Fracking in California is About to Get a Lot More Difficult

Governor Newsom, six months on the job, finds out what’s actually going on.  

By Nick Cunningham, Oilprice.com:

Last week, California Governor Gavin Newsom sacked the state’s top oil regulator after the Desert Sun reported that fracking permits in California doubled in the first six months of this year without the Governor’s knowledge. The Desert Sun report was based on data from FracTracker Alliance and Consumer Watchdog, two organizations that keep tabs on the industry.

“The Governor has long held concerns about fracking and its impacts on Californians and our environment, and knows that ultimately California and our global partners will need to transition away from oil and gas extraction,” Governor Newsom’s chief of staff Ann O’Leary said in an email to California’s Secretary of Natural Resources.

The Desert Sun, based on data from the consumer advocacy groups, also reported that top officials with the Division of Oil, Gas and Geothermal Resources (DOGGR) held investments in the oil and gas companies that they regulated. Roughly 45 percent of the permits went to companies that officials held stocks in, according to the watchdog groups. At the same time, nearly two dozen officials hired at the agency under former Governor Jerry Brown came from oil companies that have a presence in the state.

The Western States Petroleum Association or WSPA, an oil and gas trade group, says that California took in $24.6 billion in revenue because of industry operations and directly and indirectly contributes to more than 300,000 jobs.

Gov. Newsom staked out an environmental platform when he ran for governor, and even initiated a study looking at how to transition away from fossil fuels. Despite that, 191 fracking permits were approved in the first half of 2019, compared to 222 issued in all of last year. The top recipient of permits was a company called Aera Energy, a joint venture of ExxonMobil and Royal Dutch Shell.

Newsom said that he does not have the authority to issue a moratorium on fracking, although some environmental groups dispute that fact. “The governor definitely has the power to instruct the agency to ban fracking, to stop issuing permits for new wells, teo stop the expansion of the industry and to protect public health,” Kassie Siegel, director and senior counsel of the Climate Law Institute at the Center for Biological Diversity, told the AP.

But the shakeup at the state agency could dramatically slow the pace of permitting. Newsom said that he wants his opposition to fossil fuels reflected in the work of the state regulator.

It’s unclear how this will affect the oil industry in the state, but it could mark a point of departure from past administrations.

California often leads on environmental issues. For instance, the state is in the midst of a war with the Trump administration over fuel economy standards and California has vowed to go it alone even as Washington looks to water down requirements for automakers. The state has also lead on renewable portfolio standards, clean energy and cap-and-trade.

But fracking was one area that was not substantially affected during the administration of Governor Jerry Brown, who often portrayed himself as a climate change hero. Environmental groups pushed him for years to halt fracking, but he consistently fended them off. They also called for greater setback distances for drilling operations, another plea that went unanswered.

The state used to be the largest source of production, and its historical importance was portrayed in 2007 film There Will Be Blood, which depicted Southern California’s early oil days.

But California’s oil production, which topped 1 million barrels per day in the early 1980s, has been suffering a long gradual decline since then.

More recently, there was a ton of hype around the shale potential in California. Nearly a decade ago, the EIA said that the Monterey Shale in California could hold as much as 13.7 billion barrels of oil, which would have been more than the Eagle Ford shale.

However, in 2014, the agency downgraded its assessment by a whopping 96 percent to just 600 million barrels. “Not all resources are created equal,” EIA’s then-Administrator Adam Sieminski said in 2014. “It turned out that it is harder to crack the reservoirs and get the oil flowing from the Monterey” than it was from North Dakota’s Bakken or South Texas’ Eagle Ford. “The rocks are still there,” said Sieminski. “The technology is not there yet.”

At the same time, California is increasingly water scarce, a problem that will only grow as the climate changes, and competition for water in agriculture is not a trivial problem.

Even still, California still produces more than 450,000 bpd, enough to make it the seventh largest source of output in the country. And the surge of fracking permits shows that there is still interest in drilling. Governor Newsom wants to phase out the industry, but that will be a major challenge given the size of California’s output.

