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New Report: CRC’s Failure Could Leave California Taxpayers with $900 Million Burden

New analysis shows that, without action from CalGEM, California’s biggest oil and gas producer could leave the state to pay for remediation of thousands of abandoned wells.

WASHINGTON - A new analysis released today by the Sierra Club shows that the financial failure of California Resources Corporation (CRC) could leave California taxpayers bearing more than $900 million in costs for the remediation of thousands of CRC’s abandoned wells. 

CRC, which filed for bankruptcy in July, has an ownership interest in 17,971 wells in California, the vast majority of which produce little or no oil and gas. If left unplugged, idle wells can cause enormous environmental and economic harm, leaking greenhouse gases, contaminating soil and groundwater, and deteriorating property values. California law requires fossil fuel companies to pay to clean up their own idle wells, but when companies go out of business the state - and its taxpayers - are left with the obligation to close their wells.

As the bankruptcy court is scheduled to consider CRC’s proposed reorganization plan on October 13, this new report, “The Risk of Unplugged Wells for California’s Taxpayers; California Resources Corporation - A Case Study,” digs into the company’s current and projected finances to determine whether CRC will be able to cover its massive well remediation obligation or whether those costs will be left to California taxpayers. Key findings from the report include: 

  • More than three quarters of CRC’s nearly 18,000 wells are past the end of their productive lives. Almost 2,200 of those wells have already sat idle for 15 or more years.
  • In total, CRC’s wells would cost in excess of $900 million to close today; a cost that will only rise going forward.
  • Based on current market conditions, CRC is unlikely to generate positive cash flow between now and 2025, and it is unlikely that CRC will have any revenues set aside for closure obligations by 2025. CRC is also unlikely to generate positive cash flows after 2025.
  • If the state fails to require CRC to set aside funds to pay for its well closure obligations as part of the bankruptcy proceeding, taxpayers could eventually be left to cover more than $900 million in costs to plug CRC’s abandoned wells. 


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The California Geologic Energy Management (CalGEM) Division of the California Department of Conservation is entitled to participate in CRC’s bankruptcy as the regulator overseeing the company’s operations. But despite being responsible for ensuring that CRC satisfies its obligations, the state has yet to intervene. 

Last year, despite struggling to turn a profit, CRC’s CEO still took home a sizable bonus

“Without intervention from CalGEM, CRC is on track to make sure its executives remain well-paid while workers are left behind and California taxpayers are left with the $900 million bill for cleaning up the company’s mess,” said Monica Embrey, Associate Director of the Sierra Club’s Beyond Dirty Fuels campaign. “CRC may be the first major oil company to fail in California, but it certainly won’t be the last. It’s critical that the state use its authority to protect workers, communities, and our climate by holding these companies accountable for their massive well closure obligations.” 


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The Sierra Club is the oldest and largest grassroots environmental organization in the United States. It was founded on May 28, 1892 in San Francisco, California by the well-known conservationist and preservationist John Muir, who became its first president. The Sierra Club has hundreds of thousands of members in chapters located throughout the US, and is affiliated with Sierra Club Canada.

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