Oil companies try to scare us away from limiting fuel production by saying it would increase prices. But demand for fossil fuels is actually decreasing in California and throughout the US West. This should be a good reason for ramping down production. Instead, California refineries are pivoting to export an increasing amount of their products—now about 1/3—including the dirtiest fuel, petcoke.
This map shows where California refinery fuel exports go.
Key quote: “Refiners in California have already pivoted toward export of the dirtiest-burning fuels they refine here. Now a crucial question arises: Instead of phasing down oil refining as the state moves toward zero emission vehicles, will refiners here pivot to export more and more of their ongoing fuels production? Tracking exports from refineries in California matters.”
[Note from BenIndy: Same old dog, same old tricks. The only things that seem to change over the years are the euphemistic PAC names used to attack Climate Dems. This PAC, funded by Chevron, Valero, and Marathon (among others), is called the “Coalition to Restore California’s Middle Class” in short, but it’s the whole name that gives you the whole picture: “Coalition to Restore California’s Middle Class…Including Energy Manufacturing and Technology Companies Who Produce Gas Oil Jobs and Pay Taxes.” So folks, don’t forget to check the fine print on all political mailers before elections. Top funders are often noted in the fine print, but it’s worth some Google sleuthing to see who else is paying for these glossy hit pieces. The nastier they are, the deeper you should look – to assess both truthfulness and your personal alignment with the statements for or against a candidate or measure.]
SPOTLIGHT
An oil pumpjack in Kern County, California. Climate News / Harika Maddala.
Politico, by Blanca Begert, Camille Von Keen, and Ariel Gans, with help from Jeremy B. White and Wes Venteicher, February 15, 2024
BLUE OIL: Like crude from a derrick, oil money is gushing into legislative races as the industry looks to elect its favored Democrats.
The principal industry PAC — funded by Chevron, Valero and Marathon — has spent nearly $1.4 million to influence voters in a handful of races this week, according to the Coalition to Restore California’s Middle Class’ campaign filings. The spending surge is concentrated on safe blue seats. It’s a familiar tactic: with Republicans sidelined in Sacramento, businesses often look to recruit sympathetic Democrats.
That dynamic is most evident in a Stockton-area state Senate race that’s absorbed the majority of the PAC’s spending so far. The battle to succeed outgoing Sen. Susan Eggman in SD-5 has become a proxy for the larger struggle between business-backed moderate Democrats and more liberal members supported by labor and environmentalists.
The oil PAC has spent $700,000 so far to promote Assemblymember Carlos Villapudua — one of the Legislature’s most conservative Democrats — and to suppress former Rep. Jerry McNerney, who came out of retirement to challenge Villapudua. Meanwhile, a pro-McNerney committee funded by unions, consumer attorneys and green groups has spent more than $400,000.
Beyond SD-5, the industry is spending to boost Adam Perez in the 50th Assembly District; Assemblymember Tim Grayson in the 9th Senate District; Jose Solache in the 62nd Assembly District; Ed Han in the 44th Assembly District; and Karen Mitchoff in the 15th Assembly District, while attacking Jackie Elward in the 3rd Senate District. All are open, blue seats. — JW
[Note from BenIndy Contributor Nathalie Christian: This is a long read, but a good one. After the first installment of Ted Parson’s three-part series introduced climate overshoot as a concept and offered a quick history of the Climate Overshoot Commission, these two follow-up parts explain just what is so interesting – and potentially so radical– in the Commission’s recently released report. As someone who studied the Montreal Protocol (briefly), I always wondered what was so different about the rules, systems, and concepts our global society deployed to reduce ozone-destroying CFCs (et al.) and the rules, systems, and concepts we are using now in our fight against the fossil fuels–induced climate crisis. “Money! Dump-trucks of money!” is of course the most obvious answer to any and all questions, but there’s more potential overlap for success that awaits you in this fascinating two-part finish to Parson’s analysis. I have emphasized key lines through this post to assist fellow skimmers, and marked when I have done so, but I hope many of you read the whole thing.]
