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Oil industry fights gov't death sentence

The Forde Files No. 206

The full impact and force of the California government's climate change directives burst forth on Jan. 14 at the Kern County Supervisors meeting, as hundreds of people overflowed the chamber to protest new state initiatives that are key ingredients in the long march toward shutting down of the oil industry.

The initiatives, which include a moratorium on various drilling permits, have hit Kern County hard, creating a climate of uncertainty, a drop in investment and confusion in the production pipeline.

Trem Smith of Barry Petroleum said that his company lost $54 million, or 40 percent of its value, in the 48 hours after the Nov. 19, 2019 announcement of the initiatives. Tim Crawford of Sentinal Peak Resources said half the company's development has been disrupted. Russell Johnson of Associated Builders and Contractors said more than $30 million in projects have been halted.

Kern County is home to 78.8 percent of the active wells in California, and, while overall production has declined in recent years, new drilling techniques are revitalizing old fields. Kern County produces 40 percent of the oil and gas consumed in California.

"This industry is critical to us," 2nd Dist. Supervisor Zack Scrivner said at the close of the meeting. "We are willing to do whatever it takes to protect it."

At Scrivner's invitation, three representatives of Gov. Gavin Newsom's administration attended the meeting, listening to passionate appeals from oil industry employees, teachers, citizens groups, construction trades, union locals, non-profit organizations, small businesses, youth organizations and independent oil producers. The meeting began at 2 p.m. and the last public speaker spoke at 7:50 p.m. Many had to leave before they had the chance to be heard.

The governor's emissaries -- Legislative Affairs Secretary Anthony Williams, California Department of Conservation Director David Shabazian and California Geologic Energy Management Division (CalGEM) Supervisor Uduak-Joe Ntuk --- answered questions put to them by the supervisors (see meeting video on kerncounty.com).

The oil and gas initiatives that unleashed the pent-up groundswell of protest are based on legislation, Executive Orders and regulations designed to battle climate change that have been accumulating and morphing since 2005 (see sidebar). CalGEM has the responsibility for dismantling the oil industry in California to meet the state government's agenda of carbon neutrality by 2045. Williams called the process "a just transition."

The initiatives specify three state mandates: a halt of approvals of new oil extraction wells that use high-pressure steam to break oil formations below the ground; new rules for public health and safety protections adjacent to oil and gas extraction sites; and the independent audit of pending applications for hydraulic fracturing and other well stimulation practices.

The industry is fighting back on several fronts. California has the most rigid oil industry environmental standards in the world. If we want to be good stewards of the earth, Scrivner said, we can produce here safely and responsibily rather than sending our money to other countries with few environmental safeguards and lousy human rights protections. The state's "managed decline" of the industry means the loss of thousands of high-paying jobs for people with high school educations.