Nearly four years ago, California lawmakers ordered state regulators to prepare for an industry that promised a new way to fight climate change: permanently burying carbon dioxide underground.
The law called for rules governing how companies would monitor stored carbon and respond if something failed. It set a January 2025 deadline to address how companies would prove they could pay for cleanup and other costs, and to establish a single application coordinating permits across agencies.
More than 19 months after that deadline, California has not adopted its carbon storage rules.
In May, California’s largest oil producer, California Resources Corp., began burying carbon at Elk Hills, a vast, century-old oil field in rural Kern County. With its injections, the project became an important test run: the U.S. Environmental Protection Agency, which approved the injections, could point to no other project like it in the United States.
Without its own rules in place, California can’t hold companies like CRC to a tougher standard than the federal government, or make sure for itself that the carbon — a gas that suffocates people in high concentrations and drives climate change — stays in the ground.
“If something does go wrong, there are a lot of really important questions about who would actually address those concerns and impacts,” said Michelle Ghafar, an Earthjustice attorney representing groups suing to stop the project. “And we have a history of oil companies not taking responsibility for cleaning up their messes.”
State leaders have championed the Elk Hills project. Gov. Gavin Newsom has called the Elk Hills injections “proof that innovation and ambition are the California way.” State Sen. Anna Caballero said she never meant the law she authored, which ordered the rules, to stall projects already in progress.
The state is counting on carbon capture to meet its ambitious climate goals. Advocates long described the technology as a fix for industries that are hard to clean up, such as cement plants. But the California Air Resources Board, the state’s main climate regulator, has told CalMatters it likely can’t cut emissions to 85% below 1990 levels without using carbon capture far more widely, including potentially at gas-fired power plants.
The task of writing the carbon storage rules falls to the air board. Two other agencies already oversee parts of the project: the Geologic Energy Management Division, or CalGEM, which regulates oil and gas wells, and the U.S. EPA, which permits the injection wells under federal drinking-water law.
But questions about who has authority over the project remain unresolved. It’s not clear which agency is in charge if carbon escapes through one of the oil field’s older wells, for instance. CalGEM regulates those wells, but the company’s emergency plan requires notifying the EPA when something goes wrong.
Air board officials said staffing issues kept them from getting the rules done in time. They pointed to the oversight that exists, which includes the federal permit designed to keep drinking water safe and a Kern County approval whose environmental review is being challenged in court.
The financial stakes are high. The project could earn billions in public money — funded partly by federal tax credits, partly by California drivers — if the project scales up as planned.
“If you’re a driver, you should care how this money is being spent,” said Danny Cullenward, a climate expert and vice chair of an independent committee that reviews the carbon market. “You are also paying a lot of money for very large oil companies to experiment with these technologies in the absence of a regulatory framework.”
The company sees its storage business as both aligned with the state’s goals, as well as an opportunity.
“Our goal is to be a partner to the state as it transitions into the future that it envisions for itself,” said Jas Sajjan, the company’s senior vice president of government affairs.
Depleted reservoirs pierced by drilling
Amid the scrub-covered Elk Hills west of Bakersfield, an oil field worker in a hard hat turned a green valve by hand. On a nearby sign, red digits glowed like a scoreboard, tallying the tons as California’s largest oil producer began pumping carbon dioxide deep underground.
The scenes, captured in promotional photographs the company released of the May injections, were among the company’s chosen images of the moment. The Elk Hills project is the first of a joint venture called Carbon TerraVault that CRC formed with New York investor Brookfield Asset Management to pursue its carbon capture projects.
For decades, oil companies have injected carbon dioxide into aging fields to squeeze out more crude, a practice banned in California called enhanced oil recovery. At Elk Hills, the carbon is injected solely for permanent storage — the only known project of its kind in the U.S., the EPA said.
The company, federal regulators and state officials see the field’s vast, depleted reservoirs as well suited for storage because they held oil and gas for millions of years.
But the field’s appeal as a storage site is its own risk. It’s been drilled since 1910, and old wells could give carbon dioxide a path back to the surface. The nearest community, Valley Acres, sits less than four miles away.
FracTracker Alliance, a nonprofit that maps oil and gas development, identified 913 oil and gas wells within a mile of the project’s four injection wells, in a new analysis for the advocacy group Consumer Watchdog. Most of them are unplugged, and even plugged wells can deteriorate, said Kyle Ferrar, the group’s western program director. The count may understate the total, since old records may omit wells entirely, he added.
The concern isn’t new. In 2024, a retired federal geoscientist who reviewed the project warned that 204 wells pierced the rock layer meant to seal the reservoir now receiving injections and could become escape routes for carbon dioxide.
The project’s emergency plan and the permit behind it rest on the Safe Drinking Water Act, but also require surface air monitoring and a plan to inform the public of an emergency.
But that leaves a gap, experts say: federal rules require regular integrity tests only on the injection wells themselves, not the hundreds of older wells around them, said Forrest Smith, a petroleum engineer who spent six years as the National Park Service’s sole engineer overseeing thousands of aging oil and gas wells. That leaves much of the burden on the company to police itself.
