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Permitting New Oil and Gas Wells Under the Newsom Administration

California regulators approve surge in well permits

FracTracker Alliance and Consumer Watchdog have uncovered new data showing an increase in oil and gas permitting by California regulators in 2019 compared to 2018, calling into question Governor Newsom’s climate commitment. Even more concerning, this investigation found that state regulators are heavily invested in the oil companies they regulate.

FracTracker Alliance’s new report with Consumer Watchdog compares oil and gas permitting policies of the current Governor Gavin Newsom’s administration with that of former Governor Jerry Brown’s administration.

The former lieutenant governor to Brown, Governor Newsom has set out to make a name for himself. As part of stepping out of Brown’s shadow, Newsom has expressed support for a Just Transition away from fossil fuels. Governor Newsom’s 2020 budget plan includes environmental justice measures and an unprecedented investment to plan for this transition that includes investments in job training.

Yet five months into Governor Newsom’s first term, regulators are on track to allow companies to drill and “frack” more new oil and gas wells than Brown allowed in 2018. The question now is: will Governor Newsom actually take the next step that Brown could not, and prioritize the reduction of oil extraction in California?

In addition, the Consumer Watchdog report reveals that eight California regulators with the Division of Oil, Gas, and Geothermal Resources (DOGGR) are heavily invested in the oil companies they regulate. FracTracker and Consumer Watchdog are calling for the the removal of DOGGR officials with conflicts of interest, and an immediate freeze on new well approval. Read the letter to Governor Newsom here.

Governor Brown’s Legacy

Around the world, Brown is recognized as a climate warrior. His support of solar energy technology and criticisms of the nuclear and fossil fuel industry was ultimately unique in the late 1970’s.

In 1980, during his second term as Governor and short presidential campaign, he decried that fellow democrat and incumbent President Jimmy Carter had made a “Faustian bargain” with the oil industry. Since then, he has continued to push for state controls on greenhouse gas emissions. To end his political career, Brown hosted an epic climate summit in San Francisco, California, which brought together climate leaders, politicians, and scientists from around the world.

While Brown championed the reduction of greenhouse gas emissions, his policies in California were contradictory. While front-line communities called for setbacks from schools, playgrounds, hospitals and other sensitive receptors, Brown ignored these requests. Instead he sought to spur oil production in the state. Brown even used state funds to explore his private properties for oil and mineral resources that could be exploited for personal profit.

Brown’s terms in the Governor’s office show trends of increasing oil and gas production. The chart in Figure 1 shows that during his first term (1979-1983), California oil extraction grew towards a peak in production. Then in 2011 at the start of Brown’s second term (2011-2019), crude oil production again inflected and continued to increase through 2015, ending a 25-year period of relatively consistent reduction.

We are therefore interested in looking at existing data to understand if moving forward, Governor Newsom will continue Brown’s legacy of support for California oil production. We start by looking at the first half of 2019, the beginning of Governor Newsom’s term, to see if his administration will also allow the oil and gas industry to increase extraction in California.

Figure 1. Chart of California’s historic oil production, from the EIA

Analysis

The FracTracker Alliance has collaborated with the non-profit Consumer Watchdog to review records of oil and gas well permits issued in 2018 and thus far into 2019.

Records of approved permits were obtained from the CA Department of Conservation’s Division of Oil Gas and Geothermal Resources (DOGGR). Weekly summaries of approved permits for the 52 weeks of 2018 and the first 22 weeks of 2019 (January 1st-June 3rd) were compiled, cleaned, and analyzed. Notices of well stimulations were also included in this analysis. The data is mapped here in the Consumer Watchdog report, as well as in more detail below in the map in Figure 2.

Figure 2. Map of California’s Permits, 2018 and 2019

View map fullscreen | How FracTracker maps work

Findings

At FracTracker, we are known for more than simply mapping, so we have, of course, extracted all the information that we can from this data. The dataset of DOGGR permits included details on the type of permit as well as when, where, and who the permits were granted. With this information we were able to answer several questions.

Of particular note and worthy of prefacing the data analysis was the observation of the very low numbers of permits granted in the LA Basin and Southern California, as compared to the Central Valley and Central Coast of California.

First, what are the types of permits issued?

