California Permits to Drill New Oil and Gas Wells Increase 190% in First Six Months of 2020

By Dan Bacher | 

Los Angeles — As the California Resources Corporation and other oil companies filed for bankruptcy and COVID-19 cases shattered California daily records in the second quarter of 2020, oil regulators under Governor Gavin Newsom approved over 1500 new oil and gas production well drilling permits, Consumer Watchdog and FracTracker Alliance revealed in a report released on September 2.

The California Geologic Energy Management Division (CalGEM), a branch of the Department of Conservation, approved 190% more permits to drill new oil and gas production wells in California in the first six months of 2020 over Newsom’s first six months in office, according to the two public interest groups.  

To make matters worse, after a nine-month moratorium on fracking that began in July 2019, the groups revealed that CalGEM issued 48 new fracking permits to Aera and Chevron between April and July 2020. , Newsom issued 211 fracking permits during his first year in office, 2019.

To date in 2020, Newsom’s regulators have issued 1,547 new oil and gas drilling permits, 2,691 oil well rework permits, and 2691 total permits. The total number of permits approved by CalGEM since January 2019 is an alarming 7474, challenging California’s carefully cultivated image as a “green” and “progressive” state.

The permit numbers and locations are posted and updated on an interactive map at the website: NewsomWellWatch.com 

“This is exactly the wrong trendline we would expect to see at this point under Governor Newsom,” said Consumer Advocate Liza Tucker.  “We should have seen a ban on fracking, as the Governor promised during his campaign. We should be seeing fewer permits issued. That would be the natural result if we made oil companies pay for the true cost of doing business in California by putting up the money necessary to plug and clean up a well when they get a permit to drill one, as state law allows.”

“Oil companies appear to be applying for new permits without intending to use them, perhaps to draw new investors in the middle of a financial crisis due to COVID-19 and a plunge in oil demand and prices,” Tucker stated. “The last thing California should be doing is abetting them to go deeper into debt without shielding Californians from the financial consequences of being left holding the bag on well plugging and cleanup if they go under.”

For example, Tucker said the San Ramon-based Chevron had applied for six fracking permits but the state oil and gas supervisor denied them on August 7 on grounds that the agency would have to perform an environmental review. Chevron promptly said it did not want to continue with the permit applications.

See: https://www.conservation.ca.gov/calgem/Documents/WST/Chevron-WST-Permit-denial-letter-8-7-2020-ADA.pdf

California has on hand only $107 million in bonding from oil companies to plug and decommission all of the state’s wells and associated infrastructure when the actual liability is $9.2 billion, report by the California Council on Science & Technology.

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 CalGEM.  

“The increase in production well permits was accompanied by a decrease in the number of permits to drill new enhanced oil recovery (EOR) wells that use extraction techniques such as steaming and water flooding to loosen up oil, as well as a reduction in the number of permits issued to rework some types of existing wells.  This is likely a result of Governor Newsom's ongoing moratorium on high-pressure steam injection due to resulting oil spills and groundwater contamination,” according to the groups.

Permits by Well Types	Permit Count
Oil and Gas Production	*EOR & Support Wells	O&G and EOR Totals	Well Stimulation
Year	New Drilling	Rework	New Drilling	Rework	New Drilling	Rework	Total	Total
2019	467	736	950	570	1,417	1,306	2,723	211
2020	1,354	571	193	573	1,547	1,144	2,691	48
Percent Change	189.94%	-22.42%	-79.68%	0.53%	9.17%	-12.40%	-1.18%	-77.25%

*EOR stands for Enhanced Oil Recovery

Courtesy of FracTracker Alliance Analysis of Department of Conservation Data

The groups said the Newsom Administration has issued 1,547 new well drilling permits for both production wells and wells using enhanced techniques and 1,144 well rework permits in the first six months of 2020 for a total of 2,691 permits,.

 “The total between them represents a very slight drop of 1.2% over the first six months of last year. The reduction in permits for well reworks and new wells using enhanced extraction techniques contributed to a drop in total CALGEM permits issued,” they stated.

However, the total number of all new wells drilled in the first half of 2020 is still 9.2% higher than the first half of 2019 when Governor Newsom “had a complete lack of control over CalGEM's permitting policies,{ the groups pointed out. See:  https://www.consumerwatchdog.org/energy/watchdogs-call-resignations-permit-freeze-california-oil-regulators-approve-surge-well

In 2019, Governor Newsom’s administration “practically matched” the total number of permits issued under Brown in 2018. But if CalGEM keeps up the current pace, 3,102 new permits to drill oil and gas production wells will be issued in 2020, according to FracTracker Alliance.

“That blows away Brown’s tally for new well drill permits during 2018 as well as Newsom’s new well drilling permits for 2019,” said FracTracker Alliance’s Western Program Coordinator, Kyle Ferrar.  “We have not seen this level of permits issued for drilling new oil and gas wells since 2015. Governor Newsom's permitting policies are the exact opposite of the managed decline he promised.”

