California News Pulse December 2020

Posted: January 12, 2021

California | December 2020

Field Overview

California, with both onshore and offshore oil production, has been supplying the U.S. with petroleum products since the 19th century. Operations are primarily focused around Kern County, the LA Basin, and the San Joaquin Valley, with the Midway-Sunset oil field in Kern County being the state’s largest.

State Drilling Statistics (End of December)
Total Rigs in California- 6
Total Rigs in United States- 351
Total U.S. Rigs down 56% YTD

State Highlights

CalGEM Announces Civil Engineer Requirements

CalGem announced a new requirement in early December that is to be enforced by the California Board for Professional Engineers, Land Surveyors, and Geologists (BPELSG). This new requirement states that all Underground Injection Control (UIC) water disposal projects are required to be stamped by a licensed civil engineer when submitting a proposal to CalGEM. The civil engineer who signs and stamps the report must be responsible for all calculations involving structural and geotechnical engineering plans along with anything pertaining to water supply, drainage, railroads, highways, tunnels, foundations, sewerage, airways, and a long list of many other things. The important thing to take away from this is that Underground Injection Control permits have to be stamped by a civil engineer. Not the petroleum engineers designing and executing these projects. Some have speculated that this could be a way to further constrict oil and gas operations in the state, but this has not been confirmed by any regulating officials.

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Lease Sale? More Like Lease “Fail”

On the same day that CalGEM announced the civil engineer stamp conundrum, the BLM conducted its first federal drilling auction since 2012. The auction for drilling rights over 4,100 acres had the potential to generate tons of money in any other state, but the auction fell flat on its face by netting just over $46,000. The average price per acre was $11. Consider all the lease sales that occurred during the Trump administration and you have an average price of $330 per acre. The highest priced parcel was only $27 dollars per acre, or just over 8% of that average. BLM California spokeswoman Serena Baker said, “America’s free markets will help determine if energy development on public lands is feasible.” Regardless of whether or not more is at play than simply depressed oil prices, the BLM still had to deal with protests within the state. The BLM ignored the protests saying that the state’s arguments against the sale had been resolved during the environmental review that concluded last December. The review claimed that opening the land to development presents no health risks.

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