By Janet Wilson, THE DESERT SUN
September 13, 2019
California has issued no permits for fracking since late June, according to records reviewed by The Desert Sun and watchdog groups.
But permits for sometimes risky "enhanced recovery" wells and related storage are up nearly 60% in 2019 so far under Gov. Gavin Newsom, compared to Gov. Jerry Brown’s last year in office. Regular oil and gas drilling permits are up 20%.
Dozens of illegal oil spills also are currently flowing in California, according to internal records and sources, even as two state agencies investigate the Division of Oil, Gas and Geothermal Resources or DOGGR, the agency tasked with preventing spills.
Asked about the pause on fracking permits, Lisa Lien-Mager, a spokeswoman for the Secretary of Natural Resources, said Newsom's administration "has been working to develop a thorough understanding of the permit approval process to ensure all permits meet regulatory requirements." Newsom directed Natural Resources Secretary Wade Crowfoot to investigate the agency in July.
As for the spills, also known as surface expressions—which are illegal under rules that took effect in April—Lien-Mager said, "we are taking an aggressive approach to all incidents and will take appropriate action."
Kyle Ferrar, Western regional coordinator for FracTracker Alliance, an environmental group that has been analyzing permit data and pressing Newsom to take action, said activism was working. "It feels really good," he said of the halt to fracking for now. "We made a difference."
Ferrar and the Desert Sun both compiled data earlier this summer showing that the number of fracking and other well-stimulation permits had doubled during the first six months of 2019 compared to the same period in 2018
Much of Southern California's gasoline—and the region's air pollution, the nation's worst—comes from the state's oil fields and refineries.
Nearly 1,200 permits for steam injection and other "enhanced recovery" techniques were issued by DOGGR through Sept. 2 this year, compared to 749 in the same period last year, according to FracTracker's public records analysis. Environmentalists say steam injection, which blasts out much of California's heavy, gooey crude, is a dangerous, energy-intensive technique.
As for the spills, at least 40 are ongoing in Kern and Santa Barbara counties, many caused by the recovery techniques, according to internal records and DOGGR employees who requested anonymity because they fear reprisals. Notices of violation have been issued for some, though no fines have been levied.
Hollin Kretzmann, a senior attorney with the Center for Biological Diversity, called the number of active surface expressions "astonishing."
"We know that the fossil fuel industry is prone to all kinds of spills and accidents and environmental damage," he said. "It's outrageous but not surprising."
DOGGR did not respond to a request for comment.
State records indicate that hundreds of such spills, also known as "seeps" or "flows," have occurred in the past 15 years. Some were turned into unpermitted but profitable oil-producing sites rather than being halted by state regulators.
Under the new rules that took effect in April, oil companies face fines of $25,000 a day until surface expressions are stopped, with a cap of $2 million. As for whether fines were being imposed, Lien-Mager said, "The immediate focus has been on stopping all surface expressions in the Cymric field and ensuring full cleanup of the site."
The largest spill in Cymric, which Newsom toured this summer, gushed 1.2 million gallons of oil and wastewater before being contained.
DOGGR is charged with regulating California's $152 billion petroleum industry and ensuring public safety and the environment are protected. (The agency may be in for a name change. A bill moving through the legislature this week would re-brand the agency as California Geologic Energy Management, or CAL-GEM.)
Newsom ordered the firing of the state's top oil and gas regulator and the investigation after The Desert Sun reported in July that the pace of issuing fracking permits had doubled, and that eight supervisors were invested in, or consulting for, oil companies.
After the newspaper reported on so-called "dummy" folders used to issue permits to some companies without prior lengthy approvals, Crowfoot said he asked the agency to turn over thousands of permits. In recent weeks, he has requested files on all current surface expression spills, according to DOGGR employees.
Potential conflicts of interest investigated
The Fair Political Practices Commission also is investigating two senior staffers at DOGGR who held investments of up to $100,000 each in oil companies they regulate.
The probe by the enforcement team was opened in response to formal complaints filed by two groups, Consumer Watchdog and FracTracker, said FPPC spokesman Jay Wierenga. He said the agency could not comment on specifics of an ongoing investigation, but potential sanctions under state law for conflicts range from a warning to $5,000 per violation.
DOGGR's deputy director, David Gutierrez, and Thomas Goeres, senior engineer for DOGGR's coastal district, each reported investing up to $100,000 in Chevron and Aera, a subsidiary of ExxonMobil. The consumer groups allege the two had direct authority and oversight of the companies' permit requests and oil operations, in violation of the state Political Reform Act's conflict of interest codes.
Neither Gutierrez nor Goeres could be reached on Thursday for comment.
Interviewed by The Desert Sun in July, Gutierrez said that when he was hired, he informed DOGGR officials he held shares in ExxonMobil and Magellan Midstream Partners and asked if he should sell them. He said he was told that because California was not currently regulating either company, he didn't need to divest. He said he was told that if a conflict did arise, "you would just kind of step back" and leave decisions about the company to other agency officials.
Since July, Gutierrez and other supervisors who reported energy company investments have been removed from any duties that could potentially cause a conflict.
According to Gutierrez’s job description, he has "direct program management responsibility" of several statewide well programs and is responsible for compliance with state environmental laws. He's also charged with formulating and implementing policies to support DOGGR's mission "to prevent damage to life, health, property and natural resources, while also encouraging the wise development of oil, gas and geothermal resources to increase the ultimate recovery of these natural resources."
He said as soon as the agency received a Public Records Act request from the two watchdog groups in late April and he was notified, he “instantly” sold the stocks. "I asked our legal office and I asked our ethics attorneys," he said, and "they calmed me down and said 'don't worry about it.'"
"I'm trying to follow the rules," Gutierrez said in July. As part of Crowfoot's review of DOGGR, new conflict of interest policies are being developed.
Gutierrez also said he was not involved in permitting, and wasn’t aware until April that Aera Energy was a subsidiary of ExxonMobil. Aera Energy, jointly owned by ExxonMobil and Shell affiliates, received the lion’s share of fracking permits this year.
"Ignorance under the law is no excuse," said Jamie Court, president of Consumer Watchdog. "By opening this investigation, the FPPC is sending an important message to all state regulators that the decisions they make cannot impact their stock portfolio."
He added: "The job descriptions for those two individuals suggested they had direct decision-making power over companies they were invested in, and there's an absolute prohibition on regulators making decisions on companies they're invested in."
Another potential conflict
The Desert Sun has learned of another DOGGR employee who invested in companies with which he had or has close relationships: Mathew Densmore, associate oil and gas engineer in DOGGR’s Sacramento office.
He is married to Maris Tabor Densmore, the government and regulatory affairs manager for California Resources Corp. (CRC), an oil and natural gas exploration and production company operating exclusively in the state of California.
Before joining DOGGR, Matt Densmore worked for CRC and Shell.
This year he reported financial investments in both of his former employers, up to $100,000 in each, on required disclosure forms. Neither Densmore could be reached for comment.