Pt. 2, A Radical Proposal Hidden in Plain Sight in the Overshoot Commission Report
Click the image to read the full report on the Climate Overshoot website.
The Commission’s recommendations on emissions include a fossil phaseout much stronger than anything now proposed, which could materially advance climate action.
Edward A. (Ted) Parson is Dan and Rae Emmett Professor of Environmental Law and Faculty Co-Director of the Emmett Institute on Climate Change and the Environment at the University of California, Los Angeles.
Continuing my discussion of the report of the Climate Overshoot Commission released last week, today I dig into their recommendations on mitigation. As you may recall, the Commission’s informal (but serious) job description was to speak of elephants in the room and unclothed emperors: to say things that are true and important about climate risks and responses that other, more political constrained bodies cannot. If you take this job description for statements and apply it to recommendations, it would suggest recommending things that are not politically feasible – at least not now – or that even lie outside the range of current debate. This does not mean making recommendations so outlandish or implausible that they can readily be ignored or arbitrarily rejected, of course. But if the job is to move the range of acceptable arguments and proposals – moving the Overton window, as the political scientists say – the most effective recommendations may well lie beyond the boundary of what could be adopted now. This perspective is especially relevant to the Commission’s recommendations on mitigation.
Mitigation – deep rapid cuts to worldwide emissions – is the first, essential element of effective climate response. I don’t think there’s anyone thinking seriously about climate change who disagrees with this. In the Commission’s words, mitigation is the “foundational strategy.” Yet when the Commission began its work, it first planned not to speak about mitigation – not because they didn’t recognize its primary importance, but because they thought there wasn’t much for them to add to what’s already being said, particularly given the tight time limit on their work. But partway through, the Commissioners realized that not speaking on mitigation would risk them being mistakenly seen to not accord it the needed priority, so they changed course – correctly, even necessarily, in my view. But in making this decision, they also resolved that their messages on mitigation had to cut through the noise and move the debate, and thus sought to make their recommendations radical. I think they succeeded at this, although it’s not clear from the initial reactions to their report that their radicalism has been noticed – yet.
Their mitigation recommendations include calls to adopt stronger national and international accountability mechanisms for emissions cuts; policy and financing innovations to promote faster deployment of zero-emissions technologies; and for countries to recognize each other’s climate policies and reflect them in trade measures. They also call for cutting short-lived climate forcers even faster than now being pursued. These are strong recommendations, persuasive and well conceived. But they also could plausibly be adopted within a few years if governments are serious about ramping up their ambition, so do not necessarily meet the aim of proposing something radical enough to move the debate.
So, where’s the radicalism?
It’s in their very first mitigation recommendation, for a “graduated, differentiated phaseout” in production and consumption of fossil fuels. Wait a second, you might say, what’s so radical about that? Isn’t it obvious that the world needs to get rid of fossil fuels, and haven’t a bunch of people called for it? Well, yes. But the Commission’s proposal is vastly stronger than either the weak language adopted at Glasgow – which calls on parties to “… accelerat(e) efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies …” or the language now being discussed for the coming COP28, which speaks of phasing out unabated fossil fuels. The word “unabated” has been used frequently in recent months by Sultan al-Jaber of the United Arab Emirates who is overseeing this year’s COP; it was included in a draft document by EU countries; and it appears in the mitigation findings of the global stocktake released earlier this month. The Commission’s proposal is also substantially stronger, and at the same time more practical, than the most ambitious fossil-fuel proposals being promoted by activist nations: the Fossil Fuel Non-Proliferation Treaty and the Beyond Oil and Gas Alliance.
What makes the Commission’s proposal so radical is the combination of its ambition; its inclusion of key design elements that make it plausibly operationalizable; and the stature of the Commission. No mitigation proposal remotely this strong has been advanced in policy debate, certainly not by any body with stature similar to the Commission’s.
