By Colby Bermel, POLITICO
June 17, 2021
SACRAMENTO — Gov. Gavin Newsom has repeatedly said that fracking accounts for less than 2 percent of California oil production, but he appears to have vastly underestimated its use as the state prepares to ban the technique by 2024.
Oil and gas groups say the true figure is eight times higher, and environmentalists — squarely on the other side of the fossil fuel debate — agree that 2 percent is too low. Newsom is relying on a questionable statistic from his own oil regulator, and advocates wonder how the state can effectively address fracking if it doesn't have a handle on how much is taking place.
"It understates the economic importance of fracking and the number of jobs that are involved," said Brad Williams, a former state analyst who now consults for the industry at Capitol Matrix Consulting. "It's the difference between 'no big deal' and 'big deal.'"
The state's oil regulator admits it only tracks operations that have started in the past six years, a small portion of ongoing fracking activity in the state. And a review of public documents and industry records show officials could have arrived at the figure — which the agency's records show as 2.6 percent — by dividing by the wrong number.
The regulator's lax tracking methods and lack of data transparency are a source of frustration on both sides of California's fossil fuel debate. The agency charged with keeping tabs on oil production does not break out data for fracking, which is often used in conjunction with other techniques rather than as a primary form of extraction. It also can't say how often fracking assists other methods.
Now it appears the agency has used questionable arithmetic to inform a key policy decision.
Newsom this spring announced that California would phase out fracking, its first firm step to limit production in one of the nation's top oil-producing states. But the long-awaited move has been dogged by a dispute over its significance, both for environmental protection and the oil industry. Fossil fuel and environmental groups have accused the administration of underestimating fracking activity, each side speculating about why Newsom would undersell the impact of his own announcement.
The California Geologic Energy Management Division did not respond to questions about why it chose to calculate the percentage like it did, or whether it did so in error. It did provide a table showing the underlying numbers, including production figures close to those included in an industry report.
Adding to the confusion, the figures it provided showed no fracking data for 2016. The Western States Petroleum Association said 142 wells were stimulated that year to produce 2.6 million barrels of oil.
The governor's office sought to redirect focus on the broader phaseout of petroleum. "Bigger picture, phasing out fracking is one step in the state's effort to transition away from fossil fuels and reducing demand in order to curb the impacts of climate change," Newsom spokesperson Erin Mellon said in a statement.
Confusion over the statistic has concerned state lawmakers like Assemblymember Rudy Salas, a Democrat from oil-rich Bakersfield.
"We need to make sure that we're using accurate data, that we are honest about the impacts that it's going to have," Salas said. "And if the data and the science is there to show that there's going to be a bigger impact, then that needs to be reflected in whatever changes are coming, especially when it comes to thinking about those families that are going to be impacted. I know in Kern County, a lot of those families are heavily dependent on the energy industry."
Drillers for years sent regulators raw information on their fracking activity, but it wasn't organized in a reportable fashion until July 2015, when fracking regulations under CA SB4 (13R) took effect, California State Oil and Gas Supervisor Uduak-Joe Ntuk said in an interview.
That's why CalGEM only counts wells that have started operating since then, he said.
"We have several million PDFs that we can try to go through and see, but there is no uniform way that you would find it," Ntuk said of fracking before SB 4. "That's the challenge for us."
The California Council on Science and Technology did just that in July 2015. The nonprofit and federal scientists dove into those PDFs and other data to conclude that fracking enabled 20 to 25 percent of the state's oil production.
If fracking accounted for just 2 percent of oil production in 2019, as the state asserts, that would be a precipitous drop.
Industry groups acknowledge that fracking has occurred at lower levels in recent years due to regulatory changes and market challenges. But those shifts, they say, do not explain the 15 percentage point discrepancy between their estimate and the state's.
An industry-commissioned report by Capitol Matrix Consulting that used public CalGEM data and private industry surveys divided the total number of 2019 barrels from fracked wells — 26.5 million — by all of the oil produced that year to reach its conclusion that fracking contributes to 17 percent of the state's oil production.
CalGEM, on the other hand, only counts the roughly 4 million barrels from fracking operations started since July 2015.
But it divides that figure — a small subset of all fracked barrels in 2019 — by the same grand total.
"That is a strange fudging of the math," said Dan Ress, staff attorney at the Center on Race, Poverty and the Environment.
The state made an invalid calculation, said Williams, the Capitol Matrix consultant whose 32-year government career included a decade-long stint as chief economist for the Legislative Analyst's Office. If the administration wanted to limit its analysis to wells that started operating within the past six years, he said, it would need to divide by 25.3 million — the total 2019 production from such wells — rather than by 157 million.
That would come to 16 percent.
Mark Nechodom, a former top environmental official who now works for the powerful Western States Petroleum Association, said he is confused at the "cognitive dissonance" of Newsom promoting a climate policy that the governor simultaneously says won't touch the vast majority of fossil fuel activity. Nechodom directed the Department of Conservation under Gov. Jerry Brown, who famously resisted calls to ban fracking despite championing climate action.
The former governor did sign the new regulations for fracking into law through SB 4.
One possible explanation for lowballing such a figure, Nechodom said, is that it might allow the state to avoid an extensive public analysis of the ban's economic impact in its rulemaking. Officials have yet to say whether the ban will be a "major" regulation with a $50 million or greater economic impact, or whether it will conduct such an analysis.
The dispute strikes at the heart of a long-running battle over California's fossil fuel policy. Environmentalists now find themselves in a tight spot, having lobbied for such a ban for years. Now that they're getting one, it could sap momentum from their broader drive to abolish other intensive drilling methods and impose buffer zones between oil operations and sensitive areas like schools and neighborhoods.
Consumer Watchdog advocate Liza Tucker said the state is "trying to minimize the amount of fracking that goes on because they want to minimize the problem" by not accounting for fracking from wells that opened before July 2015.
"You don't look for something, you don't find it," she said.
Debra Kahn contributed to this report.