Meanwhile, Chevron – another top permit recipient in the state – has come under fire for a massive oil spill in Kern County that has been ongoing since May. About 800,000 gallons of crude oil and water have spilled, and the state oil regulator – now under new leadership – issued a notice of violation and said that Chevron has not done enough to put an end to the leak. “The Chevron spill clearly shows that California needs stronger climate leadership from the Governor,” Annie Leonard, Executive Director at Greenpeace USA, said in a statement. “Chevron takes these matters seriously,” the company said in a Saturday statement. By Nick Cunningham, Oilprice.com

Over 170 shale companies have declared bankruptcy since 2015, affecting $100 billion in debt, including 8 bankruptcies already this year. Read…. A ‘’Gusher of Red Ink’’ for US Shale

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  42 comments for “Fracking in California is About to Get a Lot More Difficult

  1. 2banana
    Jul 15, 2019 at 8:31 pm

    California has been water scarce ever since the first Asian stepped foot there after crossing the Bering Straight 3000 years ago.

    It is only due to modern engineering and by diverting water from other states that California, as a modern state, could exist at all.

    “At the same time, California is increasingly water scarce, a problem that will only grow as the climate changes, and competition for water in agriculture is not a trivial problem”

    • Paulo
      Jul 15, 2019 at 8:39 pm

      20,000 years ago, 2banana. Maybe even 40K. And at different times California was both lush grasslands and in terrible drought. Point taken on current conditions despite last winter heavy snows and rain.

      Natl Geographic excerpt:

      “The first arrivals keep getting older and older because we’re finding more evidence as time goes on. Right now we can solidly say that people were across the Americas by 15,000 years ago. But that means people were probably already well in place by then; and there’s enough evidence to suggest humans were widespread 20,000 years ago. There’s some evidence of people as far back as 30,000 to 40,000 years ago, but the evidence gets thinner and thinner the further back you go.”

      • 2banana
        Jul 15, 2019 at 8:55 pm

        Hey, I just left off a zero on 3000…

        :-)

        I remember reading a book, long ago, on the first Spanish explorers in southern California. They found the place nearly uninhabitable except for a few rare exceptions. From little water to wild fires to earthquakes to insects/snakes – that area was always trying to kill them.

        They weren’t smart enough to call it global warming and institute carbon taxes though…

        • NBay
          Jul 15, 2019 at 11:04 pm

          Discovered hypocrisy and sarcasm in one thread. Excellent.

    • alex in San Jose AKA Digital Detroit
      Jul 16, 2019 at 5:00 pm

      You go out into “the rurals” here, and there will be, in every speck-on-the-map town, a pump company. They sell parts for pumps, can drill a well for you, etc. are concerned with everything regarding getting water up out of the ground. If push came to shove, they could declare themselves “the government” and no one would oppose them, after all, they’re the ones who know how to get water up out of the ground.

  2. Paulo
    Jul 15, 2019 at 8:34 pm

    Investors need to look at the bright side. If Cali slows down fracking, they are also slowing down their losses. Shale oil production only loses money; the only monetary gain is what is extracted from gullible investors, and not from operations.

    From the same source : (Nick Cunnigham)
    “The ongoing struggles raises questions about the long-term. If the industry is still not profitable – after a decade of drilling, after major efficiency improvements since 2014, and after a sharp rebound in oil prices – when will it ever be profitable? Is there something fundamentally problematic about the nature of shale drilling, which suffers from steep decline rates over relatively short periods of time and requires constant spending and drilling to maintain?”

    https://oilprice.com/Energy/Energy-General/US-Shale-Has-A-Glaring-Problem.html#

  3. Marcus
    Jul 15, 2019 at 10:49 pm

    Congratulations. You just discovered hypocrisy. Give yourself a high five and keep the original thoughts coming.

  4. otherbrother
    Jul 15, 2019 at 11:16 pm

    Great, a blog that has a nutcase posting dumb political comments, thanks so much!

