California: Plan, Plug, or Pay


Aug 29, 2023

New Kid on The Block: CalGEM (formerly DOGGR)

As part of the California Department of Conservation, the California Geologic Energy M​anagement Division (CalGEM) is responsible for overseeing the state’s oil, natural gas, and geothermal industries, and prioritizes protecting public health, safety, and the environment. CalGEM is also charged with advancing California’s climate change and clean energy mandates through regulating oil and gas production and well management, with a goal of becoming carbon-neutral by 2045.

Orphan Wells

On July 18, 2023, CalGEM issued a draft notice listing 378 wells identified as orphan wells that need to be plugged and sealed, and estimated spending for this initial project is $80 million. These are the highest-priority orphan wells out of approximately 35,000 wells identified as “idle” – not in use for more than two years and not plugged and sealed. CalGEM issued 9,664 permits in 2022 for plugging idle wells, and 4,555 permits have been issues in 2023.

Orphan wells (defined in California as “those deserted or without a financially viable and compliant operator”) can endanger the environment and public health when they emit methane, toxic fluids, and VOCs. To address orphan well hazards through plugging and remediation, in 2022 the California legislature allocated $100 million to close some of these orphan wells. CalGEM has added 125 new positions for administering the new policies.

The July draft plan is intended as the first set of CalGEM projects, and further closings will be funded with the approximately $354 million in combined state and federal resources for California well remediation. The new funding is in addition to the hefty per-barrel fees paid by oil and gas producers in California.

Recent Changes

In April 2019 CalGEM revised its idle well ​regulations, imposing stringent testing requirements to protect public health/safety and the environment. These new regulations require state-supervised testing: fluid tests every 24 months, casing pressure tests (timing based on depth and psi), and clean out testing. Based on results, wells must be repaired or permanently closed. Wells that cannot be physically accessed must be documented and a hazard-reduction and monitoring plan submitted that considers threats to life, health, property, and natural resources.

CalGEM is responsible for plugging and sealing orphan wells, and since 1977 has plugged about 1,400 wells at a cost of around $30 million. To reduce the number of deserted wells, operators are now required to create Idle Well Management Plans, or in the absence of a plan, to pay additional well fees into the Hazardous and Idle-Deserted Well Abatement Fund to help pay for permanent well closings.

Two recent statutes are intended to ensure oil and gas infrastructure decommissioning costs are funded by producers rather than taxpayers:

Assembly Bill 1057 – producers must post a security bond or financial assurances (up to $30 million) to fund well remediation and facility closings.

Senate Bill 551 – producers must provide a cost analysis of plugging idle and orphan wells. This allows CalGEM to ensure industry estimates of well closing costs and liability are current.

Looking Forward

CA is not alone in its push to regulate low producing and orphan wells. As regulations call for more and more plugging, it is imperative that leaks be dealt with effectively and efficiently. BioSqueeze provides the most effective solution for eliminating annular leaks and gas migration, routinely sealing even the most difficult wells quickly and at a fraction of the price of repeated attempts with traditional methods.

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