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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

Urban Drilling in Los Angeles

Impact of a 2,500′ Oil and Gas Well Setback in California

Why does California need setbacks?

A new bill proposed by California State Assembly Member Al Muratsuchi (D), AB345, seeks to establish a minimum setback distance of 2,500′ between oil and gas wells and sensitive sites including occupied dwellings, schools, healthcare facilities, and playgrounds. A setback distance for oil and gas development is necessary from a public health standpoint, as the literature unequivocally shows that oil and gas wells and the associated infrastructure pose a significant risk to the communities that live near them.

FracTracker Alliance conducted a spatial analysis to understand the impact a 2,500’ well setback would have on oil and gas expansion in California. In a previous report, The Sky’s Limit California (Oil Change Internal, 2018), Fractracker data showed that 8,493 active or newly permitted oil and gas wells were located within a 2,500’ buffer of sensitive sites. At the time it was estimated that 850,000 Californians lived within the setback distance of at least one of these oil and gas wells.

This does not bode well for Californians, as a recently published FracTracker literature review found that health impacts resulting from living near oil and gas development include cancer, infant mortality, depression, pneumonia, asthma, skin-related hospitalizations, and other general health symptoms. Studies also showed that health impacts increased with the density of oil and gas development, suggesting that health impacts are dose dependent. Living closer to more oil and gas sites means you are exposed to more health-threatening contamination.

An established setback is therefore necessary to alleviate some of these health burdens carried by the most vulnerable Environmental Justice (EJ) communities. Health assessments by the Los Angeles County Department of Health and studies on ambient air quality near oil fields by Occidental College Researchers support the assumption that 2,500′ is the necessary distance to help alleviate the harsh conditions of degraded air quality. Living at a distance beyond 2,500′ from an oil and gas site does not mean you are not impacted by air and water contamination. Rather the concentrations of contaminants will be less harmful. In fact studies showed that health impacts increased with proximity to oil and gas, with associated impacts potentially experienced by communities living at distances up to 9.3 miles (Currie et al. 2017) and 10 miles (Whitworth et al. 2017).

Assembly Bill 345

This analysis assesses the potential impact of State Assembly member Al Muratsuchi’s Assembly Bill 345 on California’s oil and gas extraction and production. Specifically, AB345 establishes a minimum 2,500’ setback requirement for future oil and gas development. It does not however directly address existing oil and gas permits.

The bill includes the following stipulations and definitions:

  • All new oil and gas development, that is not on federal land, are required to be located at least 2,500′ from residences, schools, childcare facilities, playgrounds, hospitals, or health clinics.
  • In this case the redrilling of a previously plugged and abandoned oil or gas well or other rework operation is to be considered new oil and gas development.
  • “Oil and gas development” means exploration for and drilling production and processing of oil, gas or other gaseous and liquid hydrocarbons; the flowlines; and the treatment of waste associated with that exploration, drilling, production, and processing.
  • “Oil and gas development” also includes hydraulic fracturing and other stimulation activities.
  • “Rework operations” means operations performed in the well bore of an oil or gas well after the well is completed and equipped for production, done for the purpose of securing, restoring, or improving hydrocarbon production in the subsurface interval that is the open to production in the well bore.
  • The bill does not include routine repairs or well maintenance work.

Map

Figure 1. Map of Wells within a 2,500′ Setback Distance from Sensitive Receptor Sites. The map below shows the oil and gas wells and permits that fall within the 2,500′ setback distance from sensitive receptor sites.  Summaries of these well counts and discussions of these well types are included below as well.

Map of Wells within a 2,500′ Setback Distance from Sensitive Receptor Sites

View map fullscreen | How FracTracker maps work

 

Environmental Justice

The California Environmental Justice Alliance (CEJA) has just released their 2018 Environmental Justice Agency Assessment, which used FracTracker’s data and mapping to assess environmental equity in the state regulation of oil permitting and drilling. The report issued the Division of Oil, Gas, and Geothermal Resources (DOGGR) a failing grade of ‘F’. According to the report, “DOGGR is aware that the proposed locations of many drilling activities are in or near EJ communities, but approves permits irrespective of known health and safety risks associated with neighborhood drilling.”

FracTracker’s analysis of low income communities in Kern County shows the following:

  • There are 16,690 active oil and gas production wells located in census blocks with median household incomes of less than 80% of Kern’s area median income (AMI).
  • Therefore about 25% (16,690 out of 67,327 total) of Kern’s oil and gas wells are located within low-income communities.
  • Of these 16,690 wells, 5,364 of them are located within the 2,500′ setback distance from sensitive receptor sites such as schools and hospitals (32%) vs 13.1% for the rest of the state.

