CalGEM Reaches Settlement with E&B Natural Resources Over Oil Well Violations

What you need to know

• E&B Natural Resources Management Corporation agreed to resolve more than $1.2 million in civil penalties related to unauthorized injection and two instances of unpermitted well work in Kern County. The settlement is final and the company waives its right to appeal.
• The company took proactive measures and worked collaboratively with CalGEM to address the issues. CalGEM will conditionally reduce penalties if the company maintains compliance.
• The settlement resolves CalGEM's first penalty for unpermitted well work within a health protection zone under Senate Bill 1137.

SACRAMENTO - The Department of Conservation's California Geologic Energy Management Division (CalGEM) reached a settlement with E&B Natural Resources Management Corporation (E&B) to resolve more than $1.2 million in civil penalties for violations involving seven oil and gas wells in Kern County and one in Santa Barbara County.

Under the settlement, E&B will pay $400,000 through a payment plan and receive a $324,470 penalty offset for plugging and decommissioning another operator's three wells in Kern County currently at risk of becoming deserted or orphaned. The company will also be responsible for cleaning the site and safely removing any surface equipment and tanks. An additional $484,110 in penalties will be conditionally reduced if E&B demonstrates compliance with well testing requirements through the end of 2027.

The violations were documented in two CalGEM enforcement orders that primarily involved unauthorized injection after wells had failed to meet mechanical integrity testing requirements. Mechanical integrity testing is required to help ensure injection wells can safely contain injected fluids and protect underground water. The company worked collaboratively with CalGEM to resolve the issues and created stronger internal controls as a result.

The settlement also covers violations for altering well casing without an approved permit, which E&B took action to resolve once it came to the company's attention. That unauthorized work was performed on a well located within a health protection zone established under Senate Bill 1137, making this CalGEM's first penalty collected for unpermitted well work within a health protection zone since the law took effect. That law created a 3,200 foot buffer that stops new oil drilling near schools, homes, and other sensitive receptors. The work at issue involved an existing well and did not involve new drilling.

"This settlement does more than hold an operator accountable for the violations-it also avoids unnecessary, costly, and protracted litigation around violations that clearly took place" said Conservation Director Jennifer Lucchesi. "Importantly, it underscores why regular oil well testing matters. Those regulatory requirements provide an important safeguard for communities, groundwater, and the environment."

E&B must begin the plugging work on the three wells within 12 months of the settlement's effective date and complete the work within six months after it begins. If E&B does not begin or complete the work within the required timeframes, the $324,470 offset becomes due as a penalty.

The company does not contest the enforcement orders and waives its right to appeal them.

If E&B incurs 30 days or more of new unauthorized injection violations between January 1 and December 31, 2027, the conditionally reduced $484,110 penalty will become payable.

State law gives CalGEM a range of enforcement tools to protect public health, safety and the environment, including civil penalties, remedial orders and orders requiring wells to be plugged and abandoned. CalGEM also requires operators of injection wells to conduct mechanical integrity testing to demonstrate that wells can safely perform their intended function and prevent the movement of injected fluids into underground sources of drinking water.

View Settlement

View Order No. 1560 to E&B Natural Resources Management Corporation (PDF)

View Order No. 1621 to E&B Natural Resources Management Corporation (PDF)