Regulators require operators to apply for permits for a number of activities at well sites. This dataset includes permits to drill wells, including re-drilling existing wells, permits to rework existing wells, and permits to “sidetrack”. Well stimulations using techniques such as hydraulic fracturing and acid fracturing also require permits, as outline in CA State Bill 4.

How many permits have regulators issued?

In 2018, DOGGR approved 4,368 permits, including 2,124 permits to drill wells. In 2019, DOGGR approved 2,366 permits from January 1 – June 3, including 1,212 permits to drill wells. At that rate, DOGGR will approve 5,607 total permits by the end of 2019, including 2,872 wells.

That is an increase of 28.3% for total permits and an increase of 35.3% for drilling oil and gas wells.

DOGGR also issued 222 permits for well stimulations in 2018. So far in 2019, DOGGR has issued 191 permits for well stimulations, an increase of 103.2%.

Who is applying for permits?

As shown in Table 1 below, the operators Chevron U.S.A. Inc., Aera Energy LLC ( a joint conglomerate of Shell Oil Company and ExxonMobil), and Berry Petroleum Company, LLC dominate the drilling permit counts for both 2018 and 2019.

Aera has obtained the most drilling permits thus far into 2019, while Chevron obtained the most permits in 2018, almost 100 more than Aera. In 2019, Chevron was issued almost 3 times the amount of rework permits as Aera, and both have outpaced Berry Petroleum.

Table 1. Permit Counts by Operator

Where are the permits being issued?

Data presented in Table 2 indicate which fields are being targeted for drilling and rework permits. While the 2019 data represents less than half the year, the number of drilling permits is almost equal to the total drilling permit count for 2018.

Majority players in the Midway-Sunset field are Berry Petroleum and Chevron. South Belridge is dominated by Aera Energy and Berry Petroleum. The Cymric field is mostly Chevron and Aera Energy; McKittrick is mostly Area Energy and Berry Petroleum. The Kern River field, which has by far the most reworks (most likely due to its massive size and age) is entirely Chevron.

Table 2. Permit Counts by Field

Conclusions

Be sure to also read the Consumer Watchdog report on FracTracker’s permit data!

The details of this analysis show that DOGGR has allowed for a modest increase in permits for oil and gas wells in 2019. The increase in well stimulations in 2019 is estimated to be larger, at 103.2%.

There was the consideration that this could be a seasonal phenomenon since we extrapolated from data encompassing just less than the first half of the year. But upon reviewing data for several other years, that does not seem to be the case. The general trend was instead increasing numbers of permits as each year progresses, with smaller permit counts through the first half of the year.

Oil prices do not provide much explanation either. The chart in Figure 3 shows that crude prices were higher in 2018 than they have been for the vast majority of 2019. The increase in permits could be the result of oil and gas operators like Chevron and Aera anticipating a stricter regulatory climate under Governor Newsom. Operators may be securing  as many permits as possible, while DOGGR is still liberally issuing them. This could be a consequence of the Governor’s recognition of the need for California to begin a managed decline of fossil fuel production and end oil drilling in California.

Could this be an early industry death rattle?

Figure 3. Crude prices in 2018 and 2019

July 12, 2019 Update: Governor Gavin Newsom has reacted swiftly to the report by Consumer Watchdog and FracTracker regarding findings of conflicts of interest within DOGGR and the quickening rate of well permitting, by firing California’s top oil and gas regulator Ken Harris.
Newsom’s chief of staff Ann O’Leary also requested other changes to California’s Department of Conservation. O’Leary stated:
“The Governor has long held concerns about fracking and its impacts on Californians and our environment, and knows that ultimately California and our global partners will need to transition away from oil and gas extraction. In the weeks ahead, our office will work with you to find new leadership of (the division) that share this point of view and can run the division accordingly.”

By Kyle Ferrar, Western Program Coordinator, FracTracker Alliance

South Belridge field by Sarah Leen, National Geographic

Trends in California’s Oil and Gas Development

By Kyle Ferrar, Western Program Coordinator

Over 38,000 oil and gas wells have likely been hydraulically fractured in California. The last permitted hydraulic fracturing operation in CA was approved in June 2015. Additionally, new aquifer exemption proposals will make it easier for operators to obtain hydraulic fracturing permits. One of the most interesting and troubling issues we found when analyzing the data on violations is that operators with the highest number of new well permits are also responsible for the majority of violations. In this article, we provide a look at these and other the trends of unconventional drilling in CA.

