The struggle against California’s expansion of fracking continues as oil prices plunge

  • Published on April 27th, 2020

Dozens of oil tankers with 20 million barrels of crude oil are at this time floating off the California Coast from Long Beach to San Francisco with nowhere to go. The oil aboard these tankers could satisfy 20 percent of world’s production, according to oilprice.com. There is apparently no place at this time to store this oil, since the price of oil has collapsed below zero. On April 20, US oil prices plunged, falling below $0 to $-37.63 a barrel, the lowest since oil futures trading was opened in 1983, according to Julia Horowitz, a reporter for CNN Business. Nobody wants to buy the oil — and so oil companies are paying to have the oil stored.

End of fracking? Oil tankers off california

By Dan Bacher

The market collapse was immediately spurred by the COVID-19 pandemic reducing demand and oil producers scrambling for locations to store their excess crude. However the oil industry was in deep trouble before COVID 19, since it was overproducing and was deeply in debt.

Ironically, the collapse takes place at time when California regulators under Gavin Newsom have continued to approve new permits for fracking and other oil and gas drilling.

The State Department of Conservation on Friday, April 3 approved 24 new fracking permits in Kern County, the center of the oil industry in California, during the midst of the COVID-19 Pandemic and after a nearly six-month moratorium on new fracking operations.

The California Geologic Energy Management Division (Cal-GEM), formerly DOGGR, issued the fracking permits to Aera Energy, jointly owned by affiliates of Shell and ExxonMobil. The Well Stimulation National Laboratory Scientific Review document is available at www.conservation.ca.gov/

The permits are the first to be issued in more than six months, following a moratorium that was placed on the practice announced by Governor Gavin Newsom last November that established a new third-party review by the Lawrence Livermore National Laboratory.

The oil price plunge highlights how absurd it is for California regulators to continue Governor Jerry Brown’s expansion of oil and gas drilling as they have since Newsom took office in January 2019.

Environmental justice advocates, conservationists and public health advocates were very disappointed by the approval of environmentally destructive fracking operations as coronavirus infections, hospitalizations and deaths increase daily, although less than in other states due to Governor Gavin Newsom’s stay-at-home order and other emergency measures.

“It just doesn’t make any sense to approve fracking permits in the state of California now,” said Liza Tucker, consumer advocate for Consumer Watchdog. “It’s clear that it’s time to sunset fossil fuels and effect a just transition to a new energy economy. We should end fracking right now and phase out oil and gas production in the state in a rational, managed way. We should not be issuing new permits for oil and gas drilling.”

Last November’s moratorium on fracking came after the Last Chance Alliance, a coalition of over 700 health, environmental justice, climate and labor organizations, conducted a multi-year campaign calling on =Governor to protect the health and safety of communities living on the front lines of the state’s massive fossil fuel industry.

In July 2019, Governor  Newsom fired the state’s head oil and gas supervisor a day after Consumer Watchdog and the FracTracker Alliance revealed that the number of fracking permits issued from January to June had doubled under Newsom from those issued under Governor Jerry Brown during the same period, They also exposed number of financial conflicts of interests held by state regulators. Newsom claimed he was unaware of the fracking expansion.

However, fracking opponents strongly condemned the approval of new fracking permits at a time that the state is shut down and people are dying everyday from the COVID-19 virus.

“By allowing a sudden return to fracking in the state, Governor Newsom has shown his true oily colors,” said Alexandra Nagy of Food and Water Watch. “Despite his pledges to ban fracking and bring California into a clean energy future, Newsom has quietly fallen into line with the corporate fossil fuel interests that have been polluting this state’s air and water for decades.”

Number of new oil and gas permits approved under Newsom last year rivals those issued under Jerry Brown

The issuing of new fracking permits took place less than two months after Consumer Watchdog and the FracTracker Alliance reported that the total number of oil and gas well permits issued in 2019 under the Newsom Administration rivals the number issued during the last year in office of former Governor Jerry Brown.

The Newsom Administration issued just 1% fewer permits for a total of 4,545 in 2019 versus 4,590 for all of 2018, according to the groups.

“The numbers give fresh urgency on the need to order a 2,500-foot health barrier between oil industry operations and people living as close as just yards away,” Consumer Watchdog and FracTracker Alliance wrote in a letter to Governor Newsom on the eve of his state of the state address. “

Read the letter to Newsom here.

