Category Archives: Fracking

Oil Companies Are Profiting From Illegal Spills. And California Lets Them.

A river of oil spills across the Cymric field near McKittrick, California, in June 2019 (Obtained by The Desert Sun and ProPublica via a Public Records Act request)

California may be a global leader on combating climate change, but state regulators have allowed companies like Chevron to make millions from inland oil spills that can endanger workers and damage the environment.

ProPublica, by Janet Wilson, The Desert Sun, and Lylla Younes, ProPublica, Sept. 18, 2020

In May 2019, workers in California’s Central Valley struggled to seal a broken oil well. It was one of thousands of aging wells that crowd the dusty foothills three hours from the coast, where Chevron and other companies inject steam at high pressure to loosen up heavy crude. Suddenly, oil shot out of the bare ground nearby.

Chevron corralled the oil in a dry streambed, and within days the flow petered out. But it resumed with a vengeance a month later. By July, a sticky, shimmering stream of crude and brine oozed through the steep ravine.

Workers and wildlife rescuers couldn’t immediately approach the site — it was 400 degrees underground, and if the earth exploded or gave way, they might be scalded or drown in boiling fluids. Dizzying, potentially toxic fumes filled the scorching summer air. Lights strobed through the night and propane cannons fired to ward off rare burrowing owls, tiny San Joaquin kit foxes, antelope squirrels and other wildlife.

An aerial view of the Chevron spill in the Cymric field on July 13, 2019. (Obtained by ProPublica and The Desert Sun via a Public Records Act request)

Over four months, more than 1.2 million gallons of oil and wastewater ran down the gully.

California had declared these dangerous inland spills illegal that spring. They are known as “surface expressions,” and the Cymric field was a hot spot. Half a dozen spills and a massive well blowout had occurred there since 1999. This time, faced with news headlines and a visit by Gov. Gavin Newsom to the site, officials with the California Geologic Energy Management Division, or CalGEM — the main state agency overseeing the petroleum industry — ordered Chevron to stop the flow. Regulators later levied a $2.7 million fine on the company.

Instead, Chevron profited.

Amid the noise and heat, trucks arrived daily to vacuum out the oil from a safe distance. It was refined, sold and shipped to corner gas stations, bringing the company $399,000, according to state records. Chevron appealed the fine, saying while “we fully accept — and take responsibility for — our actions,” it does not believe the spill, known as Cymric 1Y, posed a threat to human health. The company has yet to pay, and CalGEM has not moved forward with an appeal hearing.

Along with being a global leader on addressing climate change, California is the seventh-largest producer of oil in the nation. And across some of its largest oil fields, companies have for decades turned spills into profits, garnering millions of dollars from surface expressions that can foul sensitive habitats and endanger workers, an investigation by The Desert Sun and ProPublica has found.

California Oil Spills Earn Companies Millions For years, companies have corralled spilling oil in four large fields and sold it. Shoshana Gordon/ProPublica. Source: California Department of Conservation

Since the new regulations outlawed surface expressions last year, more than two dozen have occurred in Kern County, the heart of the state’s oil industry. In the Cymric field, three spills are still running, state officials say, including one that’s spilled nearly twice as much as the one for which Chevron was fined.

Dozens of older spills have also flowed for years, the investigation found. The largest, just around the bend from Cymric 1Y, started in 2003. The site, also operated by Chevron and dubbed GS-5, has since produced more than 16.8 million gallons of oil and about 70 million gallons of wastewater, a company spokeswoman said. That tops the amount of oil spilled by the Exxon Valdez, the infamous tanker that ran aground in Alaska in 1989. In the last three years alone, the crude collected from GS-5 has generated an estimated $11.6 million, according to an analysis of production data provided by the state.

Chevron and state regulators say they’re trying to shut down GS-5 and they have reduced the flow by 90%. It was spilling approximately 15,000 to 23,000 gallons of fluid a day in early February, the latest date for which the state provided detailed data. Ten to 15% of that was oil, officials said.

“We take our responsibility to operate safely and in a manner that protects public health, the communities where we operate and the environment very seriously,” company spokeswoman Veronica Flores-Paniagua said. “We remain committed to stopping and preventing seeps consistent with the updated state regulations.”

But a close review of the state’s new rules shows they contain several large loopholes that keep oil from surface expressions flowing — the result of years of lobbying and pushback by the energy industry.

Vacuum trucks suck thousands of gallons of oil and wastewater a day out of the GS-5 spill, near McKittrick. GS-5 is one of the largest and longest-running surface expressions. (Jay Calderon/The Desert Sun)

For example, over stiff opposition from environmentalists, state officials explicitly allowed high-pressure “steam fracking,” a controversial extraction technique that has been linked to surface expressions. And when spills break out, there is nothing stopping producers from turning them into moneymakers. In a practice known as “containment,” companies can corral the spills with dirt berms, netting, pipes or drains; vacuum out the crude; refine it and sell it. The 2019 regulations spell out steps companies must take to try to halt the spills — mainly temporarily ceasing steam injection — but there are no deadlines for stopping them and restoring the sites.

The new rules also largely exempt “low energy” surface expressions related to oil production. According to a review of state and local records, the exemption appears to cover more than 70 older spills that are still revenue generators.

A cache of internal documents, photos and video obtained by The Desert Sun and ProPublica shows that over the past quarter century, CalGEM has routinely allowed oil companies to contain and commercialize surface expressions, despite warnings by staffers about environmental and human harm. The agency acknowledges that more than 160 containment structures have been built to corral spills since the late 1990s.

The inland spills typically draw little attention, unlike major marine events that garner national headlines.

But hundreds of them have occurred, records show. Geysers of oil, rock and mud have shot skyward 100 feet, and slopes have collapsed under smoking waterfalls of crude and wastewater. In one case, a worker died; in another, an employee had to wrench his ankle away from a sudden sinkhole; and a third had to abandon his truck as a dark stain of oil mushroomed beneath it.

A Berry Petroleum Co. surface expression in the Midway-Sunset Oil Field in August 2011. (Obtained by ProPublica and The Desert Sun via a Public Records Act request)

“Keep in mind that these eruptions are not at well sites,” wrote then-Oil and Gas Supervisor Elena Miller in a 2011 email to her boss. “These are locations where the earth opens up and spews fluids, solids and gases.”

Oil company representatives defend their practices, saying surface expressions mirror natural seeps of crude and come with harvesting a product that provides thousands of well-paying jobs and fuels car-centric California. Containing the spills, they added, also costs money. Chevron, for instance, told lawmakers this year that it had spent $9 million to try to halt spills in the Cymric field.

Environmentalists who fought for the regulations are furious about the loopholes and the continued spills.

“It’s completely obscene that oil companies can cause an oil spill and then profit off it,” said Hollin Kretzmann, an attorney with the Center for Biological Diversity, an environmental nonprofit organization.

CalGEM could not provide a full accounting of how much oil has spilled from surface expressions, even though the 2019 regulations explicitly require that oil companies report production numbers. The agency also declined to provide spill maps and plans mandated by the new rules, citing, in part, “multiple ongoing legal investigations,” including a departmental probe of the Cymric spills and ongoing litigation between Chevron and another company involving the field where the worker died.

“We are greatly reducing the problem. We continue to make progress, but more work is needed,” state Oil and Gas Supervisor Uduak-Joe Ntuk said in a statement. He noted that the practices had developed over decades, and that the new regulations were crafted under his predecessor and then-Gov. Jerry Brown.

“This Administration has made it clear that surface expressions are unacceptable and will not be tolerated as the cost of doing business,” he said.

After visiting Chevron’s Cymric 1Y spill site last year, Newsom pledged to “tighten things up.” In November, his administration placed a statewide moratorium on new permits for steam fracking, a suspected root cause of many surface expressions, and hired scientists with the Lawrence Livermore National Laboratory to study whether the method can be used safely.

