Newsom’s New Restrictions on Oil & Gas in California Amid State’s Growing Dependence on Imported Oil, and Continued Dependence on Gas-Fired Power Plants

    California Governor Gavin Newsom recently signed three bills to restrict the state’s oil & gas industry. According to news reports:

“Assembly Bill 3233, grants cities and counties greater authority to impose restrictions on oil and gas operations, including limiting or banning new oil and gas developments in their jurisdictions.”

“AB 1866, imposes higher fees on oil wells that are no longer active but that have not been properly decommissioned.”

“AB 2716 bans the operation of low-oil production and gas wells within the 1,000-acre Inglewood Oil Field and imposes a $10,000 per month penalty on these wells until they are permanently plugged and abandoned.”

     The measures were supported by environmental groups, including the very radical Center for Biological Diversity, which sponsored AB 3233. Detractors said that the new laws could make energy more expensive for Californians, trading domestic oil & gas for imported oil & gas.

     California does have quite a few orphaned, idle, and abandoned wells with plugging liability estimates of $23 billion according to Sierra Club, and $21.5 billion according to Carbon Tracker.

     As the following graph shows, California’s oil production peaked in 1986 at 1.1 million barrels per day. It is now 75% less at 283,000 barrels per day.

     As the graph below from the California Energy Commission shows, foreign imports of oil to the state have increased since the late 1990s. More than 60% of California is imported from foreign countries. This does not reflect the mix in the country as a whole since the U.S. imports about 41% of its total consumption of oil. California imports over 39% of its imported oil from non-Western hemisphere countries. For the whole U.S., this is at about 20% so nearly double. That means that California has significantly less energy security (in terms of oil) than the U.S. as a whole and most of their imported oil is likely more emissions intense than that of the U.S. as a whole. 

     ExtractingFact.com argues that it is Newsom’s policies that are leading to the continued depletion of California’s oil production and the increase in imports. They note that “the state issued just 24 drilling permits in 2023 – a 99% decline from the 2,000 permits issued in 2020.” This is the apparent reality even as 1400 permit applications are awaiting approval. Reuters noted in July 2023 that:

“The governor wants to phase out oil drilling in the state by 2045.”

“California also passed a law last year banning oil and gas drilling within 3,200 feet of structures including homes, schools and hospitals. But CIPA has blocked implementation of that law by qualifying a referendum to overturn it for the November 2024 ballot.”

“Nearly half of the wells with rework permits approved this year are within the contested buffer zone.”

     The 3200 ft setback law would make much of the state undrillable and if it includes reworks, then existing wells may be forced to be abandoned. It is the most aggressive setback requirement I have ever encountered.  

     California is still a major consumer of oil & gas and demand has risen since the pandemic waned. As shown below, the state spent $200 billion on 6882 trillion BTUs of energy in 2022. In 2023 California spent $26.6 billion buying foreign oil.

 

     Most of California’s imported oil came from Iraq, Saudi Arabia, Brazil, Ecuador, Columbia, and Guyana, as shown below. Importing oil from anywhere, including Alaska, is more carbon intensive than producing it in-state and pipelining it to refineries. Other countries generally have less stringent environmental rules, and some may have authoritarian or autocratic governments.

     California is also a major consumer of natural gas, the number 2 state after Texas. About 40% (or more depending on how it is assigned) of the state’s total electricity consumption is powered by natural gas. Natural gas provided 47.5% of in-state generated electricity. Since the state imports 30% of its grid power that makes natural gas less in the total power consumption – closer to 39%. While there are ongoing debates about closing some of the existing natural gas plants, as the second graph shows, it is difficult to see what would replace it, especially in the near term.

 

 

References:

Newsom signs bills restricting oil, gas operations. The Signal. September 26, 2024. Newsom signs bills restricting oil, gas operations (msn.com)

New Data Shows California’s Deepening Dependency on Foreign Oil Imports. ExtractingFact.com. June 12, 2024. New Data Shows California’s Deepening Dependency on Foreign Oil Imports | Extracting Fact

Petroleum and Other Liquids. U.S. Energy Information Administration. 2024. California Field Production of Crude Oil (Thousand Barrels per Day) (eia.gov)

Annual Oil Supply Sources To California Refineries. California Energy Commission. Annual Oil Supply Sources To California Refineries

Newsom Ignores Transition Plan, Pushes California Toward Full Dependence on Foreign Oil. ExtractingFact.com. October 2, 2023. Newsom Ignores Transition Plan, Pushes California Toward Full Dependence on Foreign Oil | Extracting Fact

California new oil well approvals have nearly ground to a halt. Nichola Groom. Reuters. July 13, 2023. California new oil well approvals have nearly ground to a halt | Reuters

California State Energy Profile. U.S. Energy Information Administration. California Profile (eia.gov)

Foreign Sources of Crude Oil Imports to California. California Energy Commission. 2024. Foreign Sources of Crude Oil Imports to California

List of power stations in California. Wikipedia. List of power stations in California - Wikipedia