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1st Quarter Approvals For Higher Risk Oil Extraction Up Sharply While Industry Forgoes Using Nearly Two Thirds Of Permits Granted In Last Two Years, Groups Urge Newsom To Deny Permits

Tue, 04/19/2022 - 10:52
Posted in:
oil well

Los Angeles, CA—Permit approvals for drilling new Enhanced Oil Recovery (EOR) wells using higher risk steam injection techniques jumped up 59% in the first quarter of 2022 though California oil production continues to decline, according to analysis by FracTracker Alliance. The permits are posted on a map at www.NewsomWellWatch.com.

Moreover, while oil companies continue to apply for permits to drill new wells and to rework them, in the last two years nearly two thirds granted by state regulators have gone unused. 

“The state continues to approve drilling permits to reach tar-like oil when industry sits on the permits it’s been granted,” said Consumer Watchdog Energy Project Director Liza Tucker. “This makes no sense. Governor Newsom needs to seize this moment and stop all permitting.  This is the moment for a real transition to renewable energy rather than leaving it on the backburner.”
California’s oil and gas industry is asking the Newsom administration to streamline the approval of new drilling permits, but the data shows that it is a disingenuous request. FracTracker cross-referenced drilled well data sets from the California Geologic Energy Management Division (CalGEM) going back to the start of 2020. It found that of the 2,686 new drilling permits approved by CalGEM since then, 1,689 of them—a whole 63%--currently remain unused.

“Oil and gas companies have plenty of permits to drill but choose to stock more instead,” said Kyle Ferrar, FracTracker’s Western Program Coordinator. “The real agenda for oil companies is clear, use any moment of crisis to lock in decades of future oil dependence that puts an unnecessary burden on the future of the climate and community health. That’s a scenario that both the current climate crisis and war in Ukraine makes clear, we cannot afford." 

According to the latest analysis by FracTracker Alliance of permits approved through December 31, 2021, and posted by Consumer Watchdog at www.newsomwellwatch.org, approvals of all types of oil drilling permits rose 3.2% in the first quarter of 2022 over 2021. But approvals for drilling new Enhanced Oil Recovery (EOR) wells using higher risk extractive techniques dependent on steam injection jumped up 59%. (See Table 1 below). Those permits included 16 new steam injection wells, though the majority were for gas storage and disposal wells. Fracking permit approvals ceased altogether, while permits to plug wells rose 62%. 
Table 1
FracTracker Analysis Of California Geologic Energy Management Permit Data. The table shows the counts of permits issued by CalGEM in the first quarter of 2022, versus the first quarter of 2021. 

New drilling permits for both oil and gas production and EOR wells rose 36% in the first quarter, while permits to rework existing wells fell 2.9%.  The total number of wells approved by Governor Newsom since January 2019 is nearly 11,000. 
Timeframes for approving drilling permits for new production and EOR wells have been lengthening and the slowdown appears to coincide with a court decision last year that denied Kern County, the heart of the state’s oil drilling, the authority to issue new drilling permits. These applications have now been punted to CalGEM.  

Historically high oil prices usually stimulate production, but while production has surged in some other states, California’s has not expanded. In fact, FracTracker reports that the production rate continues to decline about seven percent a year though permitting has stayed consistent.

Spooked by the pandemic downturn and investors heading for the exit, California’s oil industry appears to be concentrating instead on what it can do to tread water by extracting from existing wells to keep production going while cutting costs. “It is a sign of stagnation that permit approvals remain on automatic pilot when the industry isn’t even using them,” said Tucker.  “It means once again, the oil industry and the and the market price of oil is what drives permitting, and not state policy in the context of public health or environmental protections. That’s pathetic.”