Category Archives: Oil drilling

Opinion: Three practical things Newsom can do to keep Big Oil in check

[BenIndy Contributor Kathy Kerridge – Californians like to think of themselves as climate forward, and Governor Gavin Newsom certainly projects that image. However, there is often a gap between rhetoric and action. Last year, as part of the governor’s climate proposals, the legislature enacted setbacks so oil drilling — with all its health risks — could not happen in your backyard, next to your child’s school or near health facilities. The oil industry then qualified an initiative to overturn that effort (often positioning their bill as “pro-setback” to the people who signed) and CalGEM has continued busily granting permits for drilling in within setback zones. So why doesn’t Newsom back up his rhetoric? This op-ed from the director of Sierra Club California, published by the LA Times, does a good job of explaining how Gov. Newsom might turn rhetoric into action. – K.K.] 

Opinion: If Gavin Newsom really wanted to go after Big Oil, here’s what he would do

An oil rig silhouetted by a golden sunset.
Director of Sierra Club CA Brendan Dawson: “If Newsom wants to live up to his reputation as a champion for the climate and an opponent of Big Oil, he must do more than just promise to protect our environment and health.”

By Brendan Dawson, first published in the LA Times on April 7, 2023.

California politicians promise to protect the environment a lot more than they actually do. For environmental advocates like me, reconciling a politician’s public statements on environmental issues with their actions doesn’t take much time: Simply put, there is no reconciling them.

Gov. Gavin Newsom’s stance on oil and gas is no exception. Late last year, the governor called for a special legislative session to hold oil and gas companies accountable for gouging California consumers when gasoline prices spiked last fall by imposing a penalty on excess profits. The bill that came out of the session in March fell short of the governor’s goals, settling for requiring more industry transparency.

Environmental groups, including Sierra Club California, nevertheless supported the measure as a step toward regulating an industry that was hurting the working class and overheating the planet at the same time. Newsom himself announced “a new sheriff in town” and claimed to have “brought Big Oil to their knees.”

And yet his administration continues to capitulate to the oil industry in other important ways. Newsom’s public determination to take on this industry differs significantly from what goes on behind closed doors.

For instance, after the fossil fuel industry used the state’s referendum process to stall a critical law banning new or reworked oil and gas wells within 3,200 feet of homes, schools, parks and healthcare facilities, the governor decried the move. He said in a statement that he was proud to have signed the setback measure, Senate Bill 1137, “to stop new oil drilling in our neighborhoods and protect California families.”

Since Newsom’s statement, however, his administration’s oil agency, the California Geologic Energy Management Division, or CalGEM, has approved hundreds of permits to rework existing oil and gas wells and continue dangerous operations within setback zones. CalGEM has approved a total of 897 permits since the beginning of the year, 62% of which are within the zones that would be protected by SB 1137.

Reworking of existing wells is a significant source of pollution that puts communities at elevated risk of asthma, cancer and other illnesses. Environmental justice advocates fought for decades to secure setbacks from these operations, only to see CalGEM continue to rubber-stamp permits while the governor stood by.

Newsom is obviously aware of the fossil fuel industry’s repercussions for California communities and the environment. Other departments in his administration have taken steps to advance clean air, and Newsom publicly champions them. But CalGEM, the agency charged with “protecting public health, safety, and the environment in its oversight of the oil, natural gas, and geothermal industries,” clearly missed the memo.

The United Nations’ Intergovernmental Panel on Climate Change, in the recently released final part of its sixth assessment of the global climate, calls for cutting two-thirds of global carbon pollution by 2035 and ending reliance on oil and gas by 2040. In the report, U.N. Secretary General António Guterres says we must “massively fast-track climate efforts by every country and every sector and on every timeframe. Our world needs climate action on all fronts: everything, everywhere, all at once.” For California to do our part to meet these demands, Newsom must align his administration’s actions with his public statements.

There are a few more concrete steps Newsom can take toward that end. First, he can direct CalGEM to stop issuing new and rework permits, prioritizing the rescinding of permits within the setback zone that would be established by SB 1137.

