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Absolutely the wrong way to think about this. Treat it like any other development that could be hazardous. If the school board pays for the construction of a n

Absolutely the wrong way to think about this. Treat it like any other development that could be hazardous. If the school board pays for the construction of a new auditorium, and the new building is left half-finished by a bankrupt contractor, you would blame the contractor rather than the school board itself. This should be no different.

nickff 6y ago
The school district must conduct due diligence on its counter-parties, to an extent determined by the scope of the project and level of risk. If the school officials failed to do basic research on the contractors, or did not hedge against risks, I would blame the officials and not the contractors. The school officials have a responsibility to the public, while the contractor does not.
- wiz21c 6y ago
  > The school officials have a responsibility to the public, while the contractor does not. You do realize what you're writing ? Next time you'll be robbed by some entity, you'll sure remember that it's your fault, that you had to conduct due diligence.
- rtkwe 6y ago
  How deep do you go, at some point they have to trust whoever they're contracting has done the job properly sealing the wells or verifying that the wells are sealed. The school board isn't an oil company they don't have the expertise to evaluate everything independently.
  - jfim 6y ago
    > How deep do you go, at some point they have to trust whoever they're contracting has done the job properly sealing the wells or verifying that the wells are sealed. The school board isn't an oil company they don't have the expertise to evaluate everything independently. They can hire independent experts to assess whether the job has been done correctly, the same way one would get a second opinion on work that has been done that's outside one's field of expertise. There are plenty of engineering firms that will inspect bridges, oil wells, and other infrastructure. Alternatively, they could choose to not get in the oil business in the first place.
    - rtkwe 6y ago
      Yeah that's what I meant trusting at some point. They have to trust the people they hired actually verified and that the steps in their verification were actually enough. They're barely in the oil business, they've just renting out the land, some small space, the mineral rights to cover holes in their budgets.
Lammy 6y ago
A school board paying for an auditorium is a thing school boards normally do. Don’t you think it’s a little weird to have energy extraction on that property too? I do.
- totalZero 6y ago
  Let's not lose the point. The question at hand is, "who should be responsible for the cost of plugging a well when it reaches the end of its life?" The answer to that question does not tell us whether or not a well should be drilled near a school. If you're from Oklahoma, Texas, or another major oil-producing state, you have probably seen oil wells situated near schools, neighborhoods, or other sites that may present a hazard to young people. California is one of the largest oil producers in the country, so I'm not surprised that they have oil production in urban/suburban areas. Weird? Maybe. Unhealthy? Probably. Drilling at the site precedes the establishment of the school in 1927, as there is a large oil field beneath Beverly Hills into which around 100 wells have been drilled from four clusters, one of which is the school's property. That oil field was discovered in 1900. A single year's production at the school used to produce millions of dollars' worth of oil (not including natural gas). So, at some point administrators in the district weighed the pros and cons and said, "ok we'll tap into that revenue source." Whether that was a weird or not-weird decision, I think it was reasonable to assume that the well operators would follow lawful practices and would not be able to duck the cost of plugging wells at the end of their life. Venoco certainly made a lot of money from its decades of operating those wells. California backed the school district in this dispute. The California State Lands Commission went after Venoco for the money, but a federal judge in Delaware affirmed the bankruptcy court ruling and denied California's claim. I think this situation says way more about bankruptcy law and bonding requirements for oil and nat gas wells, than it says about well placement. This is not an isolated problem. As bankrupt producers like Whiting and Chesapeake are sure to be followed by other firms in the coming months, we are going to see more examples of the same. Bonding requirements should reflect the real cost of plugging wells, and creditors of bankrupt petroleum companies should not be permitted to recoup assets before those assets are used to cover the cost of mitigating environmental hazards. That principle holds whether the well is on a school district's property, on private property nearby, or out in the middle of nowhere. Should we hold school districts more liable than other landowners for the costs of plugging wells? Or should a licensed well operator be expected to set aside money for plugging the wells that it operates?

nickff 6y ago

The school district must conduct due diligence on its counter-parties, to an extent determined by the scope of the project and level of risk. If the school officials failed to do basic research on the contractors, or did not hedge against risks, I would blame the officials and not the contractors. The school officials have a responsibility to the public, while the contractor does not.

wiz21c 6y ago
> The school officials have a responsibility to the public, while the contractor does not. You do realize what you're writing ? Next time you'll be robbed by some entity, you'll sure remember that it's your fault, that you had to conduct due diligence.
rtkwe 6y ago
How deep do you go, at some point they have to trust whoever they're contracting has done the job properly sealing the wells or verifying that the wells are sealed. The school board isn't an oil company they don't have the expertise to evaluate everything independently.
- jfim 6y ago
  > How deep do you go, at some point they have to trust whoever they're contracting has done the job properly sealing the wells or verifying that the wells are sealed. The school board isn't an oil company they don't have the expertise to evaluate everything independently. They can hire independent experts to assess whether the job has been done correctly, the same way one would get a second opinion on work that has been done that's outside one's field of expertise. There are plenty of engineering firms that will inspect bridges, oil wells, and other infrastructure. Alternatively, they could choose to not get in the oil business in the first place.
  - rtkwe 6y ago
    Yeah that's what I meant trusting at some point. They have to trust the people they hired actually verified and that the steps in their verification were actually enough. They're barely in the oil business, they've just renting out the land, some small space, the mineral rights to cover holes in their budgets.

Lammy 6y ago

A school board paying for an auditorium is a thing school boards normally do. Don’t you think it’s a little weird to have energy extraction on that property too? I do.

totalZero 6y ago
Let's not lose the point. The question at hand is, "who should be responsible for the cost of plugging a well when it reaches the end of its life?" The answer to that question does not tell us whether or not a well should be drilled near a school. If you're from Oklahoma, Texas, or another major oil-producing state, you have probably seen oil wells situated near schools, neighborhoods, or other sites that may present a hazard to young people. California is one of the largest oil producers in the country, so I'm not surprised that they have oil production in urban/suburban areas. Weird? Maybe. Unhealthy? Probably. Drilling at the site precedes the establishment of the school in 1927, as there is a large oil field beneath Beverly Hills into which around 100 wells have been drilled from four clusters, one of which is the school's property. That oil field was discovered in 1900. A single year's production at the school used to produce millions of dollars' worth of oil (not including natural gas). So, at some point administrators in the district weighed the pros and cons and said, "ok we'll tap into that revenue source." Whether that was a weird or not-weird decision, I think it was reasonable to assume that the well operators would follow lawful practices and would not be able to duck the cost of plugging wells at the end of their life. Venoco certainly made a lot of money from its decades of operating those wells. California backed the school district in this dispute. The California State Lands Commission went after Venoco for the money, but a federal judge in Delaware affirmed the bankruptcy court ruling and denied California's claim. I think this situation says way more about bankruptcy law and bonding requirements for oil and nat gas wells, than it says about well placement. This is not an isolated problem. As bankrupt producers like Whiting and Chesapeake are sure to be followed by other firms in the coming months, we are going to see more examples of the same. Bonding requirements should reflect the real cost of plugging wells, and creditors of bankrupt petroleum companies should not be permitted to recoup assets before those assets are used to cover the cost of mitigating environmental hazards. That principle holds whether the well is on a school district's property, on private property nearby, or out in the middle of nowhere. Should we hold school districts more liable than other landowners for the costs of plugging wells? Or should a licensed well operator be expected to set aside money for plugging the wells that it operates?