Newsom Pulls Plug on New Fracking Projects

Governor Gavin Newsom issued a moratorium today to halt the permitting of new high-pressure steam-injection wells in California. The sudden announcement apparently caught everyone by surprise. Even the county’s Energy Division and representatives of two of the Cat Canyon applicants couldn’t comment on the moratorium’s effect on the new steam-injection projects proposed in Santa Barbara County. But by late afternoon, a spokesperson with the Department of Conservation clarified that the moratorium applies only to high-pressure steam injection projects that fracture rock; the cyclic steaming injection at the Cat Canyon projects are at less than fracturing pressure. According to Western States Petroleum, an industry organization, Cat Canyon did not require high-pressure steam injection.

The proposed wells in Cat Canyon use steam-injection, a process that passes steam, not highly pressurized water or chemicals, down a well to heat the crude to a liquid that can be pulled up through the pumps, Jim Youngson, a consultant for ERG confirmed. ERG, now renamed Terra Core, has permit applications in for 233 “thermally enhanced” wells, one of three projects undergoing intense scrutiny in the county.

According to the state DOGGR office — Division of Oil, Gas, and Geothermal Resources, newly renamed the Geologic Energy Management Division, or CalGEM — the moratorium goes into effect immediately. Newsom’s action comes after high-pressure cyclic steaming caused massive surface leaks of oil in Kern County. The Cymric oil field spilled 900,000 gallons, 70 percent of which is water, more than five times the size of the Refugio spill of 140,000 gallons. The violations at the Cymric oil field have resulted in $2.7 million in fines against operator Chevron, according to the Los Angeles Times.

Assemblymember Monique Limón’s Assembly Bill 1057 renamed DOGGR to GEM, reflecting a turn toward greater environmental protections. By January 1, it requires an increased bond for abandoning wells. Onshore oil production has insufficient security against spills or abandonment, according to AB 1057. Her bill increases that ten-fold, requiring up to $30 million to plug an operator’s wells statewide. It is the first bill nationwide to raise the bond closer to actual abandonment costs, which can range from $15,000 for a shallow well to $1 million for one in a densely populated city that requires rerouting infrastructure.

“When Governor Newsom signed my bill this year,” said Limón, “we not only transformed the mission of the oil regulator to protect public health, safety, and environmental quality, but we also increased the amount of financial security oil companies must provide to protect California taxpayers from cleaning-up abandoned oil and gas operations — resulting in up to $1 billion of additional taxpayer protections. His announcement today is aligned to the work that I and other members of the Legislature have been doing to protect Californians from dangerous and costly drilling practices.”

The increase in bond payments helps to close the estimated gap between existing bonds and onshore wells expected to phase out as oil production declines in California, a state that aims to be carbon free in energy production by 2045. The cost to plug and abandon the 30,000 deserted wells identified in the state is estimated to be about $1.5 billion. California is home to roughly 250,000 oil and gas wells, according to the state Council on Science and Technology.

Linda Krop, lead council for the Environmental Defense Center, pointed out that Newsom included fracking in the moratorium. (Applications for fracking and other well-stimulation techniques are to be reviewed, per Newsom, in an independent audit by the state Department of Finance. As well, Lawrence Livermore labs is undertaking a scientific review of pending permits for public health, safety, and environmental protection compliance.) The EDC was also quizzing the state on what exactly this portended for ongoing permitting. “We know there were issues with DOGGR going back to the Brown administration and permits being issued without adequate review,” said Krop on Tuesday. “That’s been concerning to a lot of communities, including ours.” From the announcement alone, Krop thought, the state will not issue fracking or cyclic-steam-injection permits. “It looks very exciting,” she said earlier today. “We are cautiously optimistic that this will apply to the Cat Canyon projects.”

The president of the Western States Petroleum Association, Catherine Reheis-Boyd, said the health and safety of communities near the industry have always been important, as the men and women who work the wells also live nearby. “We are proud to be good neighbors and to support our state’s energy independence by producing oil that remains in California to provide affordable energy for us all,” she said. Reheis-Boyd stated California’s environmental regulations were already the most strict in the world, and she expected the upcoming review would bear out current practices.

“It is disappointing that the state would pursue additional studies when multiple state agencies already validate our protection of health, safety and the environment during production,” she said. “These agencies should also consider reliability, affordability, and resilience of our energy supply, as every barrel delayed or not produced in this state will only increase imports from more costly foreign sources that do not share our environmental and safety standards.”

According to Western States, the new East Cat Canyon projects involve no hydrofracking or high-pressure steam injection. Instead, they would feed steam into the well to soften the crude initially, and then use low-pressure cycles of steam to continue to lift the oil to the surface.

CalGEM will be auditing its permit process for conformity with the new rules in AB 1057. Existing permits are unaffected. The state’s fracking permit process has been under review since mid-July, a CalGEM spokesperson said, and no such permits have been issued since then.

The moratorium halts any new production while regulators and experts consult on the safety of the process and examine the effect of making illegal the surfacing of processed water and oil. The end result could be upgraded safety practices, updated regulations and rules, or prohibition of the high-pressure steam injection process altogether, according to the California Department of Conservation.

A second portion of the initiative will add protective requirements to public health and safety rules for residents and communities near oil wells. The state will hold workshops in the coming weeks to consult with industry and the community around producing wells, with the rule-making phase beginning in 2020.

Editor’s Note: This story was updated to reflect the new information that Cat Canyon projects are not affected by the moratorium. On Nov. 20, the story corrected that AB 1057 underpinned the governor’s moratorium; it does not.