For more information on the breakdown of Kern County wells, see our informational table, here.

DOGGR wells

Using freshly published Division of Oil, Gas, and Geothermal Resources (DOGGR) data (6/3/19), we find that there are 9,835 active wells that fall within the 2,500’ setback distance, representing 13.1% of the total 74,775 active wells in the state.

There are 6,558 idle wells that fall within the 2,500’ setback distance, of nearly 30,000 total idle wells in the state. Putting these idle wells back online would be blocked if the wells require reworks to restart or ramp up production. For the most part operators do not intend for most idle wells to come back online. Rather operators are just avoiding the costs of plugging and properly abandoning the wells. To learn more about this issue, see our recent coverage of idle wells here.

Of the 3,783 permitted wells not yet in production, or “new wells,” 298 (7.8%) are located within the 2,500’ buffer zone.

Getting a count of plugged wells within the setback distance is more difficult because there is not a complete dataset, but there are over 30,000 wells in areas with active production that would be blocked from being redrilled. In total there are 122,209 plugged wells listed in the DOGGR database.

Permits

We also looked at permit applications that were approved in 2018, including permits for drilling new wells, well reworks, deepening wells and well sidetracks. This may be the most insightful of all the analyses.

Within the 2018 permit data, we find that 4,369 permits were approved. Of those 518 permits (about 12%) were granted within the proposed 2,500’ setback. Of the permits 25% were for new drilling, 73% were for reworks, and 2% were for deepening existing wells. By county, 42% were in Kern, 24% were in Los Angeles, 14% in Ventura, 6% in Santa Barbara, 3% in Fresno, and 2% or less in Glenn, Monterey, Sutter, San Joaquin, Colusa, Solano, Orange and Tehama, in descending order.

SCAQMD Notices

In LA, Rule 1148.2 requires operators to notify the South Coast Air Quality Management District (SCAQMD) of activities at well sites, including stimulations and reworks. These data points are reiterative of the “permits” discussed above, but the dataset is specific to the SCAQMD and includes additional activities. Of the 1,361 reports made to the air district since the beginning of 2018 through April 1, 2019; 634 (47%) were for wells that would be impacted by the setback distance; 412 incidences were for something other than “well maintenance” of which 348 were for gravel packing, 4 for matrix acidizing, and 65 were for well drilling. We are not sure where gravel packing falls, in reference to AB345.

A major consideration is that this rule may force many active wells into an idle status. If the onus of plugging wells falls on the state, these additional idle wells could be a major liability for the public. Fortunately AB1328 recently defined new idle well rules. The rules entice operators to plug and abandon idle wells. If rule 1328 is effective at reducing the stock of idle wells, these two bills could complement each other. (For more information on idle wells, read FracTracker’s recent analysis, here: http://stg.fractracker.org/2019/04/idle-wells-are-a-major-risk/)

State Bill 4 Well Stimulation Reporting

We also analyzed data reported to DOGGR under the well stimulation requirements of CA State Bill 4 (SB4), the 2013 bill that set a framework for regulating hydraulic fracturing in California. Part of the bill required an independent scientific study to be conducted on oil and gas well stimulation, including acid well stimulation and hydraulic fracturing. Since 2016 operators have been required to secure special permits to stimulate wells, which includes hydraulic fracturing and several other techniques. To learn more about this state regulation read FracTracker’s coverage of SB4. From January 1, 2016 to April 1, 2019, there have been 576 well stimulation treatment permits granted under the SB4 regulations. Only 1 hydraulic fracturing event, permitted in Goleta, would have been impacted by a 2,500’ setback in 2018.

Support for AB345

After being approved by the CA Assembly Natural Resources Committee in a 7-6 vote, the bill did not make it up for a vote in the Senate Appropriations Committee during the 2019 legislative session.  The bill was described by the committee as “promising policies that need more time for discussion.” AB345 is now a two-year bill in the state Senate and will be reconsidered by the committee in January of 2020. The Chairperson of the Appropriations Committee, Lorena Gonzalez, indicated her general support for the policy and committed to working with the author to find a way to move the bill forward at the end of the session.

By Kyle Ferrar, Western Program Coordinator, FracTracker Alliance 

Feature image by David McNew, Getty Images