Ntuk said that while that review is in progress, the agency is cracking down. He has the power to fine companies $25,000 a day for ongoing spills. But other than the one, unpaid fine against Chevron, he has not imposed any financial penalties for surface expressions, instead issuing “notices of violation” — citations that Ntuk has compared to “parking tickets.” He said that approach is working; many spills have stopped and some companies are working proactively to seal abandoned, often damaged wells to prevent future spills.

Companies with existing permits, however, are free to keep steam fracking — and to scoop up any oil that cracks the surface.

Some experts say the current reality is reminiscent of the 19th-century oil rush.

“It reminds me of the industry back when you’re watching ‘There Will Be Blood’ and they used to let this stuff explode out of the ground and collect it,” said Deborah Gordon, a Brown University senior fellow, who researched California’s Midway-Sunset field, where many surface spills occur. Her group concluded it emitted more greenhouse gases than any oil field in the nation. “This is not where this industry needs to be.”

After 150 Years, California’s Oil Gets Harder to Extract

Oil production in California began in the 1850s, just as its famous gold rush was petering out. Tantalized by visible natural “seeps,” companies large and small drilled wells across the state, hoping to hit paydirt. While profits could be big, so could the spills.

In 1910, a Kern County wellhead blew out. Oil skyrocketed from the ground. Over 18 months, the Lakeview Gusher spilled 395 million gallons, creating a pool so deep and wide that men rowed boats across it. It still holds the record for the largest oil spill in U.S. history, dwarfing BP’s Deepwater Horizon disaster, which leaked 210 million gallons into the Gulf of Mexico.

Top, the Lakeview Gusher in 1910. Above, men row on the lake of oil created by the spill. (San Joaquin Geological Society)

The California Division of Oil and Gas — the precursor to today’s CalGEM — was formed in 1915. Until this year, the agency’s primary mission was clear: Maximize the production of petroleum and other energy resources. That included helping companies relocate water that interfered with oil, both freshwater supplies and the briny waste that gushes from wells along with crude.

After decades of extraction, pumping California’s increasingly tarry reserves became tougher. Much of it was locked underground in diatomites — tightly packed layers of ancient, tiny sea skeletons whose algal innards compressed over milleniums into gooey crude. (Cat litter is made of diatomaceous earth scraped off Kern County hillsides.) By the 1960s, researchers discovered that flooding the subterranean reservoirs with steam or injecting it in cycles, through a process known as “huff and puff,” worked well.

The huff phase involves injecting scalding steam down wellbores, then letting the heat melt the tar. The puff portion refers to softened crude, thin as heated maple syrup, rising up through production wells. When the flow slows, another steam cycle begins. The technique is called “cyclic steaming.”

By the late 1990s, companies were using a supercharged version of it: steam fracking. Producers injected steam down well bores at pressures high enough to crack brittle underground formations so oil could ooze upward. Nearly half of the oil in the state is produced from cyclic steaming, according to a University of California, Berkeley, report issued in April.

But blasting old, often damaged wells with steam had an unintended side effect: surface expressions. Like underground tea kettles blowing their tops, seeps of gas, mud, oil and rock erupted in a dozen oil fields. Five companies reported scores of spills over more than 20 years. Chevron alone logged 64 surface expressions between 1997 and 2010, according to a report it sent to CalGEM.

Typically, CalGEM has told oil field operators to “shut in” wells near a surface expression, meaning temporarily cease nearby steam injection or drilling. Usually, the spill would stop or slow within days. If it didn’t, the agency has ordered them to stop steaming in an ever-larger radius. But some spots sprang leaks again and again or spilled large amounts for years. With CalGEM’s approval, companies turned these into de facto — but permanent — production sites, even in creeks and ravines supposedly protected by environmental laws.

CalGEM got revenue too — the agency is completely funded by the industry it regulates, and this year will receive 67 cents for every barrel of oil produced.

“The Earth Had Literally Cracked Open”

U.S. House Minority Leader Kevin McCarthy, a Republican whose district includes Kern County oil fields, once called Sandy Creek a “ditch” and claimed it hadn’t rained there in 30 years. The creek, which in the 1800s ran miles from the Temblor Mountains to the then-vast Buena Vista Lake, is now dry most of the year.

But when winter rains fall, the creek flows. State biologists documented sections that are home to breeding western toads, cliff swallows, California quail, kildeer and other birds passing through on long migrations.

In 1998, near Sandy Creek’s headwaters, Aera Energy and two other companies began injecting steam into wells in the soft dirt. A web of surface expressions quickly developed, with continuous oil pools forming in the streambed. They’re still flowing 22 years later.

Rather than shutting down production, Aera reshaped the landscape. It installed a 400-foot-long metal pipe, diverting rainwater from its natural path so the crude could continue to flow into the creekbed. Although the spills were still running, they were considered contained; the oil was confined to open-air pools. Nets were slung over them to prevent birds from flying in.

Aera and TRC, another oil company that leased adjoining property, periodically pumped out the oil and sold it. State oil regulators later said in an internal report that Aera was producing about 3,000 gallons of crude and waste a day from Sandy Creek.

Under state laws, it’s illegal to discharge any hazardous substance into a creek or streambed, dry or not. The California Department of Fish and Wildlife, which enforces those laws, said it can issue temporary permits for cleanup activities, but not for permanent alterations of a streambed. “The Department sees oil spills as emergencies, and its role is to respond to minimize harm to wildlife and clean up ASAP,” a spokesman told The Desert Sun and ProPublica. The department did not respond to questions about whether it has ever cited or fined companies that have spilled oil and altered the streambed in Sandy Creek.

TRC did not respond to requests for comment. Aera, which has since sold its Sandy Creek leases, declined to comment on past surface expressions there, but it said in a statement that the company “uses a combination of innovation, engineering, and technology to ensure that we are producing California’s energy under the most environmentally responsible and safe conditions in the world.”

The containment approach wasn’t foolproof.

In fall 2010, heavy rains sparked flash floods, dismembering the metal culvert. Days before Christmas, rains fell again. The creek reclaimed its natural channel, shoving crude and wastewater 10 miles downstream, through the town of Taft and out the other end.

The aftermath of flash floods in Sandy Creek, where Aera had installed a metal culvert to divert rainwater from its natural path. (Obtained by ProPublica and The Desert Sun via a Public Records Act request)

Bruce Joab, a California Fish and Wildlife senior scientist who assesses the environmental damage wreaked by oil spills, still recalls Sandy Creek after the storms.

“I was actually shocked at how torn up that upper end of the watershed was,” Joab said. Rusted pipes, steam manifolds and other heavy debris littered the bed. “It was hard to distinguish where the creek began and the oil operation began.”

Field warden colleagues who’d seen many surface expressions warned him to watch his step.

“There were places where the earth had literally cracked open and oil was spilling out,” he recalled.

When spills occur, CalGEM employees work side by side with oil companies to investigate the causes. Chevron officials, for instance, were part of the team that responded to and probed the causes of last summer’s Cymric 1Y spill. Ntuk said that approach is required by state law.

In Sandy Creek, a CalGEM staffer documented the flood damage and spills with dozens of photographs and said in a lengthy report to supervisors that the surface expressions there were caused by steam operations. CalGEM, however, did not include Sandy Creek in a tally of surface expressions it provided to The Desert Sun and ProPublica, saying the situation is “still under evaluation and has not yet been categorized.” CalGEM provided no evidence it has ever cited or fined companies for damage after the 2010 floods or after more oily floods in 2016.

Sandy Creek is just one place where companies have constructed elaborate containment structures.

They can carry a heavy cost.

A Tragedy at Well 20

Well 20 in the Midway-Sunset field was drilled in 1927 and abandoned by Chevron in the 1980s. The company tried and failed to plug it three times. By 2011, surface expressions had broken out there regularly, and CalGEM had cited the company twice for oil field waste, though it wasn’t fined.