He should also organize a government-wide effort to plan California’s transition from oil and gas to clean, renewable energy. This transition must consider the needs of the communities that will be most affected by the transition, especially those that consist of predominantly low-income households and people of color.

Finally, he must hold the oil industry accountable for cleaning up abandoned oil wells. Thousands of wells across the state have been abandoned by the industry, and the often exorbitant cleanup costs are wrongly falling on California taxpayers. CalGEM recently spent more than $34 million in taxpayer money to clean up 171 oil wells in Santa Barbara’s Cat Canyon alone.

These steps are practical and immediately achievable. If Newsom wants to live up to his reputation as a champion for the climate and an opponent of Big Oil, he must do more than just promise to protect our environment and health.

Brandon Dawson is the director of Sierra Club California.

ACTION ALERT – Support oil and gas drilling setbacks

ACTION ALERT

TAKE A STAND WITH PDB AND  350 BAY AREA ACTION
TO SUPPORT FRONTLINE COMMUNITIES

in demanding health and safety setbacks
from oil and gas drilling in California

SB 467, the Dirty Drilling Phase out and Setbacks bill, did not pass through the Natural Resources and Water Committee last week because it was ONE VOTE SHORT, but the fight is not over. 

The bill is now being amended to ensure that frontline communities are protected from toxic oil and gas drilling by requiring a 2,500 foot setback for the over 2 million Californians that live, work, go to school, and are cared for with oil and gas drilling right in their backyards.

Texas has setbacks—and CA does not. This harms mostly low-income and Black, Latinx, and Indigenous communities. We have just a few days to get at least one vote to move this bill forward to protect the health and safety of our children, neighbors, friends, and workers from the oil and gas industry’s harmful practices. Here’s your chance to join the statewide VISÍON ALLIES Coalition and tell our lawmakers to do something for the health of Californians.

CALL THREE SENATORS NOW AND MAKE A DIFFERENCE 

The target is 1,000 calls to three Senators to urge them to vote YES when the amended bill comes back for a vote. 

Ralph Dennis, Benicia

Thank you for taking action today to secure the health and safety of vulnerable frontline communities. 

Ralph Dennis, Chair

Trump to allow new oil drilling in NorCal – targets include Mt. Diablo State Park near Walnut Creek

Repost from the San Francisco Chronicle
[Editor:  See also a Center for Biological Diversity press release.  – R.S.]

New oil drilling in the Bay Area? Trump admin opens possibility

By Kurtis Alexander May 9, 2019 
The San Ardo, Ca. oil field in Central California which is located between King City and Paso Robles, as seen on Wed. May 6, 2015. Photo: Michael Macor / The Chronicle 2015

The Trump administration brought its pro-drilling agenda to Northern California on Thursday, disclosing a plan to make more land available for oil and gas development, including parts of the Santa Cruz Mountains and East Bay hills.

Documents released by the U.S. Bureau of Land Management show the agency is looking to nearly double the amount of federal property and mineral deposits in its Central Coast region that can be leased by fossil fuel companies compared to what was proposed by the previous administration.

Roughly 725,000 acres across 11 counties will be opened up for new leasing, according to the bureau’s preferred plan, including areas in or around Mount Diablo State Park near Walnut Creek and Butano State Park near Pescadero.

Industry experts say such spots, far beyond the major oil and gas fields in San Benito, Monterey and Fresno counties, are unlikely to attract interest from oil companies because of public outcry or engineering logistics — or because they don’t find petroleum. But environmentalists aren’t so sure.

“Many of these areas have drilling and active gas wells (nearby), so yes, there’s a real risk that these places will be developed,” said Clare Lakewood, a senior attorney at the Center for Biological Diversity.

The federal government’s new plan comes as part of an environmental report addressing a court ruling five years ago that essentially halted new drilling leases in California until the impacts of fracking were fully evaluated.

The Center for Biological Diversity and the Sierra Club had brought suit against the Bureau of Land management in 2013, alleging the agency had not sufficiently analyzed fracking’s toll.

