AB 1866 by Assemblyman Greg Hart (D-Santa Barbara) seeks to amend the state’s Idle Well Management Program (IWMP) by implementing large increases to the minimum number of idle wells operators must eliminate each year.
Under the state’s current program, companies with 1-250 idle wells must eliminate a minimum 4% of their long-term idle wells annually, those with 251-1,250 wells must eliminate a minimum of 5% of their long-term idle wells annually, and companies with more than 1,250 wells must eliminate at least 6% of their long-term idle wells annually. An idle well is considered eliminated if it is plugged or brought back to production for at least six months in any given year.
Hart proposed that operators have a new obligation starting next year to eliminate idle wells at the following pace:
Companies with 1-250 idle wells: 10% annually
Companies with 251-1,250 idle wells: 15% annually
Companies with more than 1,250 wells: 20% annually
CIPA made the point to the assemblyman that CalGEM’s current program on idle wells is working.
CIPA, its members, and the state share a common objective of protecting the State of California and its taxpayers from the financial liability to plug and abandon orphan wells by ensuring operators decommission their own assets. In just the last two years, operators have plugged a record 11,032 wells. This is a result of the state’s Idle Well Management Plan, a program CIPA negotiated with the passage of AB 2729 in 2016.
Furthermore, CalGEM is in the middle of implementing AB 1057, meeting with operators to ensure operators can remediate their own liabilities. Part of that conversation includes accelerated asset retirement. The state should continue to encourage operators to remediate their own assets and the legislature should allow the current process to conclude before enacting new, arbitrary new requirements.
Under his amendments, Hart is now proposing that starting in July of next year companies with 1-250 idle wells eliminate 5% annually and those with 251-1,250 idle wells eliminate 6%. At CIPA’s request, Hart agreed to create a new tier (companies with 1,250-3,000), since two companies that fall into this category, Sentinel Peak Resources and Berry Petroleum, have significantly fewer wells than the majors and should not have the same target. That new tier will be required to eliminate 7% starting next year. WSPA members will be required to eliminate 15% of their idle wells starting next year.
In 2028, the tiers will increase to 6%, 8%, 10%, and 18% respectively, and in 2030 to 8%, 10%, 15%, and 20% respectively.
The State’s best protection is for operators to continue to be viable and compliant, and to remediate their own assets. Instituting arbitrary, unnecessary annual percentages could make a perfectly viable operator suddenly noncompliant. Instead, CalGEM should focus on keeping operators viable by issuing permits in a timely manner, ensuring operators are compliant with their IWMPs, and confirming operators’ capacity to meet their own future financial liabilities. This is the best recipe for success.