Chevron installed a large, underground containment system — a channel with perforated drains at either end — and added devices called tilt meters to record any sudden shifts in formations beneath the surface to give warning above. The tools typically monitor volcanoes and dams for seismic activity.

On the morning of June 21, 2011, Robert “Dave” Taylor and two Chevron colleagues went to the freshly graded site in response to a report of steam coming from the ground.

Taylor had worked in the Kern County oil fields for 33 years, starting as a low-paid “roustabout” and working his way up to construction representative. In Taft, where he grew up and raised his family, he was a soft-spoken but beloved coach of high school and community sports teams. Years later, people in town still called him “Coach.”

Robert “Dave” Taylor. (Bakersfield Californian)

That June morning, the field at Well 20 looked smooth, per oil and gas agency rules. But underneath, pressure was building. Tilt meters had shown sharp shifts in ground movement, though no one seemed to notice.

As the three men walked across the site, a sinkhole of hot oil and hydrogen sulfide opened beneath Taylor’s feet and swallowed him. One of the other men reached into the hole and tried to grab his arm, with no luck. He then tried to use a pipe, but Taylor was gone.

Taylor’s family drove north from their home in Taft, thinking there might be a chance he’d survived. They were greeted by a geyser of steam as tall as a telephone pole shooting out of the hole. It took workers until shortly before dawn the next day to retrieve Taylor’s body. He was 54.

Chevron spokeswoman Flores-Paniagua called Taylor’s death “a tragic and isolated incident.”

The oil and gas agency ordered Chevron and TRC to stop nearby steam injection in an ever-widening radius. It did little good. The spill swelled. Top officials began probing more deeply and told staffers to compile a “spill binder” of fields around Bakersfield, the seat of Kern County. According to the binder, which was obtained by The Desert Sun and ProPublica, they logged 19 more surface expressions in five months.

Shortly after Taylor’s death, the ground shook a few miles north and a 60-foot geyser blew skyward. A Berry Petroleum Co. worker fled as a fast-moving surface expression mushroomed under his truck, internal CalGEM documents show.

”In this week’s event, a field worker narrowly escaped injury or death by running away from the site on foot,” wrote Miller, then the oil and gas supervisor, in an email to her boss, obtained through a public records request. “He abandoned his truck which was still parked at the site two days later as it was too dangerous to re-enter.”

By autumn, a slope above the site where Taylor died had collapsed into a bubbling cauldron of oil and toxic gases.

Inside Chevron, Taylor’s death was taken seriously, said Lucinda Jackson, who headed the company’s global safety, health and environment division until she retired in 2016.

She said company geologists had told her as long as they steamed in diatomite in California, Indonesia and elsewhere, surface expressions would occur. Several studies support this conclusion, which is an active area of research.

Taylor’s death was “horrible,” she said. Her division doubled down on monitoring and detection efforts. Daily small plane flights using remote sensors were instituted. When she retired, there was a continuous, remote monitoring station in Bakersfield, 40 minutes away, tracking the company’s Kern County fields. Dozens of screens recorded underground formations for any sudden shifts.

“Nobody likes these surface expressions,” she added. “They disrupt production and they’re bad for human health and the environment. But it’s just going to be an issue as long as we’re going to keep producing, if the world is still thirsty for oil.”

Taylor’s family was barred from suing Chevron because of his employment contract but reached a settlement with the company that had done the grading work over the spill containment site. California’s workplace safety agency, Cal-OSHA, cleared Chevron in its investigation of Taylor’s death, but it later fined the company $350, the maximum allowed by law, for not informing workers in writing of the “necessary safeguards” for working near Well 20.

Although CalGEM says Chevron has now successfully plugged and abandoned Well 20, the company told the agency it was still producing oil from a nearby surface expression. In the past month, it has pumped an average of nearly 1,400 gallons of oil and brine a day out of a cistern it installed there.

The Fight for Regulation

In Sacramento, Elena Miller, the oil and gas supervisor, and her deputies had started drafting surface expression regulations along with other reforms. But oil companies pushed back, complaining that she was causing unnecessary permitting delays. Then-Gov. Jerry Brown fired Miller in the fall of 2011 as he sought to revive California’s sluggish economy. New permits were quickly approved.

Meanwhile, the U.S. Environmental Protection Agency, worried about enforcement of groundwater laws in California oil fields, had been conducting a probe of how CalGEM regulated underground injection. Among its top concerns: oil producers and the agency were not properly testing or tracking injection pressures, which if too high could fracture underground formations. A top EPA official told CalGEM that federal and state laws barred pressure that could crack formations.

Oil and steam pipelines crisscross the oil fields in Kern County, California. (Jay Calderon/The Desert Sun)

CalGEM officials said they’d revamp their regulations, but the effort took years.

Ntuk, the current oil and gas supervisor, said that prior to 2019, state regulations did not explicitly limit steam injection. Kretzmann, an environmental attorney who’s tracked the agency and injection laws for years, said Ntuk’s position was “absurd.”

As the spills continued, agency leaders in 2015 realized there was another long-standing issue: no formal training for the geologists, engineers and supervisors involved in permitting and oversight.

“The training that is provided is informal and ‘passed down’ from other regulatory staff, sometimes even new staff train newer staff, and provide ‘best practice’ training,” officials wrote in a request to lawmakers, asking for funding to implement a comprehensive training program. “This method of training is not standardized, it is not measurable, and it is extremely challenging to establish accountability for errors in the field.”

Since then, CalGEM has received funding for additional engineers and geologists and instituted a training program, although turnover at the agency is high.

Risky Business

As Taylor’s death showed, surface expressions can be dangerous. Experts say oil constantly spilling to the surface also releases fresh volatile organic compounds that are building blocks for smog and other dangerous pollution linked to heart disease, asthma and other health problems. Two new studies of pregnant women living close to California oil fields show far higher rates of premature births and low-birth-weight babies.

“Every time you push oil through an open pathway to the surface, it’s like opening a bottle of soda,” said Donald Blake, a University of California, Irvine, atmospheric chemist who has tracked air pollutants around the world, including in Kern County.

Studies of oil spill cleanup workers and nearby residents in six countries all showed they experienced higher rates of illness, ranging from sore throats to respiratory disease and cancer.

There are more immediate risks for workers too.

Workers clean up a surface expression in October 2011 in a Kern County oil field, where Berry Petroleum operated. Oil spills can pose long- and short-term health risks for workers. (Obtained by ProPublica and The Desert Sun via a Public Records Act request)

According to internal documents, CalGEM inspectors in 2014 mapped a 1¼-mile-long zone in the Midway-Sunset field, then co-owned by Chevron and Aera Energy. Vents in the rocks and ground were releasing more than 500 parts per million of hydrogen sulfide — levels that could cause humans to stagger and collapse within five minutes. Failed wellbores there were emitting up to 7,000 parts per million, more than three times the threshold for immediate death, according to guidelines of the federal Occupational Safety and Health Administration. An internal CalGEM memo stated the area was “permanently secured.” Neither the agency nor Aera responded to requests for comment about the zone’s current status.

Chevron’s spokeswoman said in an email that the company “took several steps to secure the property” and mitigate the risk of hydrogen sulfide. Chevron sold the property in March, she said.

CalGEM staff in the Bakersfield office conducted many in-depth inspections of spill sites and wrote reports documenting them for superiors. A 2015 PowerPoint presentation they prepared, obtained by The Desert Sun and ProPublica, stated that some of the diatomite formations might have been permanently altered by steam fracking, meaning spills there might never stop. But, the presentation concluded, there was little impetus for oil companies to change their ways: “The economic benefit of increased oil … production from steam injection into shallow diatomite … has been, and will continue to be motivation for operators.”

Employees familiar with the spills pushed for stricter regulation. Without it, they said, “surface expressions will remain a potential threat.”

“We Didn’t Know What to Do”

To the west, Santa Barbara County officials had already grappled with the consequences of surface expressions. Known for its scenic beaches, the area is also home to nearly a dozen oil fields.

