Not just fracking: State officials slow almost all oil permitting
Behind California’s de-facto fracking moratorium is a broader trend of growing concern to Kern’s oil industry: fewer permits for every other type of well work except plugging and abandonments.
Gov. Gavin Newsom has resisted environmentalists’ calls to halt all new drilling. But at the same time, his administration has introduced new levels of scrutiny among other changes that have restricted permitting at a time high oil prices have forced the Biden administration to open the Strategic Petroleum Reserve.
State and federal data show that in the two years after Newsom took office in 2018, California saw a 19 percent drop to 1,796 in permits given annually for new drilling. Permits awarded each year for plugging and abandonment of wells actually jumped 11 percent to 3,001 during that period, while the number awarded for work on existing wells fell 37 percent to hit 1,550.
POLITICAL FOOTBALL
California oil permitting has followed politics since before Newsom became governor. Former Gov. Jerry Brown fired former State Oil and Gas Supervisor Elena Miller in 2011 after a fervent campaign by local executives and pressure by politicians including Rep. Kevin McCarthy, R-Bakersfield.
The main complaint against Miller then was the same as it is now against state regulators: Greater scrutiny and a lack of urgency on the state’s part mean it takes longer for oil producers to get a permit that can sustain local jobs and support local tax revenues.
The head of Bakersfield-based oil producer Aera Energy LLC spotlighted the issue Nov. 10 during his keynote speech at this month’s Kern County Energy Summit.
QUIET SLOWDOWN
President and CEO Erik Bartsch clicked to show a slide titled “California Permitting
Slowdown.” It charted big jumps in the number of days the state has taken in recent years to approve underground injection permits and well stimulation projects like fracking, the controversial well-finishing technique also known as hydraulic fracturing.
His point was that Newsom is quietly attacking California’s oil supply.
“The phase-out is happening today with no public debate,” said the head of Aera, whose state permit denials for frack jobs in western Kern are the subject of a lawsuit pending in Kern County Superior Court.
STATE RESPONSE
The state’s primary oil regulator, when presented with industry summaries showing the permitting declines, pointed to the Newsom administration’s reprioritization of public health and safety in oil field project reviews, and what it called the most rigorous oversight process in the country.
The California Geologic Energy Management Division pointed to several initiatives ensuring more thorough reviews of oil field operators’ permit requests, as well as an in-depth review of the state’s permitting process. It acknowledged that additional work has taken time.
It noted a recent audit of the state’s permitting review process, CalGEM’s introduction of federal scientific reviews of fracking project applications and new regulations on injection work. It also called attention to a moratorium the Newsom administration imposed on certain high-pressure steam injection jobs after a large oil leak near McKittrick.
COURT TWIST
A twist recently arose when a judge ruled against Kern’s attempts to institute an overthe-counter permitting process for oil and gas operations. The ruling has, at least temporarily, returned CalGEM to being the lead agency in California environmental reviews of oil field projects.
The agency said in an email its staff will “rigorously review every permit request in accordance with the California Environmental Quality Act.”
“This action allows operators to move forward with more than 200 upcoming plugging operations to permanently seal old wells which are no longer in use,” CalGEM stated.
INDUSTRY VIEW
The CEO of the California Independent Petroleum Association trade group, Rock Zierman, said the state is fully empowered by the court to permit wells that have already gone through the county process prior to Oct. 6. But he said the agency insists on giving only conditional approval to new wells until the county’s permitting case is resolved.
A spokesman for the Western States Petroleum Association trade group said the Newsom administration is making it difficult for oil producers to get the permits they need to produce affordable, reliable energy for the state. He questioned why it’s happening at a time President Joe Biden is calling on Russia and OPEC to increase oil production to help lower global fuel prices.
Santa Clarita-based California Resources Corp., responding to questions about the pace of state oil permitting, voiced no complaints as it pursues well stimulation projects and “works constructively with state agencies to secure the permitting required to safely produce stable, affordable low-carbon fuel for Californians.”
CHEVRON’S COMMENTS
Chevron Corp., when asked the same questions, noted California produces just 30 percent of the oil it consumes and that, as an energy island, in-state production contributes to energy reliability and security.
The company said policies that restrict supply only shift energy production, along with high-paying jobs and tax revenue, to places with lower regulatory standards. It said it supports predictable, consistent permitting that promotes safe, responsible developing of oil and gas resources.
“We need permitting predictability and consistency to build and execute our business plans,” a Chevron spokesman wrote in an email.