California Resources Corporation filed for bankruptcy in July. But with thousands of abandoned wells left by the oil and natural gas exploration and production company, California taxpayers might be responsible for remediation, which could cost millions of dollars.
The largest oil and natural gas producer in California, California Resources Corporation’s (CRC) financial failure leaves more than 17,971 wells, which produced little to no oil and gas, unplugged and idle. According to California law, fossil fuel companies are responsible “to pay to clean up their own idle wells, but when companies go out of business the state—and its taxpayers—are left with the obligation to close their wells,” Sierra Club reported.
A bankruptcy court will consider CRC’s reorganization plan on Oct. 13 to determine whether the company will be able to cover well remediation or if close to $900 million in costs will be left to California taxpayers.
“Without intervention from CalGEM, CRC is on track to make sure its executives remain well-paid while workers are left behind and California taxpayers are left with the $900 million bill for cleaning up the company’s mess,” Monica Embrey, associate director of the Sierra Club’s Beyond Dirty Fuels campaign, said. “CRC may be the first major oil company to fail in California, but it certainly won’t be the last.”
But the California Geologic Energy Management (CalGEM) Division of the California Department of Conservation, which is entitled to regulate the company’s operations to see to it that CRC satisfies its obligations, has yet to intervene.
A new report titled “The Risk of Unplugged Wells for California’s Taxpayers; California Resources Corporation — A Case Study,” suggests that “if the state fails to require CRC to set aside funds to pay for its well closure obligations as part of the bankruptcy proceeding,” taxpayers could eventually foot the bill “to plug CRC’s abandoned wells,” a press release stated.
“It’s critical that the state use its authority to protect workers, communities, and our climate by holding these companies accountable for their massive well closure obligations,” Embrey said.