In 2007, Breitburn Energy began injecting steam into the diatomite-rich Orcutt field, half an hour inland from Pismo Beach. Oil cracked the surface and the company contained it and harvested more than 4.8 million gallons of oil from “cyclic steam energized seeps,” according to CalGEM’s 2008 and 2009 annual reports. Using federal prices for California oil for those years, that would mean they earned an estimated $7.3 million. Breitburn later went bankrupt.

Pacific Coast Energy Corp. took over the Orcutt field in 2009 and sharply increased cyclic steaming. The number of new spills spiked.

“We had spill after spill after spill after spill,” said Errin Briggs, of the Planning and Development Department in Santa Barbara County, which, like Long Beach, Los Angeles and Kern County, works with the state to oversee oil operators. County officials were stumped, and they reached out to CalGEM. According to Briggs, engineers at the oil agency said that the steam being injected into the diatomite was causing it to swell like a balloon, placing pressure on the formation above, which sprang myriad leaks.

Short cisterns, like this one pictured on a Berry Petroleum lease in the Midway-Sunset field, are used to contain oil spills. (Obtained by ProPublica and The Desert Sun via a Public Records Act request)

In 2011, CalGEM ordered Pacific Coast Energy to lower the amount of steam it was injecting, Briggs said. The number of new spills was halved over the next few years, he said. Neither a company executive nor CalGEM responded to requests for comment on those measures.

To contain the spills, Pacific Coast Energy installed wide, short cisterns, or “cans,” stuck into the earth like straws, from which frothy water and oil can be vacuumed. Unlike many Kern County containment devices, these are sealed with large, garbage can-style tops with handles that can be hoisted open by pump trucks.

County officials signed off on the construction after the fact. “Nobody in Santa Barbara had ever seen anything like this before,” Briggs said. “We didn’t know what to do.”

There are currently 58 ongoing contained spills in the Orcutt field, Briggs said. CalGEM did not respond to requests for information on the Orcutt spills for months, then said there are even more — 65 “low energy surface expressions.”

Environmentalists were stunned that companies were allowed to profit off the contained spills.

“Wow. Wow! Wow! And we didn’t even know it. That’s just crazy,” said Katie Davis, chair of the Sierra Club Los Padres Chapter covering Santa Barbara and Ventura counties. “If they’re tapping them for oil, and they’re not even legitimate wells, it’s really going around the law.”

A CalGEM spokesman said in an email that under the new regulations, “for low-energy expressions, containment … is permissible.”

A dead Western harvest mouse found by the GS-5 surface expression near McKittrick. (Pacific Wildlife Center staff. Obtained by ProPublica and The Desert Sun via a Public Records Act request)

Because the spills were considered emergencies, there was no requirement to do environmental reviews before installing the cisterns, Briggs said. That means large coast live oak, rare flowering bushes and other plants could be ripped out when necessary. Remains of Chumash tribal life could also be moved. The company did have to pay to plant restoration trees and vegetation elsewhere on the oil field.

State wildlife officials have long been concerned about the impact of surface expressions on an array of endangered animals and plants. California Fish and Wildlife records obtained through a public records request show dozens of dead and decaying birds and small mammals around spill sites.

In places like Sandy Creek, the nets oil companies place over spills to protect wildlife often get tangled or torn, said Julie Vance, Fish and Wildlife’s District 4 director in Fresno, who oversaw response to inland spills for years. Many burrow-dwelling creatures are “entombed” by fast-rising crude from underground, making it impossible to ever document their loss, she said.

Netting covers a surface expression near Sandy Creek to protect wildlife. (Obtained by ProPublica and The Desert Sun via a Public Records Act request)

For years, Fish and Wildlife deferred to CalGEM, but the wildlife agency has increasingly played a role in spill response since 2014, after policymakers expanded its mandate to include inland as well as marine spills, and as the oil agency came under growing scrutiny.

Loopholes: “Low Energy” Spills Permitted, Containment Allowed

In the fall of 2015, the California Department of Conservation announced a “renewal” plan to overhaul the state’s oil agency.

Among its priorities: writing new rules for cyclic steaming. In the four years since Taylor’s death, 63 surface expressions had broken out in the Kern County oil fields, according to state records. The department pledged to finalize the regulations in a little more than a year.

But the deadline came and went as special interests on various sides lobbied to influence the regulations. Environmentalists won language banning surface expressions. Several oil companies and trade groups pushed back, asking for a narrow definition of what constituted a spill.

In response, CalGEM exempted from the ban what it called “low energy seeps,” defined, in part, as slower spills that are not hot and are permanently contained. What qualifies as such a seep is left up to the oil and gas supervisor. The carveout appears to preserve a lucrative form of spill.

A recent thesis by a Stanford University master’s student identified 19 such “low energy” sites in the Midway-Sunset field, where spills were contained with cisterns. An analysis of production records by The Desert Sun and ProPublica found that over the past 20 years, 14 of those sites have spilled a combined 20 million gallons of oil, worth more than $19 million.

“I sure would call that a loophole in the law,” said Rosanna Esparza, a retired gerontologist who did health assessments of residents near Kern County oil operations and who is fighting to cease oil production statewide.

The Western States Petroleum Association, the industry trade group representing major companies like Chevron, pressed to nix the spill prohibition altogether and just preserve the longtime practice of containment.

“There is an inherent conflict created by prohibiting surface expressions yet allowing for management methods,” WSPA wrote in a letter to CalGEM. “The strict prohibition should be dropped in favor of language that provides for prudent management when events occur.”

In response, CalGEM staff defended the proposed ban on surface expressions “because they are inherently unsafe.” But they also provided an opening for containment. “Even when a violation has been committed,” the agency replied, “there are still protocols to safely handle that violation.”

The regulations took effect in April 2019.

Within months, more than a dozen surface expressions occurred, including Chevron’s latest Cymric spills. In short order, the Newsom administration announced the moratorium on new steam fracking permits and moved to bolster CalGEM. The governor’s January budget proposed 128 new positions for the agency, in part to better oversee surface expressions. Under state law, which requires potential polluters to fund oversight, the oil industry would have to pay $24 million over three years for the positions.

The Tug of War Continues
Oil infrastructure in the Kern River oil field near Bakersfield, California. (Jay Calderon/The Desert Sun)

The permitting pause sent shocks through the oil industry, and Kern County responded with a full-throated roar.

Hundreds packed the county supervisors’ chambers in Bakersfield in January for a meeting that lasted nearly seven hours. Oil workers and executives testified about the jobs that supported their families, and they lambasted “environmental extremists” and state officials.

Union officials, real estate agents, Chamber of Commerce members, the county sheriff, the district attorney and even the county school superintendent spoke about how vital oil revenues are to the area.

County supervisors led the charge.

“Rather than the governor giving us credit for our monumental achievements … he insists on punishing us by attempting to deny our right to use the God-given natural resources in our county to support our families,” said Supervisor Zack Scrivner, whose sprawling district includes Taft and several oil fields.

Scrivner showed photos of oil spills in Brazilian rainforests and a river in Colombia. This is a river full of oil, and I would offer that this is worse than a surface expression that the governor came down here to visit recently,” he said. “Why would this administration … send our jobs and our treasure to these countries with terrible human rights records, and with little to no environmental controls?”

No photos of the Sandy Creek spills or the Cymric ravine flooded with oil were shown.

Anthony Williams, Newsom’s legislative affairs secretary at the time, sought to reassure the crowd, saying he had grown up in Bakersfield. “I talk to the governor every single day,” he said, “and so when my voice rings in his ear, your voice rings in his ear.”

Elsewhere, in the agricultural communities around Bakersfield, farmers and environmental justice groups worried.

Some, who have long lived near oil operations in the Central Valley, disagreed with the industry and its supporters. The spills not only threatened the surface, they argued, but the water table — and the people and crops that rely on it.

