Category Archives: CA Gov. Gavin Newsom

KQED: Benicia’s Valero Refinery may NOT close – “Hail Mary” possible?

Potential Valero Refinery Closure Leaves Benicia, State Officials Scrambling for Alternatives

KQED News,  By Matthew Green, April 26, 2025

The Valero refinery in Benicia on Sept. 21, 2023. The potential closure of the massive Benicia oil refinery by next April would have a huge impact on both the city’s economy and the state’s oil supply. (Martin do Nascimento/KQED)

A week after Valero announced plans to “idle, restructure or cease” operations at its massive Benicia oil refinery by next April, company executives said that while the plant’s closure was more than likely, it was not yet a foregone conclusion.

In an earnings call Thursday, Valero executives left open the possibility of a Hail Mary, saying they had plans to meet with state and local officials to discuss potential options.

“I do think there’s a genuine interest in California to avoid the closure,” Richard Walsh, Valero’s executive vice president, said during the call. But he quickly added, “Our current intent right now is to close the refinery.”

A week after Valero announced plans to “idle, restructure or cease” operations at its massive Benicia oil refinery by next April, company executives said that while the plant’s closure was more than likely, it was not yet a foregone conclusion.

In an earnings call Thursday, Valero executives left open the possibility of a Hail Mary, saying they had plans to meet with state and local officials to discuss potential options.

“I do think there’s a genuine interest in California to avoid the closure,” Richard Walsh, Valero’s executive vice president, said during the call. But he quickly added, “Our current intent right now is to close the refinery.”

Valero CEO Lane Riggs cited California’s tough “regulatory and enforcement environment” as the main driver behind the company’s intent to cease operations at the sprawling North Bay facility. The sixth-largest refinery in the state, it currently produces up to 145,000 barrels of crude oil a day, accounting for about 9% of the state’s production.

“California has been pursuing policies to move away from fossil fuels for really the past 20 years,” Riggs said, calling the state’s regulations “the most stringent and difficult of anywhere else in North America.”

Benicia Mayor Steve Young doesn’t disagree with the assessment, but said he wishes the company had provided more lead time.

“We need to get moving on this quickly because 12 months is not a long time given the severity of the economic impact,” said Young, noting that nearly 20% of Benicia’s $60 million budget comes from the refinery. “I think that’s part of my frustration, is how little time we have to try to plan for some kind of an alternative.”

Shutting down the facility, he added, would also be a major blow to the hundreds of residents who work there, not to mention the scores of restaurants, hotels and other businesses that provide services to those workers in this city of some 27,000 residents.

The Valero refinery is also the exclusive supplier of jet fuel to nearby Travis Air Force Base, which it delivers through a direct pipeline.

“If that is stopped, what does that mean to the base?” Young said. “Travis uses an amazing amount of fuel to fly all their planes, much more than can be easily replaced, and certainly not replaced within a year. So I think that this becomes a matter of real concern to the Defense Department and it’s potentially a national security issue.”

Valero dropped its bombshell April 16 announcement roughly six months after regional and state air regulators fined the company a record $82 million for secretly exceeding toxic emissions standards for at least 15 years. And last month, city leaders voted unanimously to impose moderate new safety regulations on the facility.

Map showing location of Valero's Benicia refinery
Map by Matthew Green/KQED

“I suspect that compared to other refinery operators, they’re a pretty good business operator. But they’ve also had a pretty bad track record on public safety,” said Terry Mollica, who leads a group of residents that pushed for the city’s new safety rules to increase oversight of the refinery.

But Mollica said that he doesn’t think anybody in his group is particularly excited about the possibility of the facility closing altogether.

“There would be long-term and short-term impacts on the community,” he said. “People would lose their jobs. None of us want to see that happen particularly.”

Valero has owned and operated the Benicia refinery since 2000. The refinery was originally built in 1968 for Humble Oil, later called Exxon, and began operations the following year.

Its possible closure comes amid a growing exodus of traditional oil refiners in California. Phillips 66’s refinery in Rodeo and Marathon’s facility in Martinez both recently converted operations to biofuel production. Phillips 66 also plans to close its Los Angeles-area refinery — the seventh largest in the state — later this year.

And Valero executives, in this week’s earnings call, hinted that they may also soon consider “strategic alternatives” for the company’s only other California refinery, located near Los Angeles, which accounts for more than 5% of the state’s crude oil supply.

“California is phasing out its gasoline consumption and refiners see that coming,” said Severin Borenstein, a UC Berkeley energy economist. “We should be seriously concerned about how all that gasoline supply is going to get replaced.”

California has dramatically reduced its reliance on fossil fuels in recent decades, but most residents still drive gas-powered cars and will continue to do so for years to come, Borenstein said, even though the state already has some of the highest gas prices in the nation.

Gov. Gavin Newsom underscored that sense of urgency this week in a letter (PDF) to California Energy Commission Vice Chair Siva Gunda. He urged the commission to “redouble” its efforts to ensure refiners “continue to see the value in serving the California market, even as demand for fossil fuels continues its gradual decline over the coming decades.”