    • IdahoPotato
      Jul 15, 2019 at 11:52 pm

      I have wine and popcorn that I stock expressly for 2banana’s comments. You have a problem with that?

      • NBay
        Jul 16, 2019 at 4:46 pm

        I don’t get it. Someone’s project?

        • IdahoPotato
          Jul 17, 2019 at 9:53 am

          Wolf deleted some cray cray comments. That’s why you don’t get it.

    • zoomev
      Jul 17, 2019 at 8:31 am

      I political nutcase deserves another …

      Would someone like to call siigroup in Schenectady NY and ask them what exactly is the fracking fluid ingredient they sell that is key in separating gas from water … FYI SIGroup makes tackifiers for tire production and resins for brake pads … can’t wait for the cancer clusters and the cries of “…but we didn’t know better…”

      All for the love of paper.

  5. tommy runner
    Jul 15, 2019 at 11:55 pm

    “The Governor has long held concerns about fracking and its impacts on Californians and our environment, and knows that ultimately California and our global partners will need to transition away from oil and gas extraction,” Governor Newsom’s chief of staff Ann O’Leary said in an email to California’s Secretary of Natural Resources.
    ‘though he said he did not know so many permits were being issued and was “very angry” to learn it’. (apparently the el Salvador surf city bee didn’t cover it). and more from the dez sun tonight,
    Gov. Gavin Newsom has appointed an aerospace engineer who formerly worked for Exxon Mobil to a key seat on the South Coast Air Quality Management District, which regulates oil refineries and other potential polluters.. I don’t even know what that first sentence means.

  6. David Hall
    Jul 16, 2019 at 5:12 am

    The production decline rate of a fracking well is about 70% in the first year. The Permian Basin of Texas produces about 4 million barrels of oil a day. Ghawar in Saudi Arabia produces 3.8 million barrels of oil a day; down from 5 million barrels a day during the 2000’s. Early fracking efforts in California seemed to disappoint. A journalist reported the rock is too badly fragmented. A recent exploration well in shale on Alaska’s North Slope did not break even. Real estate prices in Midland and Odessa, TX have soared. Wages are high. It does not seem like a place where everyone goes bankrupt.

    • Jul 16, 2019 at 7:15 am

      fracking is a ponzi scheme based on cheap interest rates.

      https://srsroccoreport.com/wp-content/uploads/2019/07/20-Shale-Companies-Interest-Expense-2010-2018-768×567.png

      it’s also, as others have pointed out, devastating to water resources. how can a state that has mandated targets for civilian water usage allow fracking? even here in new york, where there is no water shortage, fracking is banned.

      • robt
        Jul 16, 2019 at 8:34 am

        Reread the first three paragraphs …

      • James Levy
        Jul 16, 2019 at 8:42 am

        The give-away in all this is that if you ask a climate change denier what evidence they would like to see in order to change their mind, and how can we go about finding if that evidence exists, they just yell at you a little louder. It’s like trying to explain to an American fundamentalist Protestant why the Grand Canyon is not a result of Noah’s Flood–no amount of evidence is going to change their minds.

        Could I and the vast majority of scientists be wrong about the anthropogenic origins of climate change? Of course! That’s the first principle of anyone who supports the scientific method–you can always be wrong. But let’s say I am wrong, what will it cost? Money. But what if I’m right, and chances are, I am? What will it cost? A billion lives and the sustainability of Western Civilization. So where should the rational person place his or her bet?
        Worse, even if climate change is real (it almost certainly is) and people are only a tiny fraction of the reason why it is happening, it still means that we’ve got a crisis on our hands and we’ve got to start planning and preparing for that crisis immediately. So the argument “the climate changes all the time–nothing to see here” is utterly bogus. If it is changing, and the change is deleterious to us humans, then we’ve got to take action. “Natural” climate change can be as destructive, or more destructive, than human-generated climate change. In either case, we’ve got to get on it, now.

        • panatomic-x
          Jul 16, 2019 at 9:44 am

          are you blaming california’s water problem’s on climate change? you could eliminate all co2 emissions tomorrow and california still wouldn’t have enough fresh water.