Tom Frantz, a fourth-generation farmer and activist from Shafter, began monitoring the Cymric surface expressions himself a year ago, sending a drone into the air for timely updates. He watched oil spill into the ravine there, month after month, before CalGEM issued the fine against Chevron. Since that one was stopped, he’s been tracking the company’s even bigger spills that are still running.

Last November, after Chevron mopped up the Cymric 1Y flow, another cluster of surface expressions sprouted nearby. Dubbed 36W, it has since gushed more than 2.1 million gallons of oil and wastewater, according to Chevron reports filed to the state, and is being piped into large concrete culverts.

Chevron’s spokeswoman said in an email that it’s part of an older spill, even though state photos and reports show them as separate events. Since late March, an analysis by The Desert Sun and ProPublica found, the 36W cluster has garnered the company an estimated $245,000.

“They’re a huge source of air pollution, a huge potential source of water pollution,” Frantz said of the spills. “When I see Chevron directly violating the law for months on end, it bothers me greatly that the state is unable to effectively regulate this industry.”

Fourth-generation farmer Tom Frantz says oil waste has stunted a neighbor’s almond trees. (Jay Calderon/The Desert Sun)

Chevron denies its surface expressions have had any effect on groundwater.

By March, the coronavirus pandemic hit. The global oil market collapsed and California producers idled rigs, costing thousands of oil workers their livelihoods. Citing economic hardship, the industry asked the Newsom administration to scale back CalGEM’s expansion.

In the end, Newsom and lawmakers approved 25 new positions, a fifth of the agency’s original request. “Rest assured that CalGEM continues to ensure full regulatory oversight,” Natural Resources Agency Secretary Wade Crowfoot told reporters this year.

State and regional water officials are also stepping in, increasingly trying to stanch surface expressions. Clayton Rodgers, assistant executive officer for Central California’s water board, said his agency had for years let CalGEM take the lead. “Based on the resources we had and the belief that (CalGEM) was doing the work to address the concerns, we did not get involved,” he said.

Last year, he and his deputy toured Chevron’s spill in the Cymric field. But he said he was unaware of the massive GS-5 spill located 1,000 feet away until a Desert Sun reporter asked him about it. One of his inspectors visited the site the next day and opened an investigation into potential violations of water laws.

A truck vacuums up oil from a surface expression in the Cymric field. (Obtained by ProPublica and The Desert Sun)

The regional water board is also monitoring Sandy Creek, the site of the streambed disaster. Berry Petroleum gained ownership of Aera’s stretch in 2017, and water board inspectors have cited the company for violating water contamination laws. Berry first told the inspectors the spills were natural seeps, but it has since voluntarily removed major rusted pipes and other debris, and has plugged and abandoned 10 nearby wells.

Berry injects no steam there, but two companies nearby still do, and the spills continue to flow. Berry has a proposal: It wants to build a channel to carry seasonal rains over the oil pools — just like Aera did 20 years ago. The efforts “are driven by our commitment to operate responsibly and protect our natural resources,” said Todd Crabtree, Berry’s manager of investor relations and administration. “Berry strives to abide by all existing California regulations regarding oil and gas production,” including the new regulations.

Overall, the rate of new inland spills has slowed, possibly due to lower production, said Gordon, the Brown University expert. But if steam fracking picks up, so could the surface expressions, she said.

Cathy Reheis-Boyd, president of WSPA, said she and other oil executives speak regularly with Newsom and CalGEM. She said the industry supports Newsom’s “pragmatic” approach to surface expressions, which includes the ongoing study of steam fracking.

“Let’s be clear,” she said. “The best way to get oil to market is not through surface expressions.”

The governor’s office declined to comment. Asked if it was considering changes to the regulations, CalGEM said “it is premature to say what new rules, if any, will result from current surface expressions or the scientific review.”

The spills have been completely halted elsewhere. After reports about “flow to surface” spills from heavy tar sands in Alberta, Canada, regulators there determined that excessive steaming volumes in the Primrose field — combined with open conduits from below ground, such as wellbores, natural faults and induced fractures — were to blame.

In 2016, the Canadian officials banned steam fracking within 1,000 meters —- or about 3,300 feet — of where the spills had occurred. That’s five times the maximum radius California spells out in its regulations, though CalGEM can impose larger ones if a surface expression continues.

Alberta also instituted strict protocols for nearby steaming.

There hasn’t been a surface expression there since.


About the Data

Data for surface expression oil volume estimates was provided by Chevron, the ​​​​​California Geologic Energy Management Division, or CalGEM, and the California Governor’s Office of Emergency Services. Revenue calculations used monthly California oil barrel price averages from the U.S. Energy Information Administration. Since those averages are currently only recorded through June 2020, revenue calculations for 2020 averaged oil barrel prices for the first six months of the year. Given that oil prices steeply declined for a period in March and then slowly increased in the following months, the resulting revenue estimates are likely undercounts. Low-energy seep revenue estimates used monthly well production data from CalGEM’s Well Search database, weekly summary files and CalGEM annual reports.

Janet Wilson is the senior environment reporter at The Desert Sun. Previously, she was a staff writer at the Los Angeles Times, where she wrote about everything from desert wind power battles to the sale of national forest lands and poor neighborhoods grappling with deadly soot.

The Bakken Boom Goes Bust With No Money to Clean up the Mess

Desmog, by Justin Mikulka, August 8, 2020
Northwestern ND Aerial Photos  Credit: NDDOT Photos, CC PDM 1.0

More than a decade ago, fracking took off in the Bakken shale of North Dakota and Montana, but the oil rush that followed has resulted in major environmental damage, risky oil transportation without regulation, pipeline permitting issues, and failure to produce profits.

Now, after all of that, the Bakken oil field appears moving toward terminal decline, with the public poised to cover the bill to clean up the mess caused by its ill-fated boom.
Historical Bakken oil production. Energy Information Administration

In 2008, the U.S. Geological Service (USGS) estimated that the Bakken region held between 3 and 4.3 billion barrels of “undiscovered, technically recoverable oil,” starting a modern-day oil rush.

This oil was technically recoverable due to the recent success with horizontal drilling and hydraulic fracturing (fracking) of oil and gas-rich shale, which allowed hydrocarbons trapped in the rock to be pumped out of reservoirs previously unreachable by conventional oil drilling technology.

The industry celebrated the discovery of oil in the middle of North America but realized it also posed a problem. A major oil boom requires infrastructure — such as housing for workers, facilities to process the oil and natural gas, and pipelines to carry the products to market — and the Bakken simply didn’t have such infrastructure. North Dakota is a long way from most U.S. refineries and deepwater ports. Its shale definitely held oil and gas, but the area was not prepared to deal with these hydrocarbons once they came out of the ground.

Most of the supporting infrastructure was never built — or was built haphazardly — resulting in risks to the public that include industry spills, air and water pollution, and dangerous trains carrying volatile oil out of the Bakken and through their communities. With industry insiders recently commenting that the Bakken region is likely past peak oil production, that infrastructure probably never will be built.

Embed from Getty Images

Meanwhile, the petro-friendly government of North Dakota has failed to regulate the industry when money was plentiful during the boom, leaving the state with a financial and environmental mess and no way to fund its cleanup during the bust.

Haste Makes Waste: Booms Move Faster Than Regulations

After the USGS announced the discovery of oil in the Bakken, the oil and gas industry moved fast, with both the industry and state and federal regulators ignoring whether what amounted to essentially new methods of extracting and transporting large amounts of oil called for new rules and protections.

The Bakken’s big increase in oil production quickly exceeded its existing pipeline capacity, leading producers to turn to trucks to move their oil out of the fields. But as the Globe and Mail reported in 2013, this stop-gap solution wasn’t working well: “The trucking frenzy was chewing up roads, driving accident rates to record highs and infuriating local residents.”

