Experts worry Shell, Exxon sold over 23,000 wells to avoid the cost of cleanup
Friday, October 28, 2022
Area Energy, a joint venture between Shell and ExxonMobil, has agreed to sell more than 23,000 wells in California to German asset management group IKAV for an estimated $4 billion, according to ProPublica.
The deal comes as the price of oil produced in California reached its highest level in a decade, millions of barrels of oil have been released from the strategic reserve to keep prices in check and fossil fuel companies’ earnings have been so high Gov. Gavin Newsom has called fro a windfall tax on their profits.
If it’s such a lucrative time to drill, why are Shell and ExxonMobil bailing out of California? Some experts believe it could be to avoid the cost of plugging and cleaning up wells at the end of their useful lives. The strong cash flow in the short term, likely, doesn’t outweigh the liability associated with continuing to pump more oil and gas.
Furthermore, when large companies start unloading assets on smaller ones, the concern becomes whether or not the responsibility for plugging these wells will eventually fall on the taxpayers.
Learn more: ProPublica > Big oil companies are selling their wells. Some worry taxpayers will pay to clean them up.
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Shale FAQ
What is fracking?
Fracking is a slang term for hydraulic fracturing. Fracturing is a process by which highly pressurized fluid is pumped thousands of feet into the ground to fracture rock formations. The goal is to release the natural gas that’s locked inside the rock.
Is it safe?
What most concerns people about fracturing is ground water contamination. The worry is that fractures underground, caused by the process, will extending upwards and into aquifers, releasing gas and chemicals into the ground water supply. There’s been no confirmed reports of such a thing happening. Though surface spills and drill site blowouts can lead to localized environmental concerns.
Will my water catch on fire?
Flammable water is caused by the release of methane gas into a drinking water supply. Methane gas occurs naturally and can be released by any kind of drilling, including water wells. In Pennsylvania officials fined Chesapeake Energy $1 million for contaminating ground water with methane. It was determined that the company had not properly cemented it’s boreholes and gas migrated up the well, between rock and into aquifers.