Loophole Allows Ventura County Oil Companies to Avoid Compliance, Cleanup Costs

Loophole Allows Ventura County Oil Companies to Avoid Compliance, Cleanup Costs title=
Photo: Los Padres ForestWatch
12 Comments
Reads 2261

Source: Los Padres ForestWatch

Oil companies throughout Ventura County are using a loophole to avoid responsibility for future compliance and cleanup costs, according to public records released last week. In response, a coalition of community organizations is calling on County planners to swiftly move forward with plans to close the loophole after months of delays.

At issue is a provision in the County’s zoning ordinance requiring oil companies to post a “surety bond”—funds that are deposited when an oil company obtains a drilling permit and are forfeited if that company fails to properly retire a well at the end of its useful life, declares bankruptcy, or fails to comply with rules to protect public health, worker safety, and the environment.

The zoning ordinance currently requires an oil company to post a $10,000 bond for each well the company operates in the county. That amount—set in the 1980s—is low compared to the current cost of properly plugging a single well, which a recent study pegged at $152,000 in southern California.

However, in lieu of paying a per-well amount, a loophole in that ordinance allows a company to post a $10,000 “blanket bond” covering all of that company’s wells in the county. The loophole allows companies to operate hundreds of wells for the same bonding amount as a single well, leaving the County—and ultimately, taxpayers—responsible for footing the bill should the company cause environmental damage or fail to properly plug and remediate wells and other equipment that are no longer used.

In an effort to close the loophole, the Board of Supervisors voted in November 2020 to set in motion a process to increase the amount of surety bonding paid by oil companies. The Board directed the County’s Resource Management Agency to study the issue and return to the Board with recommended amendments to the zoning ordinance by November 2021. That deadline passed without any formal proposal presented to the Board, and eighteen months later, County staff still have not announced any specific timeline for bringing the matter to the Board.

AERA Energy Exploits Loophole While Spending Millions to Defeat County Ballot Measures

Nearly every oil company in the county takes advantage of this loophole. Of the 39 petroleum operators in Ventura County, 34 of them have posted $10,000 “blanket bonds,” according to county records made public last week. Some of these blanket bonds cover hundreds of wells.

For example, AERA Energy has posted a $10,000 blanket bond covering all 1,188 active and idle wells it operates in the County, an amount so low that it only covers $8.42 per well. At the same time that AERA exploits the loophole for rock-bottom bonding prices, it has contributed more than $8 million towards defeating two ballot measures in the upcoming June election aimed at reforming outdated drilling permitting practices in Ventura County. Those measures would allow updates to the company’s old oil and gas permits from the 1940s, 1950s, and 1960s to make them consistent with modern environmental and public health standards. AERA is jointly owned by Shell and Exxon Mobil, which reported combined profits of $14 billion in just the first quarter of 2022.

Study of Idle & Abandoned Wells Delayed

In addition to the bonding amendments, County Supervisors in November 2020 also requested a report by County staff on the number and status of abandoned and idle wells throughout the county, along with measures to ensure timely plugging and remediation of wells that have been idle (not producing) for fifteen years or more. State regulators have found that these long-term idle wells pose an elevated risk of air pollution and water contamination.

County staff have not reported this information to the Supervisors, either. The most recent state data reveals that 1,275 wells in Ventura County have been idle for fifteen years or more, demonstrating a widespread problem that calls for immediate action.

20 Community Groups Demand Swift Action

Today, a coalition of twenty community and environmental organizations sent a letter to Planning Director Dave Ward and Resource Management Agency Director Kim Prillhart, urging county staff to take swift action to address the bonding loophole and improve management and oversight of abandoned and idle wells.

“We urge the Planning Division to proceed expeditiously with bringing these matters back to the Planning Commission and Board of Supervisors,” states the letter. “Time is of the essence, and further delays will only perpetuate the human and environmental harm caused by idle and abandoned wells and outdated regulations.”

The letter was signed by 350 Conejo / San Fernando Valley, Central Coast Alliance United for a Sustainable Economy (CAUSE), Central Coast Climate Justice Network (CCCJN), Climate First: Replacing Oil & Gas (CFROG), Community Environmental Council, Conejo Climate Coalition, Environmental Defense Center, Food & Water Watch, Indivisible Ventura, Keep Sespe Wild, Los Padres ForestWatch, Mixteco/Indígena Community Organizing Project (MICOP), One Step A La Vez, Padres Juntos Promoviendo la Educación, Runners for Public Lands, Sierra Club Santa Barbara-Ventura Chapter, Ventura Audubon Society, Ventura Climate Coalition, Westside Clean Air Coalition, and Westside Community Council.

Login to add Comments

12 Comments

Show Comments
Voice of Reason Jun 02, 2022 08:59 AM
Loophole Allows Ventura County Oil Companies to Avoid Compliance, Cleanup Costs

They're just following the rules/regulations in place. They may be completely inadequate regulations and am rather surprised they been allowed to remain in place since the 1980's in such a environmentally friendly state as CA. Blame the politicians (even blue ones, this is CA after all) who love them some of that oil money, and the revolving door between governmental regulatory bodies and the industries they're supposed to be regulating.

a-1654180366 Jun 02, 2022 07:32 AM
Loophole Allows Ventura County Oil Companies to Avoid Compliance, Cleanup Costs

Oil companies spending $8 million (probably tax deductible) goes a long way to reduce / stifle changes, so that we the taxpayers are left with expense of dealing with oil messes.
Corporations are considered as people, but they have more power than real people and never are on death row.

Voice of Reason Jun 02, 2022 11:15 AM
Loophole Allows Ventura County Oil Companies to Avoid Compliance, Cleanup Costs

It's been obvious to some of us for a long time, many others will start to wakeup now that CNN is saying the same thing.
https://www.cnn.com/2022/06/02/business/energy-crisis-inflation/index.html _ "Today's energy turmoil is not simply the result of the war in Ukraine. It is also the byproduct of cratering investment in oil and natural gas, which are depleting resources that require massive sums of money just to maintain their production, let alone increase it."

Voice of Reason Jun 02, 2022 11:16 AM
Loophole Allows Ventura County Oil Companies to Avoid Compliance, Cleanup Costs

"Energy experts told CNN they worry global policymakers are mismanaging the climate crisis, focusing too much on reducing supply and not enough on cutting the world's appetite for fossil fuels... Focusing on just one side of the equation risks not only price spikes but social unrest and turning the public off to climate action".

Chip of SB Jun 02, 2022 11:36 AM
Loophole Allows Ventura County Oil Companies to Avoid Compliance, Cleanup Costs

So the plan is to reduce and ultimately phase out local oil production. We will instead burn more fossil fuels to import our oil. Not only will this increase our environmental footprint, it will help support oil producing countries like Russia by driving up oil prices. In addition, it will strategically weaken the US by increasing our reliance on foreign oil.

Please Login or Register to comment on this.