“I am directing you … to reinforce the State’s openness to a collaborative relationship and our firm belief that Californians can be protected from price spikes and refiners can profitably operate in California — a market where demand for gasoline will still exist for years to come,” Newsom wrote.

A customer prepares to pump gas into his truck at a Valero gas station on July 22, 2013 in Mill Valley. (Justin Sullivan/Getty Images)

Almost immediately after Valero’s announcement, Newsom was lambasted by state Assembly Republicans, who said the potential closure was among the growing number of “real-world consequences” of [his] war on California energy producers that was “becoming clearer by the day.”

In his letter, Newsom defended two different laws he signed in the last two years that give the state more oversight of the oil industry and regulate backup supply when refineries go offline in order to prevent market irregularities. He also asked state energy and environmental officials to produce a report by July 1 on “any changes in the State’s approach that are needed to ensure adequate supply during this transition.”

“The California Energy Commission continues to be committed to working with stakeholders to explore options to ensure an affordable, reliable, and safe transportation fuel supply,” Sandy Louey, a spokesperson for the commission, said in an email in response to Newsom’s letter.

Young, whose city has long felt the health impacts of the refinery’s toxic releases, said he understands the motivation behind California’s ambitious regulations.

“I think certainly [California’s] done them for lots of good environmental reasons, and that obviously climate change is a real thing and burning fossil fuels is a direct contributor to it,” he said. “Did they go too far? I don’t want to say that. But it certainly has created an environment where oil companies feel that either they’ve been unfairly targeted or they are just seeing this as perhaps a way to negotiate some rollbacks of some of those things.”

Young acknowledged that the refinery’s closure would yield some “net benefit” to the health and safety of his community.

“And so from an environmental point of view, sure, it’s certainly possible to look at it as a silver lining,” he said. “But overall, given how quick this is unfolding, I’m certainly not celebrating it by any means.”

Newsom’s Inaction Puts California Legislation Requiring Companies to Pay for Oil and Gas Well Cleanup in Limbo

[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

An oil rig silhouetted by a golden sunset.
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.

ProPublica, by Mark Olalde, October 4, 2023

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.

Despite its green reputation, California has a long history of weak oversight of its oil and gas industry, which has left behind an estimated 5,300 orphaned wells. Many are scattered across Los Angeles, complicating redevelopment. Others spew methane in Kern County’s huge oilfields.

Companies have little incentive to plug wells; it’s cheaper to sell or to walk away and forfeit the small bonds currently required by the state.

“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.

Shots fired: California sues oil companies

California goes on offense against Big Oil

The lawsuit makes California the largest economy to join the campaign against oil companies. | Ben Margot / AP Photo.

California is one of the country’s top oil and gas producers, and Chevron, one of the defendants, is headquartered in the state.

Politico, by Blanca Begert and Debra Kahn, September 16, 2023

Democratic California Gov. Gavin Newsom announced a lawsuit Saturday against five major oil companies and their subsidiaries, seeking compensation for damages caused by climate change.

The suit, filed in San Francisco County Superior Court by Democratic Attorney General Rob Bonta, accuses the companies of knowing about the link between fossil fuels and catastrophic climate change for decades but suppressing and spreading disinformation on the topic to delay climate action. The New York Times first reported the case Friday.

The suit also claims that Exxon, Shell, Chevron, ConocoPhillips and BP — as well as the American Petroleum Institute industry trade group — have continued their deception to today, promoting themselves as “green” with small investments in alternative fuels, while primarily investing in fossil fuel products.

It seeks to create a fund that oil companies would pay into to help the state recover from extreme weather events and prepare for further effects of climate change. It argues that California has already spent tens of billions of dollars on responding to climate change, with costs expected to rise significantly.

“The companies that have polluted our air, choked our skies with smoke, wreaked havoc on our water cycle, and contaminated our lands must be made to mitigate the harms they have brought upon the State,” the suit says.

Shell and API said the question of how to address climate change should be dealt with in the policy arena.

“We do not believe the courtroom is the right venue to address climate change, but that smart policy from government and action from all sectors is the appropriate way to reach solutions and drive progress,” Shell spokesperson Anna Arata said in an email.

“This ongoing, coordinated campaign to wage meritless, politicized lawsuits against a foundational American industry and its workers is nothing more than a distraction from important national conversations and an enormous waste of California taxpayer resources,” API Senior Vice President and General Counsel Ryan Meyers said in a statement. “Climate policy is for Congress to debate and decide, not the court system.”

California’s legal action joins dozens of similar lawsuits brought by seven other states and many municipalities seeking to hold major polluters accountable for allegedly lying about their role in causing climate change.

Eight California local governments filed some of the country’s first climate lawsuits in 2017 and 2018 that are now in state courts. At’s filing makes California the largest economy to join the campaign against oil companies. California is also one of the country’s top oil and gas producers, and Chevron, one of the defendants, is headquartered in the state.

A spokesperson for Newsom said the timing was motivated in part by the Supreme Court’s decision in April to allow existing suits from local governments to proceed in state court, rather than be moved to federal courts as oil companies wanted. State courts are seen as friendlier venues for plaintiffs seeking climate damages because they’re generally more receptive to considering state laws that deal with climate change.