It is no surprise that the 4,545 permits were issued in a year where oil industry organizations again dominated lobbying spending in California.

The Western States Petroleum Association (WSPA), the largest and most powerful corporate lobbying group in California, placed first in the annual lobbying “competition” in California in 2019 with $8.8 million spent on influencing the Governor’s office, legislators and other state officials, a position it captures most years.

The San Ramon-based Chevron spent the third most money on lobbying in California last year, spending a total of $5.9 million.

When you add the $8.8 million from WSPA and the $5.9 million from Chevron, that comes to a total of $14.7 million spent on lobbying between the two oil industry giants alone.

New Website tracks oil and gas well permits

The oil and gas well permit numbers and locations issued by the Newsom administration amidst heavy lobbying by WSPA and Chevron are posted and updated on an interactive map at the website NewsomWellWatch.com.

FracTracker and Consumer Watchdog said they launched the website in 2019 to regularly track and update the number of oil and gas wells permitted by the Newsom Administration.

The Geologic Energy Management Division (formerly the Department of Conservation’s Division of Oil, Gas and Geothermal Resources) issues two main categories of permits: permits to drill new oil and gas wells and permits to rework existing wells. Permits are issued for different types of wells, including “Enhanced Oil Recovery Wells” (EOR) that use steam and water flooding and cyclic steaming to dislodge oil, according to the groups.

“Last year, permits for new wells rose 4.9% over 2018 while permits to rework existing wells fell 6.5%. The numbers suggest that the oil industry is seeking to drill as many new wells as possible just as many old wells fail to produce enough oil to be profitable. The total number of permits issued came in at just 1% less than the total in 2018,” the groups said.

The number of fracking permits fell 5.4% over 2018 to 211 permits issued in 2019 after Consumer Watchdog and Fractracker Alliance revealed last July a doubling of fracking permits in the first five months of 2019.  Newsom immediately called for a moratorium on fracking and high-pressure cyclic steaming permits for the rest of the year, the groups stated.

Permits for wells within 2,500 feet of homes, hospitals, daycares, or nursing facilities made up 12.2% of permits issued in 2019, a bad sign for public health. “Proximity to oil and gas drilling has been shown to increase the risks of cancer, congenital disorders, asthma and other health impacts while new wells will contribute to climate change worldwide,” the groups said.

According to FracTracker Alliance, permits for new cyclic steaming and steam injection wells—dangerous and dirty techniques to access hard-to-reach crude oil—rose 23.5% over 2018, from 1,077 to 1,330. While Newsom temporarily suspended high-pressure cyclic steaming, which can break rock formations, most cyclic steam in California is done under lower pressures.

“Since Newsom announced his moratorium on high pressure cyclic steaming in November 2019, CalGem has permitted 63 new cyclic steam wells, 9 in the Cymric Field where Chevron’s cyclic steam wells caused an 80,000-gallon spill and surface expressions continue, according to FracTracker’s crunching of state data,” the groups said.

Last July, Consumer Watchdog and FracTracker revealed that 2019 permits for new production wells had risen by 7% over the first six months of 2018 and that fracking permits had doubled.

That is when the Governor took some initial steps to rein in and review permit approvals. He also fired the top oil regulator and instituted an ethics review after the groups disclosed that top oil regulators held stock in companies that they regulate,

The two groups are hopeful that Newsom will support the creation of a 2500 foot health setback between oil and gas wells and homes, schools, hospitals and other facilities.

“Newsom hasn’t taken oil money for his gubernatorial campaign,” said Liza Tucker, consumer advocate for Consumer Watchdog. “He’s not beholden to the oil industry financially. We applaud what he has done to date; he has taken some very encouraging actions. He’s begun to house clean the oil regulation division of the Department of Conservation.”

Under pressure from Big Oil, California still doesn’t health and safety setbacks

In addition to pressuring California officials to continue to oil and gas drilling expansion in California, the money spent on lobbying by WSPA, Chevron and other oil companies was successful in preventing the Legislature from approving (Assemblymember Al Muratsuchi’s) AB 345, a bill to ensure that new oil and gas wells not on federal land are located 2,500 feet away from homes, schools, hospitals, playgrounds and health clinics,

Assemblymember Lorena Gonzalez made it into a two-old bill after pulling the bill from the Assembly Appropriations Committee that she chairs on May 16.