        • Paulo
          Jul 16, 2019 at 9:52 am

          Excellent comment. Yet, how do we ‘get on it’? In our house we have cut back in many many ways, but we still drive. Although we garden mightily, we still have supermarket food in the ‘fridge.

          There are just too many humans and it is our nature to breed and stay alive as long as possible, (and that’s just the good side :-)

          It is going to take some real catastrophes to change behaviours, imho, on the scale of Fukishima X Katrina. Fukishima has pretty much stopped nuke development (except weapons :-( I think it will take the loss of a few more mid-western crop seasons, in red states flyover land, to tip the scale. If coastal cities go under wingers will cheer, and some wingers will even say it is God’s will.

          Getting on with it example:
          I am building an emergency comm (radio shack). I have leased an antenna site to our Regional District for $1 per year, and am presently constructing a small building to house radio and computer equipment. We are using HF radio with an NVIS antenna array to be able communicate with Provincial emergency centres in the advent of “The Big One” or whatever emergency that might happen that could take out our other comm links with Canada. 9/11 taught us cell towers will fail, and New Zealand quakes taught us satt and conventional communications fail in big emergencies. Our local District Govt has been training amatuer radio operators in every community in our huge Regional District, and our Sayward site is the first remote application of the ‘Plan”. Somehow, it seems to also tie in with climate emergencies and what causes them. (Think Paradise California last summer). At the very least, our District offers a pro-active 1st step in dealing with emergencies.

          The Big one hits, or a huge forest fire cuts us off, locals communicate with other locals on Ham, Personal, Marine, or Commercial radio freqs. That information goes to our site and information is then further relayed to the appropriate people/agencies by encrypted HF. It’s pretty cutting edge, actually, even though it uses 100 year old tech as the ‘carrier’. There is only one paid employee overseeing every site, and all aspects of the Program from training to implementation. The rest is volunteer. 99.9% of the initiative is volunteer. It also really strengthens the sense of ‘community’.

          This is also being done in BC cities. Why, you might ask? Because cities actually become more impassable than rural areas in earthquakes.

          regards

        • robt
          Jul 16, 2019 at 9:52 am

          Most people know about this article by now, but it’s still an amusing read in the ‘do something now’ category, when all the media were all over it. From 1975
          http://www.denisdutton.com/newsweek_coolingworld.pdf
          There has been a roughly bi-generational shift between warming and cooling crisis anticipation since the 1800s, when scientists began believing ‘something had to be done’ rather than just depend on oracles and the gods, or possibly just adapt to circumstances. One thing does tend to be true though: historically warm periods are times of abundance for civilization; cooling, the opposite.
          Interestingly, there seems to be a subtle shift taking place towards the coming-new-ice-age in recent years.
          Understanding this phenomenon, when science becomes consensus (the antithesis of science), is explored in ‘The Structure of Scientific Revolutions’, by Thomas Kuhn, published 1962.

        • Thor's Hammer
          Jul 16, 2019 at 10:33 am

          As you point out, facts are meaningless in the face of belief systems based on ideology or religion— that is until your house in Paradise burns to the ground or your corn field is still underwater in June.

          “Delusion is the Opium of the People” Thor

          “If elections mattered they would simply cancel them” George Carlin

        • Unamused
          Jul 16, 2019 at 10:55 am

          In either case, we’ve got to get on it, now.

          It gets worse the more you look at it, and if you look at it long and hard enough, it will occur to you that it’s too late. The Great Dying has begun, and nothing will reverse it, or stop it, or even slow down the rate of acceleration.

          This might be a good time to consider the concept of “unsustainable”. Evidently it requires elucidation.

          Why, when the situation is so clear and alarming, does it remain so stubbornly intractable to change? It is because those who have power in the world want it to be this way, and even if they didn’t, they just can’t help themselves. Calling it an externality and making others deal with the costs doesn’t always work.

        • NBay
          Jul 16, 2019 at 4:54 pm

          Even if climate change is a complete and total lie, on a ball in space do you expect fossil fuels that took millions of years to form, to last forever, or become cheaper to extract?

