Case Two: Farmer Hoecker’s property is next to property that contains several leaking crude oil wells. From time to time, some sort of sludge oozes from the neighbor’s property onto his. The sludge has ruined Farmer Hoecker’s crops. The cost to cleanup the sludge on his property is expensive because he has to remove a layer of topsoil. He especially fears that gas could escape from leaking wells and explode. It does not look as though anyone is going to take care of the problem.
The situations described are not uncommon in California. As crude oil production continues to tail off because of depletion of reserves, a growing problem for California is what to do with the crude oil wells that are no longer productive but are left unattended. At best, the wells are an eyesore. At worst, the wells are creating or threaten to create environmental hazards. The Division of Oil, Gas and Geothermal Resources (DOGGR) of the California Department of Conservation is the State agency that oversees crude oil wells and natural gas wells. The DOGGR presently lists over 18,000 idle crude oil wells and over 400 orphan crude oil wells in California. The DOGGR considers a well to be idle if it has not produced crude oil or natural gas for six consecutive months of continuous operation during the last five or more years. An orphan well is one that is not only idle but also lacks any known operator or responsible party to plug it. Undoubtedly, there are more idle and orphan wells that are not known to the DOGGR. Operators of crude oil and natural gas wells are required by law to report to DOGGR all of their idle wells. But some operators do not report all of their idle wells, because they have to pay an annual fee for each idle well they report.
OBTAINING RELIEF FROM THE DOGGR
Mr. Harris and Farmer Hoecker may be able to obtain some relief from the DOGGR. The DOGGR has wide-ranging supervisory authority over the drilling, operation, maintenance, and abandonment of crude oil and natural gas wells and attendant facilities. It has a mandate to prevent damage to life, health, property and natural resources and to increase the production of crude oil and natural gas.
In order to prevent damage to life, health, property and natural resources, DOGGR regulations set out very stringent requirements for plugging and abandonment of crude oil and natural gas wells and require that a DOGGR employee inspect all wells that have been plugged and abandoned to insure that DOGGR’s requirements have been met. Plugging and abandonment of crude oil wells can be expensive.
The DOGGR has good reason for its stringent requirements. Unsealed wells may permit the migration of various fluids such as hydrocarbons and salt water to flow into underground fresh water sources and surface waters. Crude oil wells that leak below the surface can ruin oil and gas bearing strata causing damage to neighboring oil and gas wells. Leaking crude oil wells can cause great damage to crops and livestock. They can injure people directly, particularly if escaping gases ignite and explode. Even crude oil wells that do not presently constitute a danger or do not presently cause damage eventually may, unless they are properly plugged and abandoned.
One possible remedy for someone in Farmer Hoecker’s position is to file a written complaint with the DOGGR requesting the DOGGR to order his neighbor to repair the leaking wells. The DOGGR has the authority to order wells to be repaired and to impose a fine, not to exceed $5000, for failure to follow its orders. The DOGGR does not have any authority, however, to require crude oil well operators to pay damages to Farmer Hoecker that were caused by their leaking wells. Farmer Hoecker may be able to convince the DOGGR to order that the wells on his neighbor’s property be repaired, but he cannot obtain damages from the DOGGR for injury to his person and property caused by the leaking crude oil wells.
One possible remedy for Mr. Harris is to file a written request with the DOGGR for an order that the wells on his property be plugged and abandoned. The DOGGR has the authority to order that deserted wells be plugged and abandoned. That authority, however, is limited. First, in order for the DOGGR to order a well to be plugged and abandoned, the well must be deserted. The DOGGR has no authority to order an operator to plug and abandon crude oil wells that are idle, but not abandoned. The requirements for a rebutable presumption of desertion are set out in a statute. If an operator of a lease pays a fee every year for its idle crude oil wells, the DOGGR does not consider the wells deserted even if there is no production from the wells. So the DOGGR has no authority to order an operator to plug and abandon the wells on Mr. Harris’ property as long as the operator continues to pay the annual fees.
Second, the DOGGR is further limited because its authority to order plugging and abandonment of wells extends only to operators who operated the lease on or after January 1, 1996. But the wells may have ceased operating before 1996, and so there simply is no operator whom the DOGGR has authority over. Or the DOGGR may be able to identify someone who was an operator of the lease after January 1, 1996, but that operator may have gone bankrupt or simply not have the financial means of plugging and abandoning the wells. If the DOGGR cannot locate anyone who was an operator of the lease on or after January 1, 1996 with the financial ability to plug and abandon the wells, DOGGR does not have any authority to order someone who was an operator of the lease before 1996 to plug and abandon the crude oil wells. If there are no operators on or after January 1, 1996 who have the financial ability to plug and abandon the crude oil wells on the lease, the DOGGR may not be able to give Mr. Harris the relief he wants. The DOGGR has no authority to order mineral rights owners who collected royalties, but who never operated the crude oil wells, to plug and abandon them.
Another possible remedy is to ask the DOGGR to plug and abandon the wells. The DOGGR has the authority to plug and abandon hazardous and deserted wells if there is no operator who operated the wells after January 1, 1996. A hazardous well is one that has been determined to be a potential danger to life, health, or natural resources. The problem with this solution to Mr. Harris’ problem is that the DOGGR has only $1 million to spend on plugging and abandonment each year. Not surprisingly given the cost of plugging and abandoning wells, the DOGGR has enough funds to plug and abandon only a very limited number of wells each year.
In sum, the DOGGR presents only a very limited solution to the growing problem of crude oil wells that caused damages to people and property and wells that sit idle long after they have ceased producing crude oil and natural gas. The landowners and others who seek to force non-operating wells to be plugged and abandoned and leaking wells to be repaired may need to look elsewhere for a solution. |