According to state campaign finance data unveiled by investigative journalist Steve Horn for the Real News, Gonzalez has received campaign money throughout her career, including $13,000 from Tesoro $3,500 from ExxonMobil, $7,000 from the CA Independent Petroleum Association ($7,000), and $11,300 from Chevron,

For more information, read: Why Did the California Assembly Table Oil Setbacks Bill? therealnews.com/…

Unlike many other oil and gas producing states including Texas, Colorado and Pennsylvania, supposedly “green” California currently has no health and safety zones around oil and gas drilling operations.

For example, the state of Texas requires that fracking operations maintain 250 foot setbacks from homes, schools and other facilities while the City of Dallas mandates 1500 foot setbacks around oil and gas wells.

However, despite the flurry of oil industry spending on AB 345 and other bills last year, the bill made considerable progress this year in the Legislature before they went into recess because of the COVID-19 Pandemic, passing the Assembly Floor by a vote 42 to 30 on January 27:  www.dailykos.com/…

AB 345 is now in the Senate. The bill has been read for the first time and has gone on to the  Committee on Revenue & Taxation (RLS) for assignment.

Big Oil Regulatory Capture in California Continues

The increase in oil and gas drilling permits in recent years — and fact that California has no health and safety setbacks like many other states do — is a result of the millions of dollars every year that WSPA and oil companies spend on lobbying state officials, including the Governor’s Office and state regulatory agencies, as well as the many millions spent by the oil industry on campaign contributions to politicians and campaign committees.

Both the Jerry Brown and Gavin Newsom administrations expanded oil and gas drilling in California in recent years. The Brown administration approved 21,000 new or reworked well permits and Newsom’s regulators approved over 4,545 in 2019, his first year as Governor. In addition, state regulators, while opposing new offshore drilling leases in federal waters off California have increased offshore drilling permits in state waters under existing leases.

At the same time that California officials are still approving new oil and gas wells, a report by the California Council on Science & Technology reveals that California taxpayers could be on the hook for more than $500 million to plug 5,540 “orphan” wells drilled and abandoned by oil and gas companies.

The study, “Orphan Wells in California: An Initial Assessment of the State’s Potential Liabilities to Plug and Decommission Orphan Oil and Gas Wells,” was conducted at the request of the Division of Oil, Gas, and Geothermal Resources (DOGGR), now called the California Geologic Energy Management Division (CalGEM), under the California Department of Conservation.

“An initial analysis of readily available information suggests that 5,540 wells in California are, as defined, likely orphan wells or are at high risk of becoming orphan wells in the near future,” the report states. “The State’s potential net liability (subtracting available bonds held by CalGEM) for these wells is estimated to be about $500 million.”

The Western States Petroleum Association (www.wspa.org) is the largest c corporate lobbying group in California. WSPA describes itself as “a non-profit trade association that represents companies that account for the bulk of petroleum exploration, production, refining, transportation and marketing in the five western states of Arizona, California, Nevada, Oregon, and Washington.” WSPA’s headquarters is located in Sacramento, California. Additional WSPA locations include offices in Torrance, Concord, Ventura, Bakersfield, and Olympia, Washington.

Over the past decade, WSPA and Big Oil have topped the list of spenders on lobbying the Legislature in California. During the 2015-2016 Legislative Session, the oil industry spent a historic $36.1 million to lobby lawmakers and officials in California.

WSPA and Big Oil wield their power in 6 major ways: through (1) lobbying; (2) campaign spending; (3) serving on and putting shills on regulatory panels; (4) creating Astroturf groups: (5) working in collaboration with media; and (6) contributing to non profit organizations.

Here are the five top spenders over the past five years:

  • Western States Petroleum Association, $43.3 million.
  • California State Council of Service Employees, $24.3 million.
  • Chevron, $19.9 million
  • PG&E, $18 million
  • California Hospital Association, $17.5 million.

For more information about WSPA and Big Oil, read: How big oil dominates the public discourse to manipulate and deceive

(Image by Raw2Jpeg from Pixabay)

About the Author

Dan Bacher is an environmental journalist in Sacramento who focuses on California's water issues, a healthy environment for the salmon fishery of the Northwest, and the attempts by big agriculture and big oil to hog all the water.