Comparison of Permit Counts Under Gov. Jerry Brown (2010 through 2018) Vs. Governor Gavin Newsom By Year

Year	*New Drill Permits	Well Rework Permits
2010	3,112	2,493
2011	3,626	2,926
2012	3,530	3,065
2013	4,545	4,295
2014	4,282	3,325
2015	3,807	2,786
2016	337	1,590
2017	1,219	2,541
2018	2,229	2,361
2019	2,337	2,208

*New drill permits include both permits for new production wells and for wells using enhanced extraction techniques.

Courtesy of FracTracker Alliance and Based on Department of Conservation Data.

Newsom Administration: Groups “misinterpreted” the data

A Newsom Administration official told the Associated Press that the two watchdog groups “misinterpreted the data” and “asserted that the number of new drill permits were slightly up by 7 percent, from 1,475 in the first six months of 2019 to 1,579 in the same period this year.”

“Under state law, if a company applies for a permit, we review and if it meets the criteria in our regulations, we issue a permit,” Uduak-Joe Ntuk, oil and gas supervisor at the California Geologic Energy Management Division and former engineer for Chevron, told the AP: https://apnews.com/d04910d29539d39e24eaa725bcf4545f

“We are a government agency, this is what we do. It’s not a subjective political decision. We have to follow the law,” Ntuk said.

“He added that oil production in California was at its lowest level than anytime in the last four decades and that the number of permits issued for sealing old wells outpaced permits for new wells,” the AP piece stated.

Increased number of permits the result of Big Oil regulatory capture

Why is the Newsom Administration engaged in an oil drilling expansion in California? Despite California’s “green” and “progressive” veneer, the Western States Petroleum Association and the oil and natural gas corporations have captured the regulatory apparatus in California, from the Governor’s Office, to the Legislature, to the regulatory agencies, to state commissions and regulatory panels.

Last year the Western States Petroleum Association, the single most powerful lobbying organization in the state, pumped more money into lobbying than any other organization in California, spending a total of $8.8 million. The San Ramon-based Chevron pumped the third most money into lobbying, a total of $5.9 million. The lobbying expenses of the two oil industry giants came to a total of $14.7 million.

During the first quarter of 2020, at the same time that the Newsom Administration approved 1,623 total oil drilling permits, the Western States Petroleum Association (WSPA) spent $1,089,702 lobbying state officials.

Chevron spent even more: $1,638,497 in the first quarter of 2020 to influence legislators, the Governor’s Office and other state officials. The two oil industry giants combined to spend a total of $2,728,199 lobbying from January 1-March 31.

In the second quarter of 2020, WSPA spent $1,220,986 while Chevron spent $974,322 on lobbying in California, a total of $2,195,308.   

For more information, read: www.counterpunch.org/…

Newsom’s Big Oil lobbyist connections exposed

Steve Horn, investigative journalist, recently unveiled in Capital and Main Governor Newsom’s connections to lobbyists working for Aera Energy, which received 24 drilling permits from the Newsom Administration in April:  https://capitalandmain.com/gavin-newsom-hands-out-fracking-permits-to-connected-driller-0619

Horn reported:

“Aera, which also received 24 permits from the California Geologic Energy Management Division (CalGEM) on April 3 during the early days of COVID-19, has well-connected lobbyists in its corner who work for the firm Axiom Advisors.

One of them, Jason Kinney, headed up Newsom’s 2018 transition team and formerly served as a senior advisor to Newsom while he was lieutenant governor. He is also a senior advisor to California’s Senate Democrats. The other, Kevin Schmidt, previously served as policy director for Newsom when the latter was lieutenant governor. Aera paid Axiom $110,000 for its lobbying work in 2019 and, so far in 2020, has paid $30,000, lobbying reports reveal.

Axiom’s lobbying disclosure records show both Kinney and Schmidt listed as lobbyists and Aera as one of the firm’s clients. Kinney’s wife, Mary Gonsalvez Kinney, was also the stylist for Newsom’s wife–Jennifer Siebel Newsom–dating back to their time spent living in the San Francisco Bay Area. Kinney and Schmidt did not respond to repeated requests for comment for this article.” 

Big Oil’s tentacles extend far and wide in California politics. Lobbying is just one of the methods that Big Oil uses in California to exercise inordinate influence over California regulators. 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; (6) creating alliances with labor unions; and (6) contributing to non-profit organizations.

A classic example of deep regulatory capture in California is how Catherine Reheis-Boyd, the President of the Western States Petroleum Association, chaired the Marine Life Protection Act (MLPA) Initiative Blue Ribbon Task Force to create “marine protected areas” in Southern California at the same time that she was lobbying for new oil drilling off the West Coast. Yet big “environmental” NGOs constantly portrayed the process that Reheis-Boyd-Boyd oversaw as “open, transparent, and inclusive,” the despite all of the evidence showing otherwise.

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