Oil & Gas in the Next Era

Transcript

Mike Mills
Partner, Environmental & Natural Resources

My name is Mike Mills. I am a partner in the Environment, Land Use and Natural Resources Practice Group. My office is in Sacramento, and I have been with the firm for almost 17 years.

Could retiring oil fields become the next big opportunity?

Well, another trend that I see developing in the oil and gas industry in particular is a need for asset retirement of historic oil and gas fields. What that essentially means is the closure and remediation of those fields. As those fields come to the end of their useful life and they are depleted, there are additional regulations now in place that are requiring oil and gas operators to plug and abandoned wells faster, to take steps to ensure that wells are not sitting idle. All of those regulations are forcing operators to take a look at their oil and gas fields and potentially close them sooner than they otherwise would. Those closures are going to result in significant environmental remediation projects. In addition to that, ultimately, those oil fields, a lot of them, are in very desirable locations in the Los Angeles Basin along the coast. A lot of those are going to be, I think, ultimately redeveloped into commercial and residential developments.

Are land lease agreements ready for environmental cleanup obligations?

One piece of advice I would give to clients as they start considering whether they are going to redevelop an oil and gas field is to start looking at their leases and see what the leases say about remediation and lease restoration obligations. Leases generally are not cookie cutter, and I have seen leases with very distinct and different obligations on the operator in terms of what they have to do to restore the surface of the land.