Fracking is a method of extracting oil in rock with high-pressure water and chemicals. The practice has become an increasingly popular way to get at previously inaccessible mineral deposits, but it can tear up the landscape, pollute groundwater and trigger earthquakes.

While environmental groups say fracking’s impacts have become increasingly evident since the lawsuit, the Bureau of Land Management report outlines ways in which it says the technology can be safely deployed.

The fossil fuel industry praised the agency Thursday for moving forward with a plan that embraces fracking and advances the extraction of oil and gas.

“We’re pleased that after five years, the process worked and the federal government has reaffirmed that hydraulic fracturing is a safe method of production in California,” said Kara Greene, spokeswoman for the trade group Western States Petroleum Association.

The Bureau of Land Management’s new report comes in contrast to the agency’s initial environmental report, prepared under President Barack Obama and released in early 2017. That document proposed leasing about 400,000 acres in the Central Coast region for oil and gas development.

“For the BLM, the oil and gas program needs to align with new secretarial orders,” said agency spokeswoman Serena Baker, referring to the Trump administration’s aggressive push to expand energy production.

In the bureau’s Central Coast region, drilling operations are currently limited to Fresno, Monterey, San Benito, Alameda, Contra Costa and Santa Clara counties.

Industry experts say that while leases may be offered in additional parts of the region, which include the counties of Merced, San Joaquin, San Mateo, Santa Cruz and Stanislaus, it’s not likely.

“Drilling for oil is so expensive in California, it’s hard for me to believe that anyone is doing it,” said Amy Myers Jaffe, formerly with the UC Davis Institute of Transportation Studies and now a senior fellow at the nonprofit Council on Foreign Relations in New York. “There’s only going to be new drilling if there’s someone who has property nearby and they want to extend what they’re doing on the federal pocket next door.”

The Bureau of Land Management estimates that 37 new oil and gas wells will be drilled as a result of the new plan, a small fraction of the few thousand existing wells in the region.

Most of California’s oil operations are on state and private property, with California regulators dictating if and where new drilling proceeds. Like the Trump administration, officials in Sacramento have been supportive of fossil fuel extraction.

Environmental groups have pressed the state to limit or halt new drilling, citing not only the local problems but the contribution of fossil fuels to global warming.

“There are hundreds of organizations that have been coming together for years” to pressure California officials, said Monica Embrey, a spokeswoman for the Sierra Club. She’s hoping the Newsom administration will finally act.

The Bureau of Land Management’s new report is scheduled to be published Friday in the Federal Register, at which time a 30-day public comment period begins. The governor has 60 days to weigh in. After input is gathered, the agency will review any concerns and decide how to move forward.

Last month, the bureau released a similar document for Southern and Central California, clearing the way for new oil and gas development on more than 1 million acres of federal land and mineral deposits.

Kurtis Alexander is a San Francisco Chronicle staff writer.

Oil trains make comeback as pipeline bottlenecks worsen

Repost from the Toronto Star (orig. in the Wall Street Journal)

Crude-by-rail has rebounded across U.S. as production has outstripped pipeline capacity

2 Feb 2019, By Rebecca Elliott and Paul Ziobro, The Wall Street Journal
Much of the recent oil train growth is due to record shipments from Canada, where pipeline expansion projects have stalled. | MATTHEW BROWN THE ASSOCIATED PRESS FILE PHOTO

The use of trains to carry crude is surging after dropping in recent years amid concerns about safety, as drillers in parts of North America produce more oil than area pipelines can accommodate.

An average of 718,000 barrels of crude a day traversed America’s railways as of October, the latest data available, an 88% increase from a year earlier, according to the U.S. Energy Information Administration. That compares with a peak average of about 1.1 million barrels in October 2014.

Much of the recent oil train growth is due to record shipments from Canada, where pipeline expansion projects, including Keystone XL and Trans Mountain, have stalled amid environmental opposition and legal delays. Crude-by-rail shipments also have ticked up from North Dakota’s Bakken region and the Permian Basin of West Texas and New Mexico, according to energy-monitoring firm Genscape Inc.