Updated CA Shale Viewer

First of all, the CA Shale Viewer has been updated! New data has been uploaded into the map about unconventional drilling in California, and new data resources have been used to identify shale gas activity (Fig. 1). Recent reports in CA have exposed what many researchers expected – hydraulic fracturing has been occurring in the state without any oversight or documentation for a long time.

In this presentation of the Updated CA Shale Viewer we showcase an analysis of these new data sources that better describe unconventional drilling in CA. We then look to new well permitting data to see what current spatial trends may mean for future oil and gas development. We also look at a sample of operator violations issued by the state regulatory agency to tell us a bit about who the bad actors may be.

Figure 1. CA Shale Viewer – Location of well stimulation & other unconventional oil & gas activity


View map fullscreen | How FracTracker maps work

Current Fracking Activity

Fracking in California has been put on hold at the moment as a result of low oil prices combined with the new permitting requirements for groundwater monitoring. In 2015, the CA Council on Science and Technology (CCST) released a report on hydraulic fracturing, as required by State Bill 4, proposed by Senator Pavley. The legislation required the Division of Oil, Gas and Geothermal Resources to create regulations for hydraulic fracturing and other stimulation activities such as acidizing. The report highlighted the necessity of protecting California’s groundwater resources. As another requirement of SB4, the state water resources control board adopted Model Criteria for Groundwater Monitoring in areas of Oil and Gas Well Stimulation, which includes three main components:

  1. Area-specific required groundwater monitoring near stimulation wells by operators
  2. Requirements for designated contractor sampling and testing
  3. Regional scale groundwater monitoring to be implemented by the State Water Board

With these requirements in place to protect groundwater, using hydraulic fracturing and other “extreme” high energy input techniques to extract oil is not currently economical in California. Operators have not submitted a permit application for hydraulic fracturing in CA since June 2015.

This status may change in the near future, though, as DOGGR has proposed groundwater monitoring exemptions for 3 large aquifer systems in Kern and Arroyo Grande counties. Such a proposal would mean that operators would not have to monitor for groundwater contamination in these areas when using hydraulic fracturing or other stimulation technologies like acidizing.

Previous Fracking Activity

One outcome of the aforementioned CCST report on hydraulic fracturing was a review of stimulation activity that has occurred in CA but went undocumented. Researchers at Lawrence Berkeley National Laboratory (LBNL) screened thousands of oil and gas well logs and records to calculate the extent to which hydraulic fracturing was actually being used in California’s oil fields. LBNL derived “Well Stimulation Treatment” probabilities based on the number of well records that reported utilizing hydraulic fracturing.

Probabilities were then derived for each pool, which is a geographically isolated formation within an oil field. Using these probabilities, FracTracker calculated a conservative estimate for the number of stimulated wells in the state at over 38,000. There are 228,010 unique Well ID’s listed in the DOGGR database. This puts the proportion of hydraulically fractured wells in California at 16.7% of the total 228,090 wells known.

New Wells

Whereas many other states break down their oil and gas data to show in what phase of development a well may be, CA identifies all wells between the permitted and producing/injecting phase as “new.” In Figure 2 below you can see the wells identified in 2016 as “new.” The DOGGR dataset shows there are currently 6,561 new wells in California as of July 2016. Counts of new well permits were calculated for individual operators and are listed below in Table 1.

Table 1. Top 10 operators according to new well permit counts in California, along with the number of new well permits currently active, the percent those permits represent of total new well permits in the state, and the percentage of violations the operator is responsible in the DOGGR dataset provided to FracTracker Alliance.

Order Operator Permit Count Permit % Violations %
1 Aera Energy LLC 2012 30.67% 22.34%
2 Chevron U.S.A. Inc. 968 14.75% 20.35%
3 California Resources Production Corporation 768 11.70% 5.89%
4 Linn Operating, Inc. 574 8.75% 12.04%
5 E & B Natural Resources Management Corporation 572 8.71% 1%
6 California Resources Elk Hills, LLC 374 5.70% 5.52%
7 Seneca Resources Corporation 185 2.82% 2.83%
8 Freeport-McMoRan Oil & Gas LLC 164 2.50% 15.22%
9 Vaquero Energy, Inc. 154 2.35% 0.22%
10 Macpherson Oil Company 116 1.77% 2.09%

There are 68 fields in CA that have added new wells in the new DOGGR dataset published in July 2016. The top 10 fields are listed in Table 2 below.