“There’s not a lot of going back and checking these old wells until they become a problem,” he said. “It’s really making sure that the companies doing this are staying on top of it.”
The company declined to comment on the FracTracker analysis or the geoscientist’s earlier concerns, but said the risks have been addressed. Before injection began, the EPA required the company to plug or replug about 200 wells, the agency said in a press release. It relied on records from CalGEM, the state’s oil and gas regulator, said Mikayla Rumph, an EPA spokesperson.
CalGEM confirmed it reviewed the wells ordered plugged by the EPA. The state retains authority over other wells in the field, including observation wells tied to the project, but won’t regulate the injection wells themselves, said Jacob Roper, a spokesperson for CalGEM.
The rules were never meant to delay projects
California released its first outline of its carbon capture rules in May, and environmentalists say it falls short of the law. The air board expects to finish the rules this year.
Oil industry and business groups want the already-delayed process finished, not expanded.
The air board’s outline requires companies to monitor their sites, disclose results, and prove they can pay to fix a leak or plug a well for 100 years after injection ends. But because the air board hasn’t finished the rules to enforce that standard, it’s unclear whether the 100-year requirement applies to Elk Hills now, or the shorter federal standard governs in the meantime.
The outline also does not say whether companies’ monitoring work would be independently verified, or spell out when a leak or earthquake would require warning nearby residents.
CRC has told the EPA it plans to monitor groundwater quality and track the underground carbon dioxide plume for 50 years after injection ends. The company has also posted a $9.1 million letter of credit to plug wells and care for the site afterward, and bought a separate $24.6 million insurance policy to cover the cost of responding if something goes wrong.
It has asked the air board to define what added coverage the second 50 years would require, arguing the risk is lower once the plume has settled.
At an online public meeting in June, Jon Kendrick of the California Chamber of Commerce urged the air board to avoid duplicating federal rules. In written comments, CRC asked the board not to impose broader California-specific requirements.
Katie Valenzuela, an environmental justice policy advocate, said the air board’s outline leans too heavily toward shifting responsibility onto the companies themselves. “What’s the point of having standards and rules if there’s no mechanism in place to ensure those things are being met?” she asked at the meeting.
Matthew Botill, a division chief for the air board, said Senate Bill 905, the 2022 law ordering the rules, never gave the air board power to override agencies already permitting projects. In a separate interview with CalMatters last year, Botill said his agency didn’t have the budget to hire the experts needed to write the rules on time. Even if rules were in place, Botill told CalMatters, his agency would not have the authority to approve or block projects. Doing so is “outside” the state’s “direct regulatory purview,” he said.
That was intentional: As the law moved through the Legislature, its author, Caballero, sent a letter telling agencies not to let the coming rules delay projects already underway.
Caballero, in a statement to CalMatters, said the law was meant to coordinate existing agencies. California needs projects like Elk Hills to hit its climate goals and create jobs.
“We want to encourage the kind of investment that helps California meet its climate goals while creating and protecting jobs,” she said.
A technology that could spread
With billions in public money on the table, carbon storage projects could spread across California.
CRC is injecting carbon captured from its cryogenic gas plant in Elk Hills which cools gases to extremely low temperatures to separate them.
The company also intends to draw carbon from a nearby natural-gas power plant, opening another source of carbon for the project.
The company is pressing state utility regulators to let natural gas plants fitted with carbon capture count as clean power. If regulators agree, utilities could sign long-term contracts for that electricity, opening a new market for the company, a prospect chief executive Francisco Leon called “a game changer,” and “an incredible opportunity” in May.
The company has also signed agreements to bury carbon dioxide from other businesses, part of a plan to turn its statewide storage sites into hubs for the state’s industrial emissions.
A statewide build-out would likely need pipelines to move that carbon to the wells. California lifted its moratorium on those pipelines last year, and new rules adopted by the Office of the State Fire Marshal went into effect last month. Those rules don’t require the gas to be given an odor, leaving people near a leak no way to smell it, said Liza Tucker, a researcher with the group Consumer Watchdog.
In a new report, Tucker argues that carbon storage is a lifeline for an industry the state is supposed to be winding down.
“All it does is entrench us and invest us in keeping fossil fuels alive far longer than we ought to be,” Tucker said.
For now, the company is injecting carbon at Elk Hills while an environmental lawsuit over the project remains unresolved. The suit, brought by a coalition of Kern County community groups and environmental organizations, argues the project’s environmental review never grappled with where all the carbon will come from: the capturing and piping of carbon from industrial sources into a region already among the most polluted in the country.
Ghafar, the Earthjustice attorney representing groups challenging the project, said no single agency is examining the project’s full range of risks. Federal regulators focus largely on drinking water, while state agencies oversee separate pieces of the project, leaving unanswered who would take charge if carbon dioxide escaped aboveground, she said.
“It’s really alarming that they’ve started injection when we don’t have a decision yet from the court on these really important questions about whether the risk of leaks, disasters and proper regulation have been fully addressed,” Ghafar said. “There really is no one agency or one entity that is looking at the full scope.”
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This story was originally published by CalMatters and distributed through a partnership with The Associated Press.
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