Big Oil Companies Are Selling Their Wells. Some Worry Taxpayers Will Pay to Clean Them Up.

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ProPublica

The price of oil produced in California this year reached its highest level in a decade. President Joe Biden is releasing millions of barrels of oil from the Strategic Petroleum Reserve to keep prices in check. And fossil fuel companies’ earnings are so high that Gov. Gavin Newsom has called for a windfall tax on their profits.

California Assemblymember Steve Bennett, a Democrat who has long worked on oil policy, has seen oil companies in his Ventura district walk away from environmental liability. “It gets passed on to a smaller company and to a smaller company until someone declares bankruptcy and the public is stuck with the cleanup bill,” he said.

Supermajors Shell and ExxonMobil recently agreed to sell more than 23,000 wells in California, which they owned through a joint venture called Aera Energy, to German asset management group IKAV for an estimated $4 billion. Aera accounts for about a quarter of California’s oil and gas production, largely from pumping in Kern and Ventura counties.

California has the authority to ask for an additional $30 million in financial security from a single operator but only requires Aera to hold a $3 million bond. As a result, Aera’s bonds cover less than half a percent of the $1.1 billion that ProPublica estimates it would cost the state to plug the wells based on the average cost to California for past well plugging. (That estimate does not include the additional cost of full surface remediation.)