Table 2. Top 10 Oil Fields by Permit (New Well) Count

Order Oil Field Well Count
1 Belridge, South 1518
2 Midway-Sunset 903
3 Poso Creek 553
4 Lost Hills 488
5 Cymric 336
6 Kern River 294
7 Elk Hills 276
8 Kern Front 233
9 McKittrick 186
10 Belridge, North 174

In Figure 2 below, the counts of new wells in fields are shown in shades of yellow/red. The fields with the highest number of new wells are located in the Central Valley. The top 10 operators’ wells are also identified. The majority of new well permits are located in the South Belridge oil field, and the majority of those wells are operated by Aera Energy. As can be seen in the map, most new wells are located in fields in Kern county, but Santa Barbara and Fresno, and even Salinas counties have fields with 40 or more new well permits.

Figure 2. New Well Permitting Map of Unconventional Drilling in California


View map fullscreen | How FracTracker maps work

Violations

Who collects violations data?

In most states with heavy oil and gas drilling, data on violations is collected by the state regulatory agency, aggregated in datasets and spreadsheets, and made available to the public. FracTracker has done analyses with such data in the past.

In Pennsylvania for instance, a 2011 look at the data showed us that as the number of inspectors on the ground in the Marcellus Shale fields increases, the number of violations/well actually decrease. This was important information that challenged the cynical hypothesis: that more inspectors mean additional eyes on the ground to identify more violations during inspections. In reality, more inspectors actually mean that operators are held to higher standards, and further best management practices (BMPs) are employed. This trend at least seemed to be the case in Pennsylvania. As a regulatory agency, such knowledge is incredibly important, and even validates increased spending and budgets for more personnel.

In California, the issue of publishing violations data is again met with a similar response from the Division of Oil Gas and Geothermal Resources (DOGGR), specifically the “Oh, is that my job?” question.

How is it shared?

At FracTracker, we spent time working with regulatory officials at DOGGR to get some data on violations. We were informed that at some point in the future, the data may be aggregated and available digitally. Until then, however, a request for the data would have to be made to each of the six district offices individually and would take approximately a year to pull together scanned copies of violations notices in PDF format. Unfortunately, we at FracTracker do not have the capacity to process such files. Instead we asked for anything DOGGR had digitally available, and we were provided with a sample subset of 2,825 violations dating mostly from 2013 and 2014 and only in District 2, the Los Angeles Basin.

What does CA violations data look like?

Looking at the sample of data in Table 2, we see that the majority of violations are caused by the operators that also have the most new well permits. Aera Energy, in particular, is responsible for over 1/5 of all violations in our sample set. Limiting factors and sampling bias of the sample set of violations may impact this analysis, though, as all violations are limited to Los Angeles County.  Operators that mostly operate in the Central Valley will be under represented in the violations count. When more violations data becomes available we will be sure to expand this analysis.

Bans and Regulations on Unconventional Drilling in California

Although every state regulatory agency lambasts that they have the most comprehensive and conservative set of oil and gas extraction regulations, California regulators may actually be right. That is, save for New York which has banned hydraulic fracturing outright.

Regardless of the policy decisions made at the state-level, multiple local municipalities in CA have attempted to or succeeded in passing local bans. Six counties have passed outright bans on unconventional drilling in California, as can be seen in the FracTracker Local Actions map below (Fig. 3). Most recently the county of Alameda, home to the cities of Berkeley and Oakland, has passed a ban. The county of Monterey is also considering a ban on all oil and gas extraction, which has been approved as a local ballot initiative for November 2016.

Figure 3. Local Actions, Bans and Regulations Map


View map fullscreen | How FracTracker maps work

As the price of oil rebounds closer to $100/barrel, there will be more interest by operators to increase unconventional drilling in California. The addition of new aquifer exemptions will make it all the more appealing. These local movements are therefore incredibly important to ensure that “extreme” extraction methods like fracking don’t expand in the future.

Feature Photo: South Belridge field by Sarah Leen, National Geographic