The industry could have restricted production until new pipelines and processing equipment were built but instead moved to rail as the next transportation option. High oil prices motivated drillers to get the oil out of the ground and to customers as fast as possible. Moving oil by rail was essentially unregulated and would not require the permits, large investment, or lead times required for pipelines, leading to the Bakken oil-by-rail boom.

Moving large amounts of this light volatile oil on trains had never been done before — but there was no new regulatory oversight of the process. Without proper oversight, the industry loaded the Bakken’s volatile oil into rail tank cars originally designed to carry products like corn oil. That’s despite the National Transportation Safety Board warning that these tank cars were not safe to move flammable liquids like Bakken crude oil.

The industry waved away these warnings. July 6, 2013 marked the first major derailment of a Bakken oil train, resulting in a massive explosion, 47 deaths, and the destruction of much of downtown Lac-Mégantic, Quebec. Bakken “bomb trains” (as train operators called them) continued to derail, creating large oil spills and often catching fire and burning for days. Regulators have still failed to address the known risks for oil trains in the U.S. and Canada. 

Fracking for oil also resulted in large volumes of natural gas coming out of the same wells as the oil, further contributing to the financial troubles of shale producers. However, with no infrastructure in place to process or carry away that gas, the industry chose to either leave it mixed in with the oil loaded onto trains (making it more volatile and dangerous) or simply burn (flare) or release (vent) the potent greenhouse gas into the atmosphere.

More than a decade after the Bakken boom started, North Dakota was flaring 23 percent of the gas produced via fracking — making a mockery of the state’s flaring regulations. In July, The New York Times detailed the environmental devastation caused by flaring in the oil fields of Iraq, where they flare about half of the gas as opposed to the quarter of the gas that North Dakota has flared.

Also in July, researchers at the University of California, Los Angeles and University of Southern California published research that found pregnant women exposed to high levels of flaring at oil and gas production sites in Texas have 50 percent higher odds of premature birth when compared to mothers with no exposure to flaring.

Flare from an oil well in the Permian region of Texas. Credit: © 2020 Justin Hamel

Another major blindspot for the industry and regulators has been the radioactive waste produced during fracking. When the industry did finally acknowledge this issue in North Dakota, its first move was to try to relax regulations to make it easier to dump radioactive waste in landfills — a practice that is contaminating communities across the country.

In 2016, a study from Duke University found “thousands of oil and gas industry wastewater spills in North Dakota have caused ‘widespread’ contamination from radioactive materials…”

The fracking boom in North Dakota has resulted in widespread environmental damage and is worsening the climate crisis, given its high flaring levels, methane emissions, and, of course, production of oil and gas. As major Bakken producers go bankrupt and continue to lose money while the oil field goes bust, who will pay to clean up the mess?

Like most oil-producing states, North Dakota had the opportunity to require oil and gas producers to put up money in the form of bonding which would be designated to properly clean up and cap oil and gas wells once they were finished producing. Unfortunately, the state didn’t put that precaution in place, and now bankrupt companies are starting to walk away from their wells.

It’s starting to become out of control, and we want to rein this in,” Bruce Hicks, Assistant Director of the North Dakota Oil and Gas Division, said last year about companies abandoning oil and gas wells.

The state recently decided to use $66 million in federal funds designated for coronavirus relief to begin cleaning up wells the oil industry has abandoned — costs that the industry should be covering, according to the law, but that are now shifted to the public.

The Bakken boom made a lot of money for a select few oil and gas executives and Wall Street financiers. But as the boom fades, taxpayers and nearby residents have to deal with the financial and environmental damage the industry will leave behind.

Bakken’s Best Days Are a Thing of the Past

As DeSmog reporting has revealed, shale producers have not been profitable for the past decade, even though they have drilled and fracked most of the best available shale oil deposits. While the prolific Permian region in Texas and New Mexico still has some of the best “tier one” core acreage for oil production left, that isn’t the case in the Bakken.

In June, oil and gas industry analysts at Wood MacKenzie highlighted this discrepancy in remaining core acreage between the Permian and the Bakken. According to Wood MacKenzie, the top quarter of remaining oil well inventory in the Permian would result in over 8,000 new wells. For the Bakken, however, the analysts put that number at 333 wells.

This difference is why John Hess, CEO of major Bakken producer Hess Corporation, predicted in January that Bakken production would soon peak.

The drop in oil demand due to the pandemic has hit the industry as a whole, but the Bakken was already in decline, with the best producing wells a thing of the past well before the novel coronavirus reached U.S. shores.

In September 2019, The Wall Street Journal reported on the dismal outlook for Hess Corporation’s oil wells, noting last year: “This year’s wells generated an average of about 82,000 barrels of oil in their first five months, 12 percent below wells that began producing in 2018 and 16 percent below 2017 wells.”

Legal Reviews of Pipelines Potentially Causing Shutdowns

Even when the industry did try to construct oilfield infrastructure in the Bakken, its rush to build and manage pipelines hasn’t always worked out well. Legal challenges to two major Bakken pipelines, one old, one new, may shut down both of them soon.

The controversial Dakota Access pipeline (DAPL) is facing a potential shutdown after a judge ruled that the Army Corps of Engineers did not properly address oil spill risks and now must complete a full environmental review, which could result in a long-term shutdown of the pipeline while the Corps completes the study. Energy Transfer, DAPL‘s owner, appealed that ruling, and a subsequent court decision has allowed the pipeline to remain in operation while the legal battle over the environmental impact study continues.

At the same time, the Tesoro High Plains pipeline — in operation since 1953 — is facing a shutdown because it failed to renew an agreement with Mandan, Hidatsa, and Arikara Nation landowners on the Fort Berthold Indian Reservation, meaning the pipeline’s owner, Marathon, now is trespassing on that land.

These pipelines together ship more than one-third of the oil out of the Bakken, and if they are shut down, Bakken oil producers likely would turn to rail again to move their oil. However, rail is significantly more expensive than pipelines and not economically viable at current low oil prices.

However, at current production levels, existing pipelines (other than the two in question) and current long-term rail contracts can likely handle most of the Bakken’s oil production, especially as the region becomes less attractive to investors.

Energy consulting group ESAI Energy recently released a new report on U.S. pipelines, with analyst Elisabeth Murphy concluding, “An uncertain outcome for Dakota Access will have knock-on effects for the Bakken, such as capital being diverted to other basins that have better access to markets.”

The ESAI analysis also concludes that the Bakken will decline by approximately 270,000 barrels per day on an annual basis in 2020 and by a further 65,000 barrels per day in 2021.

With declining total production and new wells producing less than the past, Bakken producers are facing rising debts without the means to pay them back.

End of the Unconventional Bakken Boom

Oil produced by fracking is called “unconventional oil” due to the new technologies used to extract it from shale. However, it is unconventional in other ways as well. One, it has never been profitable. Another is a change in the boom-and-bust cycle, which has been a part of the oil industry since its inception in the U.S. in the 1850s.

Traditionally the boom-and-bust cycle for conventional oil production was tied to the price of oil. Low prices caused busts. This was true of the shale oil industry in 2014 when oil prices crashed. However, the industry returned to record production after that.

Williston "Rockin' the Bakken" marketing slogan
Screen shot of a marketing slogan for Bakken oil and gas development. Source: https://willistondevelopment.com

But it’s different this time. Unlike conventional oil fields, shale field production declines much more quickly. While shale producers could retreat to the top-producing acreage during the 2014 bust, most of that acreage is now gone.

The shale industry is faced with trying to come back from a historic downturn in which even the companies that don’t go bankrupt are saddled with crippling debts. That’s because for most of the past decade, shale companies borrowed more money than they made producing fracked oil and gas, to the tune of hundreds of billions of dollars.

All of the evidence strongly suggest that the Bakken is an oil field on the decline. Its best acreage has been depleted and the economics of the remaining acreage don’t pan out these days.