It is these elements taken together that make the Commission’s proposal radical.
[Note from BenIndy: Please take a minute to tell Governor Newsom to sign AB 1167. Here is his phone number: (916) 445-2841, and here is a phone script, provided by 350 Bay Area Action:
Phone script: Hello, my name is ____________. I live in ____________, California and I’m a climate supporter of 350 Bay Area Action. I am calling to ask the Governor to sign AB 1167, the bill requiring adequate bonding for plugging oil wells. I want our state to do everything we can to protect the health of impacted communities and address the climate emergency.
Click this image to go to the governor’s contact form page. You will be redirected to a new site.
Prefer activism by email? You can urge Gov. Newsom to sign AB 1167 using his contact web form (clicking these links will redirect you to his contact page). There will be a drop-down menu where you can select the topic as “An Active Bill” and then another drop-down menu where you can select “AB 1167.” Follow the instructions to write a message. Please also note that our elected state representatives, Senator Bill Dodd and Assemblymember Lori Wilson, neglected to vote on this important bill.]
“A Setup for Disaster”: California Legislation Requiring Companies to Pay for Oil and Gas Well Cleanup in Limbo
The bill, which awaits a decision by Gov. Gavin Newsom, follows ProPublica’s reporting on the multibillion-dollar cost to clean up California’s oil and gas industry and the exodus of major companies shifting ownership of thousands of aging wells. | Uncredited image.
The California Legislature recently passed a bill that would provide the state’s taxpayers some of the strongest protections in the nation against having to pay for the cleanup of orphaned oil and gas wells. But Gov. Gavin Newsom has not indicated if he will sign it.
AB1167 would require companies that purchase idle or low-producing wells — those at high risk of being left to the state — to set aside enough money to cover the entire cost of cleanup. Assemblymember Wendy Carrillo, a Los Angeles Democrat who authored the bill with the support of the Natural Resources Defense Council and Environment California, said it’s needed to “stem the tide” of orphaned wells.
Newsom has until Oct. 14 to make a decision. A spokesperson declined to comment, saying the governor would evaluate the bill “on its merits.” The state’s Department of Finance released a two-page analysis opposing it.
It costs more than $180,000 to clean up an average orphan well in California, the state told the U.S. Department of the Interior in 2021, according to documents ProPublica obtained via a public records request. This includes plugging the well with cement, removing aboveground infrastructure like pumpjacks and decontaminating the site. But bonds, which are financial instruments guaranteeing to pay for cleanup, cover only a tiny fraction of that cost. A ProPublica analysis of state data found that oil and gas companies have set aside only about $2,400 per well. (State oil regulators are currently reevaluating companies’ bonds to increase them within existing law, which does not mandate that they cover the entire cleanup cost.)
Left unplugged, many wells leak climate-warming methane, brine and toxins that were used in the drilling process.
Newsom has until Oct. 14 to make a decision. | Uncredited image.
“It’s a setup for disaster,” said Ann Alexander, a Natural Resources Defense Council senior attorney.
The bill follows ProPublica’s reporting on the exodus of oil majors from the state’s declining industry — one sale last year saw more than 23,000 wells move from Shell and ExxonMobil to a little-known German asset management group called IKAV — and on the multibillion-dollar cost to clean up the industry. ProPublica’s work was repeatedly cited by the Legislature and the bill’s supporters.
“It’s too easy for them right now to offload those unproductive oil wells to newer or less-resourced companies that may turn around and go bankrupt and that don’t have the adequate financial capacity to do the job of cleaning up,” said Laura Deehan, director of Environment California.
The Western States Petroleum Association and California Independent Petroleum Association industry trade groups warned state lawmakers that “this misguided bill will increase the number of orphan oil wells in California.” The organizations argued that requiring bonds that cover the full cleanup cost would dissuade sales to companies hoping to enter the market. This, in turn, could lead to well owners getting stuck with the expensive cleanup, causing insolvency and ultimately leaving the wells with the state.