        • Elliot
          Jul 18, 2019 at 2:54 pm

          It is pretty much accepted that we are now entering a long term global cooling period, i.e. ice age – directly related to decreasing solar activity. If we are to “get on it”, then what is required is to generate a lot of waste heat. As an early adopter, I am willing to buy a V12 F-750 pick-up truck to do my part.

  7. Jim
    Jul 16, 2019 at 6:46 am

    I’m in the Northern Territory, Australia….and the fracking movement is very political. As this is a Territory, and dependant upon the federal Australian government, the Feds calls the shots on fracking. Protest all you like….

    Honestly, the local IMPEX gas project (not fracking) is possibly the worst deal ever (Trump’s pun) signed by the Australians. The cost of the project must be repaid via profits before any royalties are paid….good luck paying back $53 billion. Gas will be shipped off for the next 40+ years…at below market rates; and locals will salvage look at the gas burn offs, enjoying the local air pollution, while paying the highest LNG rates in the nation. Yes, ironically Australians could add some LPG import terminals…not joking.

    California has some of the cleanest air, standards/policies even stronger than those in a Europe. The ironic parallel of Chicago having the strongest gun control legislation in the US….does it help?

    Is it green washing? Who will tell the truth? and the Germans are doing it all again by abandoning Nuclear, and signing a deal with Mephistopheles…(Faustian devil).

    Germans….will…! (if still you trust Der Spiegel)….have a read of the shocking problems in the green transition:

    https://www.spiegel.de/international/germany/german-failure-on-the-road-to-a-renewable-future-a-1266586.html

  8. tobyt
    Jul 16, 2019 at 9:25 am

    remember reading many years ago of one of the first padres in california ruminating/writing about “what manner of sea creature” was responsible for the large black balls littering the california beaches….obviously natural seepage from the offshore oil fields…pollution has been around along time

    • Jul 16, 2019 at 1:17 pm

      Could you cite that book? That might make an interesting read. Thanks.

      • alex in San Jose AKA Digital Detroit
        Jul 16, 2019 at 5:09 pm

        Interesting article on tar balls on California beaches; I remember ’em on the beach on the windward side of Oahu in Hawaii too. Once I went to sit down on a large black rock and … ooops!

        https://www.theatlantic.com/science/archive/2016/12/tar-balls-the-beachs-fossil-fuel-flowers/509768/

        • Jul 16, 2019 at 6:17 pm

          Yeah, these little tar balls are everywhere. There are also oil spills in various places, and ships cause oil to be disgorged into the sea when they empty their ballast (I don’t think they’re allowed to do that anymore). And some oil seepage occurs naturally, and there are bacteria that feed on it, etc. But here we’re talking about “large black balls” — I’m imagining something like a medicine ball, and those would be fascinating.

      • tobyt
        Jul 17, 2019 at 9:48 am

        hi Wolf…love your blog..a must read…..I read about 20 books a month and do remember the bit about the tar balls was from an article written in the very early 2000 era about “peak oil production”,do remember the the balls were referred to as “eggs” by the monk/clergyman and the article was talking about natural seepage that was alleviated by actual drilling. Been trying to track down actual article for you

  9. Unit472
    Jul 16, 2019 at 10:27 am

    I don’t know what the ‘climate’ will be next year or 50 years from now and neither does anyone else! I do suspect the big oil companies have a better handle on the profitability of fracking for oil than anyone commenting here. If they are willing to spend their own money to frack they must believe they can make a profit.

    We don’t assume restaurants or retailers are inherently unprofitable just because many go bankrupt every year so why the assumption that all frackers have the same cost basis?