The crude-by-rail comeback is expected to last through late this year in the Permian, and longer in North Dakota and Canada, as companies struggle to lay new pipe as quickly as drillers are getting oil out of the ground.

Shipping oil by train is more expensive than sending it through a pipeline, so producers often avoid making longterm commitments to rail companies. It costs about $20 a barrel to send oil by rail from Canada to the U.S. Gulf Coast, compared with about $12.50 by pipeline, according to energy investment bank Tudor Pickering Holt & Co.

But pipeline projects typically lag behind growth in oil and gas production, and the gap has lengthened in many parts of the country in recent years as local activism has made it increasingly difficult to complete projects. Meantime, North American oil production topped 15.6 million barrels daily in August, a 17% annual increase, according to the EIA.

Bottlenecks have grown particularly severe in Canada. Heavy crude there was selling locally for more than $50 a barrel below U.S. benchmark prices last fall, reflecting producers’ inability to get it to market due to pipeline problems. U.S. oil prices have since fallen about 24%, closing at $54.23 a barrel on Wednesday.

The congestion in Canada spurred companies including Houston-based ConocoPhillips and Calgary-based Cenovus Energy Inc. to ink rail deals.

“The intention is to bridge us over to the next major pipeline expansion, so a few years,” ConocoPhillips finance chief Don Wallette, Jr. said last fall.

Cenovus’s three-year agreements will allow it to transport about 100,000 barrels of oil daily to the U.S. Gulf Coast, where refiners mix it with lighter crudes to produce fuel.

In October, about half of the oil the U.S. imported by rail from its northern neighbor went to the Gulf Coast, EIA data show, helping to offset a 30% decline in crude purchases from Venezuela over the past two years. Roughly a quarter went to the Midwest, while smaller amounts went to the East and West coasts.

Derailments, notably one in Lac-Mégantic, Quebec, that killed 47 people in 2013, have raised concerns about the safety of transporting oil by trains on a large scale. That prompted federal regulators to impose tougher safety requirements for railcars, though opposition remains in some communities.

The heightened demand for oil train transportation has benefited railroads including Union Pacific Corp., whose petroleum shipments rose 30% last year to 228,470 carloads as the company handled more crude oil. But Chief Executive Lance Fritz said the Omaha, Neb.-based railroad isn’t investing heavily to support crude-by-rail shipping because the demand could evaporate once major pipeline projects come online. “We’re careful to make these commitments because it’s a short-lived phenomenon,” Mr. Fritz said in a recent interview. “It’s just not going to be around for long-term returns.”

Since shipping oil by rail is generally more expensive, pipelines remain a more attractive option when available, analysts say. “People would love to have the optionality to move onto crude by rail whenever they want to, but nobody wants to be signing a check for it,” RBN Energy analyst John Zanner said.

Mr. Zanner said because of limited supply of railcars and other infrastructure he doesn’t expect oil train shipments from Canada to increase significantly as a result of U.S. sanctions on Venezuela’s state-owned oil company.

Oil companies often use trains on an ad hoc basis, and rail provides geographic and financial alternatives for producers wary of committing to new pipes. Pipeline companies typically won’t proceed with a project unless drillers sign multiyear contracts guaranteeing payment regardless of whether they have oil to ship.

Whiting Petroleum Corp. is weighing those trade-offs in North Dakota, where it is evaluating whether to support an additional pipeline or rely on costlier, but more flexible, crude-by-rail transportation. Crude production in the state, once the heart of oil-train transportation, has swelled about 38% since the Dakota Access Pipeline opened in 2017, federal data show, testing the limits of existing pipelines.

In November, oil sold in Minnesota fetched as much as $19 a barrel less than it would have at the main U.S. trading hub in Cushing, Okla., reflecting the bottleneck, according to price reporting agency S&P Global Platts. “You’re always balancing between getting the infrastructure in place versus flexibility,” said Peter Hagist, a senior vice president for Whiting.