California regulators ordered oil drillers including Chevron Corp. (NYSE: CVX) and Linn Energy LLC (Nasdaq: LINE) to halt operations at 12 injection wells in the state because of concerns they may taint groundwater.
The Division of Oil, Gas, and Geothermal Resources said 10 of the well operators shut down voluntarily, while two were issued cease-and-desist orders. All the wells are located in Kern County, northeast of Los Angeles, are within a mile of the surface and 500 vertical feet underground of a water supply, the agency said.
More than 50,000 oil-field injection wells operate in the state, according to the oil and gas division. An extensive shutdown of the wells would threaten the operations of a $34 billion industry that employs more than 25,000 people in the state, based on agency estimates.
The agency said the orders were part of a “systematic statewide review” of injection wells. The state acknowledged that some well injections were taking place in zones that hadn’t been approved by the U.S. Environmental Protection Agency (EPA), triggering the evaluation of all 50,000 injection wells.
The order includes three wells operated by Linn Operating Inc., three by California Resources Corp. (NYSE: CRC), two each by E&B Natural Resources Management Corp. and Chevron and one well each operated by Modus Inc. and Western States International Inc. Modus and Western States will receive cease-and-desist orders while the rest voluntarily relinquished their permits to inject.
Community Opposition
Hydraulic fracturing or fracking, in which water and chemicals are injected into rock formations to free oil and gas, is allowed in at least 32 states. California is working on an environmental review of the process, and local communities across the U.S. are mobilizing to stop it. In November, voters in Athens, Ohio; Denton, Texas; and California’s Mendocino and San Benito counties passed measures banning fracking.
The state’s order follows a review conducted by federal regulators that found “serious deficiencies” in California’s oversight of underground injection wells and required the state to come up with a plan that would bring its program into compliance by February 2017.
The agency granted permits allowing oil companies to drill 170 waste-disposal wells into aquifers suitable for drinking or irrigation, according to a February report in the San Francisco Chronicle. The agency later acknowledged some of those permits should never have been granted.
Joint Letter
California’s oil and gas supervisor and the chief deputy of the state’s water resources control board sent a joint letter to the EPA on Feb. 6 outlining their plans to improve enforcement.
The state oil and gas division posted a list of more than 2,000 permitted injection wells under review because of EPA’s request. Units of drillers Freeport-McMoran Oil & Gas LLC and Linn Energy account for more than half of the well permits listed.
The federal Safe Drinking Water Act gave the EPA authority to establish a program that prevents well injections from contaminating groundwater supplies. Under the program, the agency approves exemptions on a case-by-case basis for wells that pump into parts of aquifers that aren’t being used for drinking water and won’t be in the future.
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