Dwayne Purvis is a petroleum reservoir engineer who authored a study that estimated it would cost as much as $21.5 billion to clean up California’s oil industry. He pointed out that the most common type of bond — a surety policy — is similar to insurance guaranteeing a well will be plugged, so oil companies wouldn’t have to set aside the full cleanup cost in cash to comply with AB1167. Federal regulators recently found these bonds are relatively cheap.
If that stops companies from buying wells in California, Purvis said, then there’s a bigger problem: “This admits — implicitly but almost inescapably — that the cost of plugging exceeds the value of remaining production,” he told ProPublica via email.
A Western States Petroleum Association spokesperson did not address questions about its claims. The California Independent Petroleum Association did not respond to requests for comment.
In negotiations over the bill, according to people present, the trade associations pointed to one example in particular to highlight why the legislation would create more orphan wells — the sales of some of the more than 750 wells orphaned following bankruptcy filings by multiple entities in the Greka group of companies. The sales, the industry argued, presented an opportunity for the wells to be plugged by an oil company, not the state.
However, hundreds of the wells remain on the orphaned list to this day, only they’re now associated with a new company: Team Operating.
Greka’s CEO and Team Operating didn’t respond to emails requesting comment.
The bill does carry a potential loophole, experts cautioned: whether the increased bond requirements in the bill would apply to wells transferred through shell companies, as is often the case.
The state Department of Finance’s opposition to the bill relied on three arguments.
The agency’s report claimed that large companies with enough resources to plug wells are coming into the California market. But research shows these producers are exiting the state and handing off their aging, unprofitable wells to smaller companies that are less likely to be able to afford cleanup.
Its analysis also suggested that bond underwriting companies are “becoming hesitant” to do business in California. Purvis said that if these companies believe the situation is too risky to guarantee cleanup costs will be paid, “then the taxpayers of California probably should not extend producers the same credit.”
Finally, the report argued the bill is unnecessary because California regulators already have the authority to recoup plugging costs from wells’ previous owners.
While existing law gives the state this authority, it only applies to wells transferred after Jan. 1, 1996. Oil drilling in California dates back to the 1860s, and many thousands of wells were sold prior to the law’s cutoff, meaning the state can’t go after the wells’ former operators.
ProPublica reviewed the state’s list of orphaned wells and found numerous examples of well cleanups being left to taxpayers despite the wells being sold after 1996. In those cases, the state either hasn’t used its authority or has otherwise failed to secure plugging funds.
Department of Finance analysts referred questions to the state’s oil regulators, who were the source for much of the report. A spokesperson for the California Geologic Energy Management Division said state regulators have obtained money from previous owners on occasion.
But going after older operators is difficult, said Rob Schuwerk, a former New York assistant attorney general and the North American executive director of the energy finance think tank Carbon Tracker Initiative, and bonds are guaranteed money.
“There’s no better substitute for having the cash,” he said.
ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.
Mitigation – deep rapid cuts to worldwide emissions – is the first, essential element of effective climate response. I don’t think there’s anyone thinking seriously about climate change who disagrees with this. In the Commission’s words, mitigation is the “foundational strategy.” Yet when the Commission began its work, it first planned not to speak about mitigation – not because they didn’t recognize its primary importance, but because they thought there wasn’t much for them to add to what’s already being said, particularly given the tight time limit on their work. But partway through, the Commissioners realized that not speaking on mitigation would risk them being mistakenly seen to not accord it the needed priority, so they changed course – correctly, even necessarily, in my view. But in making this decision, they also resolved that their messages on mitigation had to cut through the noise and move the debate, and thus sought to make their recommendations radical. I think they succeeded at this, although it’s not clear from the initial reactions to their report that their radicalism has been noticed – yet.
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