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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