely using the local, incumbent workforce.
“Cleaning up the idle wells crisis is a lot of work and we have trained workforces ready to help,” said Veronica Wilson, the California organizer with the Labor Network for Sustainability. “We want the state to get serious about this problem so that we can do right by our communities.”
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.