California’s Energy Transition from Oil State to Fossil Free: Introduction Part Two—Fracking

Part two of the introduction discusses California’s recent opposition to fracking, including recent legislative efforts and regulatory actions.

In addition to his sweeping policy goals on transportation, Gavin Newsom took aim at fracking, a well stimulation method that injects water and chemicals into difficult geological formations in order to allow subsurface oil and gas to flow. Executive Order N-79-20 stated that California “must focus on the impacts of oil extraction as it transitions away from fossil fuel, by working to end the issuance of new hydraulic fracturing permits by 2024.”  Newsom, who maintained that he did not have the authority to stop hydraulic fracking, issued a separate announcement in which he asked the legislature to end the issuance of new hydraulic fracturing permits by 2024.  Some lawmakers, however, supported a broader ban that would cover oil production more generally.

In April 2021, in response to Newsom’s request, the legislature considered SB 467, a bill that went beyond a fracking ban and included several issues that lawmakers had previously attempted to address. SB 467 would have prohibited new or renewed fracking permits, acid well stimulation, cyclic steaming, and water and steam flooding after January 1, 2022 with a ban after 2027.  It would have also implemented a 2,500-foot buffer zone, known as a setback, between drilling sites and schools, homes, and playgrounds.  (Previous legislative attempts to require a 2,500-foot setback failed. ) Additionally, it would have established a state program to encourage companies to hire laid off oil and gas workers to help clean up shut wells.  The bill, however, failed to pass out of the Senate Committee on Natural Resources and Water.

Legislative Failure to Executive Action

Within a week of the bill’s failure, on April 23, 2021, Newsom issued an executive order that directed the Department of Conservation’s Geologic Energy Management Division (CalGEM), the state’s main oil regulator, to initiate regulatory action to end the issuance of new fracking permits by January 2024.  In a far-reaching expansion of the aims of his earlier executive order, Newsom also requested that CARB analyze ways to phase out oil extraction across the state by no later than 2045 as part of the Climate Change Scoping Plan.  “The climate crisis is real, and we continue to see the signs every day,” he said in a press release.  “As we move to swiftly decarbonize our transportation sector and create a healthier future for our children, I’ve made it clear I don’t see a role for fracking in that future and, similarly, believe that California needs to move beyond oil.”  The following month, CalGEM issued a draft regulation to ban all new fracking and other well stimulation permits starting in 2024.

Reflecting the limits of executive action, unlike SB 467, the proposed regulatory ban on well stimulation treatments did not apply to cyclic steaming, a method similar to fracking by which high-pressure steam is used to break subsurface oil formations and allow thick crude to flow more easily.  The process is controversial, as it has caused oil leaks, often called “surface expressions,” in Kern County, and it requires natural gas for power.  In January 2020, CalGEM put a moratorium on the approval of new high pressure cyclic steam projects and wells, pending a safety review with the Lawrence Livermore National Laboratory.  A total ban on cyclic steaming, however, would bring a rapid decline in California oil production, as it accounts for more than half of oil output in the San Joaquin Valley and has kept many older California oil fields producing. 

Earlier Legislative Efforts

The regulatory moves to end fracking in 2021 followed legislative efforts that began in 2011 and, after a number of failed bills, achieved limited success in 2013. In September 2013, Governor Brown signed into law SB 4, which imposed restrictions on fracking beginning on January 1, 2014 and implemented a regulatory structure over fracking and other well stimulation treatments.  The bill required well operators to obtain a one-year permit for well stimulation treatments and provide a list of chemicals to be used as well as a plan to monitor the groundwater. The bill also required the California Natural Resources Agency to conduct a study on the health and safety impacts of well stimulation treatments.

The following year, in 2014, state lawmakers introduced SB 1132, which would have imposed a moratorium on fracking and other extraction methods until the completion of a multi-agency review of the economic, environmental, and public health impacts.  The bill failed to pass the Senate. Notably, between 2006 and 2016, the oil industry spent more than $150 million on political campaigns and more than $130 million on lobbying in California.

In 2015, the Division of Oil, Gas, and Geothermal Resources (DOGGR) released the environmental impact report required under SB 4, which concluded that fracking could have “significant and unavoidable impacts” on air quality, greenhouse gas emissions, and public safety.  DOGGR also formally adopted the bill’s fracking regulations, which became effective in 2016.

Shale Counter-Revolution

Overall, with a combination of environmental opposition and significant overestimations of California’s shale oil potential, California largely missed the so-called shale revolution that began during the mid-2000s. As high oil prices and low interest rates made the costly process of hydraulic fracking economic, U.S. oil reserves increased during this time and a number of states increased oil production through fracking.  California’s share of national oil production, however, has fallen significantly since 2010.

The political attention and efforts to ban fracking took hold in 2011, when initial reports estimated that the 1,750-square-mile Monterey Shale Formation potentially held 13.7 billion barrels of oil.  Those estimates were revised significantly downward in 2014 to only 600 million barrels of recoverable oil.  Along with this lower estimation of reserves, fracking has accounted for only a small amount of California oil production. The California Department of Conservation states that fracking produces about 2% of total in-state oil production.  In 2019, for example, fracking produced 2.3 million barrels of oil, or 1.5% of California's oil production, while cyclic steam produced 21% and traditional drilling produced 77%.  Other estimates put the share of oil production from fracking at around 20% up to 25%.  Nonetheless, while overall production is low, one report indicated that fracking activity is relatively high, accounting for about half of all the new oil wells drilled in California during 2005-2015.

Local efforts to regulate oil have been more successful where statewide legislation has failed. These include local prohibitions against fracking and cyclic steam production and initiatives, notably in Los Angeles County, to end oil production within jurisdictions.  Highlighting regional differences within the state, counties that are more dependent on the oil industry for employment, such as Kern County in the San Joaquin Valley, continued to support both conventional oil drilling and fracking. While some farming communities in the San Joaquin Valley opposed fracking due to concerns over environmental impact and water use, the opposition was focused on practices that conflicted with agriculture rather than on the industry’s right to extract oil.

Part three of the introduction will discuss California’s opposition to the Trump administration’s plan to promote offshore drilling.