Assessment of Rework Permits on Oil Production from Operational Wells Within the 3,200-Foot Public Health Protection Zone

Monitoring data clearly shows that rework operations present uniquely heightened risks for frontline communities. Necessarily opening a well bore to allow for the rework operations creates a point source release of hazardous air pollutants including toxic and carcinogenic polycyclic aromatic hydrocarbons including BTEX (benzene, toluene, ethylbenzene, and xylenes) compounds that degrade local and regional air quality resulting in a multitude of health impacts. There are also additional volatile acids and other chemicals often used during reworks that present additional exposure risks. This complacent acceptance of this elevated risk scenario has even been codified in California state air quality regulations with a blanket exemption for uncontrolled releases from all extraction activities and production equipment and infrastructure. The exemptions apply to all state rules and protections meant to reduce these risks for communities. Additionally, they last for a full 90 day period. Eliminating rework operations within the public health protection zone will prevent an annual average of 500 unregulated point sources of acute and chronic exposures to air toxics and carcinogens each year in California communities.  

When it comes to “asset retirement” and well plugging, it is not completely clear to what extent the SB 1137 policy forbidding rework operations within the 3,200’ protection zone will necessarily accelerate the phase out of operational oil and gas wells within the protection zone, but this analysis shows that the counts of wells transitioning from active to idle or plugged and abandoned well status will be increased. At the face level, about 2% of the wells within the protection zone receive rework permits each year, based on a ten year average. This translates to the elimination of rework operations for 500 wells per year. Additionally it is likely that this count will decrease proportionally with the counts of active wells within the protection zone. Of importance, the implementation of SB1137 may at some point have the side effect of increasing the count of idle wells in the state. Without proper regulation to guide operators to plug these inoperable wells, many of these wells in need of a rework may instead end up in idle well management plans and eventually on California’s orphan wells list. Wellsites are more likely to leak and become sources of hazardous air toxics and environmental contamination with neglect. Policies need to be in place to require operators to plug any wells that become idle within the protection zone. 

The production focused portion of this analysis shows that the protection zone for rework permits will likely reduce extraction volumes within the protection zone at a marginal level. The amount of potential or future production that may be eliminated from wells that do not receive reworks within the protection zone was deduced. Measures of production increases following rework operations can be considered equivalent to the theoretical loss of increased production resulting from denying rework permits in the protection zone. Under the assumption that while reworks are necessary for the safe resumption of maximum production for a well, operators are likely to continue producing from a well even if it needs a rework. Preventing rework operations would therefore eliminate the subsequent increase in the volume of production from wells following rework operations. 

As reworks permits are denied and if reworks continue at historical rates, the potential loss of future production is likely to be equal to the historical increase in production from wells that have received reworks in the past. Based on this assumption, California could experience an estimated reduction in oil production of about 2,400 MBbls per year from current production levels (2021). This represents an annual 7.1% reduction in production from within the protection zone, which represents 1.75% of oil production statewide. This percentage is likely to decrease steeply over time as operators prioritize reworks for higher producing wells. As higher producing wells are idled and removed from the sample population, they will comprise a smaller proportion of the total. 

This report also finds that while there was an immediate increase in production following rework operations, the rework operations did little or nothing to sustain the increased production. Increases in production were short lived and the majority of production volumes declined back to normal (equivalent to their prior production averages) within a three year period. Additionally, wells that received reworks reported production declines at faster rates than those that did not receive rework permits. These comparisons are interesting, because they show that rates of production decline for wells that receive reworks are accelerated. The rework operation permits do not increase the percentage of wells remaining active. Rather rework operations are more regularly issued to wells that are more likely to end production sooner. The small 1.7% increase in production is not worth the additional expenditures of fossil fuels and energy resources necessary for the reworks, or the increased risk of additional community exposures to air toxics. Preventing operators from conducting rework operations within the health protection zones is a common sense public health intervention due to its low cost to the oil and gas industry. It would provide substantial public health protections and has a minimal impact on production.

The results of this analysis show that the policy proposed in SB1137 of denying rework permits will  put high risk wells on a track for early retirement. These wells are more likely to have an accelerated production decline, and therefore a shortened production lifespan as it is. Removing the ability for wells to receive reworks will have the added benefit of accelerating well retirement for troublesome wells. This will reduce the typical drawn out production decline curve time frames that have allowed wells to change ownership and has resulted in tens of thousands of stripper wells evading inclusion in idle well management plans. Plugging these wells earlier instead of granting emissions exemptions will reduce the counts of marginally producing wells at risk of becoming orphaned in the near future and  will improve the local and regional air quality for frontline communities. This is a sensible tradeoff as the data shows that denying rework permits will have a small impact on production within the protection zone, which is a minimal amount of overall statewide production.