Reviewing the economics of the Bakken, investment site Seeking Alpha recently concluded that the “Bakken Will Never Be The Same Again.”

Seeking Alpha was purely commenting on the economics of oil production in the Bakken. However, the same could be said about the water, air, and land in the Bakken. Shale companies polluted the environment and are now walking away from the damage — leaving the cleanup bill to the public. It is a tried-and-true approach for industries in resource extraction. Privatize the profits and socialize the losses.

Hess Corporation CEO John Hess knows more about the economics of the Bakken than most people. In February Reuters reported, “Hess plans to use cash flow from the Bakken to invest in longer-term offshore investments.” A major Bakken producer is apparently no longer viewing the region as a good long-term investment.

From here, the outlook only gets worse for the Bakken.

Main Image: Northwestern ND Aerial Photos  Credit: NDDOT PhotosCC PDM 1.0 

Gavin Newsom Hands Out Fracking Permits to Connected Driller

While California was convulsed by COVID-19 and George Floyd’s death, the governor gave Big Oil a big gift.

Capital and Main, by Steve Horn,  June 19, 2020

On June 1, in the midst of the turmoil created by the coronavirus pandemic and the death of George Floyd in Minneapolis, California Gov. Gavin Newsom’s administration quietly issued 12 fracking permits to Aera Energy, a joint venture owned by ExxonMobil and Shell.

Oil drilling in California has faced criticism for its disproportionately negative health impacts on Latino communities and other people of color. The 12 new permits will be for fracking in the Lost Hills Oil Field. The Kern County town of Lost Hills is more than 97 percent Latino, according to 2010 U.S. Census data.

The fracking permits are the latest example of California’s oil industry benefiting from regulatory or deregulatory action during the COVID-19 pandemic and came just months after the Newsom administration said it supported taking actions to “manage the decline of oil production and consumption in the state.” 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.

Calling the situation “unseemly,” Jamie Court, president for the Los Angeles-based group Consumer Watchdog, wrote via email that “Aera should not be able to buy the influence it apparently has over state oil and gas policy.” Last November, prior to the 24 permits issued in April, Newsom had declared a statewide fracking permit moratorium in response to a scandal involving a regulator for the California Division of Oil, Gas, and Geothermal Resources (DOGGR). The regulator, who had been tasked with heading oversight issues on issuing permits, was revealed to have stock investments valued up to $100,000 in Aera Energy’s parent company, ExxonMobil. Newsom fired the head of DOGGR at the time, Ken Harris, and eventually renamed the agency CalGEM.

Kinney and Schmidt are not the only two with Newsom ties. Aera CEO Christina Sistrunk sits on the governor’s Task Force on Business and Jobs Recovery, created to craft an economic recovery plan in response to the ongoing COVID-19 economic fallout.

Aera is one of the state’s top drillers and accounts for nearly 25 percent of California’s production, its website claims. Aera landed 490 drilling permits from CalGEM in the first quarter of 2020, according to data collected by FracTracker, and 651 permits in 2019.

Lost Hills

The town of Lost Hills has a population of about 2,500 people and its field ranks sixth in oil produced in the state. The field sits in close proximity to a residential neighborhood just west of Interstate Highway 5, close to both a middle school and public park.

Infrared camera footage from 2014, taken by the advocacy group Earthworks and the Clear Water Fund for a 2015 report they published, showed that the Lost Hills field emits prolific amounts of toxic chemicals into the air, including methane, acetone, dichlorodifluoromethane and acetaldehydes. High levels of isoprene and acetaldehydes can cause cancer, while the other substances can result in serious health damage, including heartbeat irregularities, headaches, nausea, vomiting, throat irritation, coughing and wheezing.

In a survey done for that same report of Lost Hills residents, respondents reported having “thyroid problems (7 percent), diabetes (7 percent), asthma (11 percent) and sinus infections (19 percent).”

“Of all respondents, 92.3 percent reported identifying odors in their homes and community,” it further detailed. “Odors were described as petroleum, burning oil, rotten eggs, chemicals, chlorine or bleach, a sweet smell, sewage, and ammonia. Participants reported that when odors were detected in the air, symptoms included headache (63 percent), nausea/dizziness (37 percent), burning or watery eyes (37 percent), and throat and nose irritation (18.5 percent).”

Methane is a climate change-causing greenhouse gas 84 times more potent than carbon dioxide during its first 20 years in the atmosphere, according to the Intergovernmental Panel on Climate Change. A 20-year window falls within the 2030 deadline established by IPCC climate scientists in a 2018 report that concluded that, if bold action is not taken steadily until then, the world could face some of the most severe and irreversible impacts of climate change.

Setbacks

The new Lost Hills permits came as CalGEM completed its pre-rulemaking public hearings, on June 2, for regulations pertaining to distancing setbacks of oil wells from homes, schools, health clinics and public parks.

The rulemaking process also came as a direct result of the Newsom administration’s November fracking moratorium announcement, found within that same directive.

Last January, two months after the directive, new CalGEM head Uduak-Joe Ntuk, Newsom’s legislative affairs secretary Anthony Williams and Department of Conservation director David Shabazian all attended and spoke at a pro-industry hearing convened by the Kern County Board of Supervisors. They held the hearing in direct response to Newsom’s November announcement. Aera CEO Sistrunk spoke at that hearing and the company promoted it on its website.

The lobbying disclosure records also show Kinney and Schmidt’s firm represents Marathon Petroleum, which advocated against legislation that would mandate CalGEM to implement a setbacks rule by July 1, 2022. That bill, AB 345, had previously mandated that a setback rule be put into place by 2020.

But after receiving lobbying pressure from the Common Ground Alliance— which has united major labor groups with the oil industry, and which was incorporated by an attorney whose clients include Chevron, ExxonMobil, BP America and Western States Petroleum Association—Assembly Appropriations Chairwoman Lorena Gonzalez (D-San Diego) made it a two-year bill during the 2019 legislative session. The “two-year” option for state legislators extends the lifeline of a bill for potential amendments and passage into the second year of every two-year legislative session. Gonzalez told Capital & Main the bill received two-year status due to its high implementation cost.

Aera’s parent company, ExxonMobil, has given Gonzalez $5,500 in campaign contributions since her first run for the Assembly in 2013. Aera also gave a $35,000 contribution to the California Latino Legislative Caucus Foundation during the first quarter of 2020, its lobbying disclosure form shows. Gonzalez is the chairwoman of the California Legislative Latino Caucus and the foundation is its nonprofit wing. And both Aera and the Common Ground Alliance share the same attorney, Steven Lucas, incorporation documents and disclosure forms show.

“The Governor has been clear about the need to strengthen oversight of oil and gas extraction in California and to update regulations to protect public health and safety for communities near oil and gas operations,” Vicky Waters, Newsom’s press secretary, told Capital & Main in an emailed statement. “CalGEM has launched a rulemaking process to develop stronger regulations and will consider the best available science and data to inform new protective requirements.”

Waters did not respond to questions about Axiom Advisors and its personnel ties to Gov. Newsom.

“An Afterthought”

The permits handed to Aera coincide with the Newsom administration granting the industry a suite of regulatory relaxation measures during the COVID-19 era. These include a delay in implementing management plans for idle oil wells and cutting the hiring of 128 analysts, engineers and geologists to bolster the state’s regulatory efforts on oil wells—even though the industry was legally obligated to pay for it.

These measures came after San Francisco public radio station KQED reported that the oil industry’s top trade associations, the Western States Petroleum Association (WSPA) and California Independent Petroleum Association (CIPA), requested that CalGEM take such actions.

Aera’s general counsel, Lynne Carrithers, sits on the board for CIPA, while the company is also a WSPA dues-paying member.

In response to a question about the cancellation of hiring of 128 regulators, Teresa Schilling, a spokeswoman for the Department of Conservation—which oversees CalGEM—said by email that the “Administration had to revisit many proposals in the January budget as a result of the COVID-19 pandemic and the fiscal challenges it created.”