  10. Bet
    Jul 16, 2019 at 10:45 am

    I have first hand experience with Fracking. My ex farm has 7 wells on it. If I had stayed married, I can guarantee you I would not be still living on the farm or in South Texas. My ex moved two years ago to live in Mexico. At night it looks like an alien hell scape. Accidents are up huge from the trucks. Sure its money but..
    The health fallout will be huge in the coming years from the unregulated OSHA standards from breathing the silicate sands used for fracking . There is a fracking pond on the farm, they had to drill I think 500 ft down for the water of which millions of gallons are used to frack a single well, which in a years time will fall of to the tune of about 90%. Animals who fall or drink in the ponds, die, I sure as hell would’nt want to swim or drink from them. The production station on my upper field is a miasma of chemical smells that make you have instant headaches. The towns people complain of nosebleeds, headaches and other health ailments. The destruction of wildlife is uncountable, The wall of methane is a toxic curtain on the bird migrations from Mexico on the eastern fly way. Earthquakes, toxins, and the oil companies hide the 2nd flares to burn off the methane . I know first hand how they lie cheat, steal, plunder. Fracking isn’t worth it, its not. We need the will to get off the teat of oil. We owe it to our children and grand children and generations to come,

    • Prairies
      Jul 16, 2019 at 1:05 pm

      The lack of regulation in American drilling baffles me as a Canuck. The profits should be through the roof with the practices you describe. Fracking ponds are not common here( I don’t see them in the bakken fields but I think they might be in use around Fort Mac) and water sourcing in the Bakken north of the border recycles %90 of water used. Wasting excessive amounts of fresh water on oil production won’t last.

    • panatomoic-x
      Jul 16, 2019 at 6:23 pm

      @Bet – i’m sorry to hear what you are going through . thanks for posting about it. people need to know. i’ve read similar stories from the people in pennsylvania who leased their land.

    • otherbrother
      Jul 16, 2019 at 10:50 pm

      The payoff for light Texas crude makes fracking a really dumb business IMHO, because nobody really wants what they pump — maybe a small market in exports pays a little — but this whole mess is getting dumber by the day … and the health issues/risks are literally insane!

  11. CreditGB
    Jul 16, 2019 at 10:57 am

    Appears California is destined to choke on its debt, feces, and regulations some time soon.

    How long are productive people and businesses going to continue to pay increased tax payments, and pay for regulations to support this nightmare policy state.

    • NBay
      Jul 16, 2019 at 5:20 pm

      Sorry. I was baited and bit. Have to loosen up.

  12. Nicko2
    Jul 16, 2019 at 11:14 am

    Fracking is a stop-gap, enabling the transition to greater renewable adoption. Already, a barely 10 year old Natural gas turbine was shut down in California due to non profitability – renewables are now the cheapest option (solar/wind, plus battery backup). California is leading the world.

    • Ethan in NoVA
      Jul 16, 2019 at 12:21 pm

      What battery backup? You mean hydroelectric energy storage?

    • Kevin
      Jul 18, 2019 at 8:18 am

      This is not correct. The true cost comparison between renewables and fossil fuels is enormously complex and likely won’t be knowable until the subsidies for renewables expire. Fossil fuels are also the beneficiary of substantial subsidy because of tax treatment, but that implicit subsidy is not slated for expiration, as the renewable subsidy is. Renewables are competitive in the US only because of subsidies, and the value of the electricity they produce is also diminished relative to fossil fuels because it is inconstant and not evenly distributed geographically. For instance, on shore wind energy peaks in the morning, and is most viable in the Midwest. Solar peaks midday, which is better in warm climates, but is also distributed unevenly. Storage for these modalities is expensive and problematic to say the least. See this complex discussion, there is a lot of propaganda from green energy advocates and other vested interests online, but the truth is much more complex:

      https://www.factcheck.org/2019/07/does-wind-work-without-subsidies/

  13. tommy runner
    Jul 16, 2019 at 11:15 am

    until the townsfolk work their way up to the castle w/pitchfork and torch an fn eat them..silly

  14. Eddie89
    Jul 16, 2019 at 1:57 pm

    The guy that wrote the 1975 Newsweek article on global cooling, has written an update: https://www.insidescience.org/news/my-1975-cooling-world-story-doesnt-make-todays-climate-scientists-wrong

Comments are closed.