“All these cases got tied up in years of procedural wrangling; oil companies doing everything they could to drag their feet,” said spokesperson Alex Stack. The “Supreme Court finally let these cases go forward this spring — the state as a whole is joining cities and counties.”

California officials have been contemplating legal action against oil companies for years, since at least the early 2010s, when former Democratic Gov. Jerry Brown was serving as California attorney general. The state did sue coal companies and automakers before that, alleging public nuisance harms stemming from climate change, but the Supreme Court rejected the arguments.

The links between oil companies and efforts to downplay the effects of climate change have become clearer since then, a former top California legal official said.

“At that time there was less information about the ongoing and continuing efforts by oil companies to mislead and misrepresent on the record,” said Ken Alex, a former senior assistant attorney general under Brown who led the office’s environmental section. “I don’t think we had the same level of information that they have now about that conduct.”

The evidence has continued to pile up. A study published this year from Harvard University and the University of Potsdam in Germany found that Exxon’s climate models from 40 years ago were spot on.

California joining the legal parade against oil companies could prove significant.

“Having California participate is a big deal,” Alex said. “These are difficult cases. They have five defendants who have endless resources; it’s not simple to prove what they need to prove in terms of misrepresentation.”

Valero raked in $11.5 billion in 2022 profits, beating its $930 million for the previous year by a dozen times.

Valero 2022 Profits Skyrocket But Gas Pump Gouging In CA Moderates As CA Threatens Refiner Penalty

Consumer Watchdog, by Liza Tucker, 01/26/2023

Los Angeles, CA—Valero raked in $11.5 billion in 2022 profits, beating its $930 million for the previous year by a dozen times. However, Governor Newsom’s call for a special session in October to deal with price gouging appears to be having an impact on gouging in California as California-reported refinery margins were lower than any other region for the first time this year and in line with historic margins.

“Valero reported profits per gallon of gasoline in California during the fourth quarter at below 50 cents, a red line marker for price gouging,” said Consumer Watchdog Liza Tucker. “It reported per gallon profits off California gas at 36 cents, a reasonable profit in line with what the refiner earned here for the last 20 years. Meanwhile margins elsewhere remained high.

“The threat of a legislative penalty on gasoline price gouging that Governor Newsom called for appears to be reining in gas prices in California already,” said Tucker. “Clearly, California lawmakers should enact that penalty.”

Consumer Watchdog has called for 50 cents as a demarcation line on profits per gallon above which refiners will pay a penalty. SBX 1 2, introduced by Senator Nancy Skinner (D-Berkeley) will set a penalty on California refiners when gas prices and the profits refiners make per gallon off consumers become abnormally high. The legislature has yet to set a profit level for the penalty.

Five refiners control California’s gasoline market by making 97% of the state’s gasoline. They usually report higher profit margins per gallon of gasoline for the US West Coast than any other region in which they operate, said Tucker.  Valero’s 4th quarter profits were the first indication the price gouging penalty has impacted the companies’ policies. In addition, November and December gasoline prices in California were more in line with the typical spread between average US and California prices of a little more than a dollar.

“Just raising the price gouging penalty has significantly curbed Valero’s profit taking in California and made gasoline more affordable for Californians and in particular the most vulnerable in the state who were paying as much as 20% of their after-tax income for gasoline,” said Jamie Court, President of Consumer Watchdog. “Imagine how much Californians will save once a penalty is enacted.”

Valero tripled its fourth quarter profits to $3.1 billion from $1 billion. But Valero reported West Coast refining margins per barrel—the difference between what crude oil costs a refiner compared to the wholesale charge for the finished product—that were the lowest among its regions of operation.  Since Valero only has Western refineries in California, the margins are California-specific.

Valero reported a margin of $15.43 for the West Coast, compared to $18.88 for the US Mid-Continent, $22.68 for the Gulf Coast, and $29.66 for the North Atlantic. Consumer Watchdog divides margin per barrel numbers to arrive at a per gallon profit.  That translated into a profit of 36 cents per gallon in California, 44 cents in the US Mid-Continent region, 54 cents on the Gulf Coast, and 70 cents in the North Atlantic.

In contrast, Valero bagged price gouging profits per gallon in the second and third quarters of 2022. In the second quarter of 2022, Valero reported an 83 cent per gallon profit at the pump and, in the third quarter, a 60 cent per gallon profit in the third quarter, according to Consumer Watchdog research. See refiner profit per gallon chart here.

According to Gary Simmons, Valero’s executive vice president, profits were buoyed by a continued tight market for crude. Simmons said that bad weather also interfered with the restocking that normally occurs at this time of the year. “That sets up the year nicely from the refinery margin perspective,” he said.

As it was, California’s big five oil refiners posted overall profits of $67.6 billion in the first nine months of 2022 – nearly quadruple the profits recorded for the same period in 2021. Chevron reports its fourth quarter and annual earnings tomorrow. It controls 30% of California’s gasoline market.