“Significantly expanding a fee-based program in this time of belt-tightening would not be appropriate,” Schilling continued, speaking to the oil industry’s current financial travails. “However, CalGEM is committed to continuing its critical core enforcement and regulatory work with its current resources. Furthermore, all regulations remain in effect and operators are still accountable for meeting them.”

Schilling added that, with regards to the connections with Axiom Advisors, the administration works with “a variety of stakeholders on policy issues and budget decisions,” calling the latest budget proposal “consistent with Administration priorities.”

But Cesar Aguirre, a community organizer with the Central California Environmental Justice Network who lives near Lost Hills in Bakersfield, sees the situation differently.

“The Lost Hills community is already surrounded by extraction and the Newsom administration and CalGEM continue to show that they intend to put the environment and frontline communities as an afterthought,” he said, advocating for the passage of AB 345. “These actions show us that Californians can’t depend on empty political promises to protect public health.”

Under Cover of Pandemic, Fossil Fuel Interests Unleash Lobbying Frenzy

DeSmogBlog, by Dana Drugmand, April 2, 2020
Worker power washing drill pipe
A worker power washes drill pipe at Citadel Rig 6 in the Alpine High region of the Permian Basin, Reeves County, Texas. Credit: Justin Hamel © 2020

Thousands of Americans are dying, millions have filed for unemployment, and frontline health care workers are risking their lives as the coronavirus pandemic sweeps across the U.S. In the midst of this crisis, the fossil fuel industry, particularly the oil and gas sector, has been actively seeking both financial relief and deregulation or dismantling of environmental protection measures.

A new briefing by UK-based think tank InfluenceMap summarizes this fossil fuel lobbying during the time of the pandemic, pointing to specific examples of how fossil fuel interests around the world are using the cover of the coronavirus crisis to advance their agenda.

InfluenceMap, which tracks and measures corporate influence over climate policy, focused on recent corporate lobbying for both financial interventions and relating to climate or energy regulations. “The oil and gas sector appears to be the most active globally in the above two lobbying areas, demanding both financial support and deregulation in response to the COVID-19 crisis,” the report states.

In the U.S., the top oil and gas producer in the world, this activity has been particularly pronounced. While the oil and gas sector is struggling amid plummeting prices and demand, the struggle is due to factors far beyond the pandemic, and mostly of the industry’s own making.

Many shale companies had amassed large debts that allowed them to rapidly spend and expand production, for example. And the oil and gas giant ExxonMobil’s stock hit a 10-year low in late January, and a 15-year low by March 5, before the pandemic reached a crisis point in the U.S.

Nevertheless, the Trump administration and Republican lawmakers have looked to use the COVID-19 crisis as an excuse to shore up the petroleum producers. In mid-March, the President announced his intention to buy up crude oil to fill the government’s Strategic Petroleum Reserve, which Democrats and climate advocates slammed as a reckless bailout of Big Oil.

Republicans in Congress tried unsuccessfully to give away $3 billion in the recent economic stimulus package to fund that emergency oil stock-up, but the package still contains nearly $500 billion for broad corporate interests with little oversight that oil companies will likely look to access. Senator Lisa Murkowski (R-AK), chair of the Senate Committee on Energy and Natural Resources, sent a letter on April 1 to Treasury Secretary Steve Mnuchin urging him to use the CARES Act stimulus funds to support oil and gas companies.

The rapidly declining coal industry, with many companies already bankrupt, has likewise turned to the government for financial assistance. The National Mining Association wrote to President Trump and Congress asking to suspend royalties and fees, including payments that support victims of black lung disease. Congress did not include the trade group’s requests in the stimulus package, but the group has said it will continue to make its demands.

Beyond seeking their own financial relief through the government’s coronavirus response, fossil fuel interests are using front groups to push back against attempts to include clean energy or climate-related measures in the economic relief bills.

U.S.-based think tanks linked to fossil fuel-based interests such as [the] Koch brothers have been active in opposing support for green energy programs in the U.S. federal government’s response to the crisis,” InfluenceMap said in a emailed statement. The InfluenceMap briefing cites a new project of the Texas Public Policy Foundation (TPPF) called Life:Powered, which promotes fossil fuels and was originally launched under the name “Fueling Freedom” in 2015 “to combat the Obama-era Clean Power Plan.”

A coalition of over two dozen right-wing, free market think tanks, led by TPPF and the Competitive Enterprise Institute, sent a letter to Congress on March 23 under the umbrella of the Life:Powered project urging lawmakers to reject any incentives or support for “unreliable ‘green’ energy” in the latest stimulus package. The letter includes several false claims about renewable energy and argues, “climate change is not an immediate threat to humanity.”

Some of these same conservative free market groups, members of the State Policy Network, have been buying ads on social media attacking efforts to use the COVID-19 economic relief efforts to also address climate change, which medical experts have said poses “unprecedented threats to public health and safety.”

Life:Powered Facebook ad about oil price war
A Facebook ad from Life:Powered and the Texas Public Policy Foundation, promoting a petition in favor of the U.S. oil industry.

Deregulation is another form of assistance the oil and gas industry has pursued. And whether by weakening existing climate policies like Obama-era clean car standards or waiving environmental compliance requirements, the Trump administration has granted much on the industry’s wish list.

One example cited in the InfluenceMap briefing is the Environmental Protection Agency’s (EPA) recent policy suspending civil enforcement of environmental rules and relaxing compliance requirements. The American Petroleum Institute sent a letter to President Trump and EPA Administrator Andrew Wheeler specifically asking for relief from environmental compliance.

Outside the U.S., corporate interests including oil and gas have also used the pandemic to lobby for their agendas, which run counter to the Paris climate agreement and actions necessary to address climate change. Examples cited in the InfluenceMap briefing include:

  • The European Automobile Manufacturers Association (ACEA) recently sent a letter to the president of the EU Commission asking for laxer timelines for complying with the EU vehicle climate regulations.
  • Oil and Gas UK produced a business outlook report that referenced the COVID-19 crisis, while arguing that protecting the UK oil and gas industry is essential in ensuring the sector can contribute to providing the UK with net-zero emissions solutions.”
  • The Australian Petroleum Production and Exploration Association Chief Executive Andrew McConville referenced the need for measures to ensure economic recovery from COVID-19 pandemic while commenting in favor of a draft government commission report published on Australian resource sector regulation. APPEA stated support for a number of findings, including advice against bans on natural gas exploration. McConville argued the report constituted an ‘an important contribution as we consider vital recovery measures.’”
  • Several Canadian oil and gas companies and the Business Council of Alberta are calling on the Canadian federal government to postpone any regulatory changes or tax increases including a planned increase to the carbon tax. The Canadian Association of Petroleum Producers has also been gunning for a $15 billion bailout package from the federal government.

Trump Meets With Oil CEOs

President Trump is scheduled to hold an in-person meeting Friday, April 3 with the heads of leading oil and gas companies to discuss their concerns, such as the Russia-Saudi Arabia oil price war and depressed demand as a result of the pandemic response.

According to Greenpeace USA, the executives expected to meet with Trump personally earned at least a combined $100 million in 2018 alone between salaries, bonuses, stock options, and other compensation.

Where the rest of the world sees a global health and economic crisis, fossil fuel CEOs see an opportunity to line their pockets,” Greenpeace USA Climate Campaign Director Janet Redman said in a statement. “We cannot let our government’s response to the COVID-19 pandemic be driven by corporate executives looking to exploit a crisis for their own gain instead of supporting health care providers and working families. Nurses need masks. Hospitals need ventilators. Workers need paychecks. People need help all over this country. And what is Trump doing? He’s making sure oil executives have golden pandemic parachutes. It’s disgraceful.”

Main image: A worker power washes drill pipe at Citadel Rig 6 in the Alpine High region of the Permian Basin, Reeves County, Texas. Credit: Justin Hamel © 2020