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Featured, Energy Matters Jun 14, 2021

Banning oil production doesn’t eliminate California’s need for fuel

Erik Bartsch, Aera Energy’s president and CEO, talks about Governor Newsom’s latest call to ban fracking and ultimately end oil production in California.

Aera CEO Erik Bartsch

Aera CEO Erik Bartsch

Aera Energy has been asked repeatedly over the past few months what our response is to Governor Gavin Newsom’s latest calls to ban new fracking in our state and ultimately stop oil production in California.

When the announcement was made, my reaction was concern and disappointment. Concern around how Aera’s employees and business partners would receive the news. Disappointment because if the state chose to work with industry, I believe we could create a better future together.

Today, Aera employs over 2,000 employees and suppliers; hard-working people who work day-in, day-out to solve problems. And as I’ve talked to people since the announcement, the response I’ve heard from workers is one of frustration; that this announcement was not about solving problems – it was about politics.

When the Governor directed the Department of Conservation’s Geologic Energy Management (CalGEM) Division to stop the issuance of new fracking permits by 2024, it came on the heels of Senate Bill 467, which would have banned fracking. Our elected officials shot down the bill before it left committee, partly because the bill flies in the face of intense scientific scrutiny.

So, what’s the truth? The truth is that we live in the communities where we work. There is no dispute about the right to clean water supplies. We all want that. The truth is that hydraulic fracturing has been safely bringing energy to California for more than 60 years. It is an infrequent, short term activity to get production started in a well and is a safe and important part of California’s energy mix.

The State’s own scientific review agrees. An independent scientific council commissioned by the California government studied the practice in 2015 and concluded that there has been no release of hazardous chemicals to surface waters, no direct impacts to fish and no groundwater contamination.

Going forward, the Governor’s administration will be required to release a formal finding of fact regarding health and safety of the process to back up his claims. The government has the burden of proof and rightly so, considering that this move will put hardworking people of California out of work and threaten our energy supplies.

A constructive way forward

While I agree that climate change needs action, the administration’s intent to eliminate oil production in the state doesn’t confront the issue. Why? Banning oil production in California does not end our state’s underlying need for fuel. Curbing California production only adds instability and cost. We need to keep the state running through the energy transition, getting people to work and children to school while upholding the quality of life our state is known for and Californians deserve.

Solving the State’s energy challenge is complex. This state continues to be the third largest gasoline consuming market in the world. Eliminating production here in California without eliminating demand will just increase the amount of oil the state imports. And projections of oil demand in the decades to come suggest that we will continue to require these products even as other technologies, such as electric vehicles and hydrogen become more common. What we would see is production replaced by oil brought by tankers from places like Saudi Arabia and produced under rules and regulations that are not nearly as stringent as what we have here in California. Importantly, we can’t accommodate all of the 400 additional tankers that would come to our shores each year without significant expansions in our harbors, driving higher costs for Californians.

The oil and gas industry is a core component of California’s economy. The industry contributes more than $197 million in property tax revenues to California each year. We provide $1.5 billion in state and local revenues to fund essential services in our communities, including education, health and public safety.

The industry also provides 50,000 jobs for hard-working Californians, at a time when our families are still reeling from the effects of the pandemic. About 10,000 of those jobs support families right here in the Central Valley – many of them minority families. Can we really afford to take more jobs away from Californians?

I propose an alternative way forward in which California producers have a seat at the table to deliver the supply we need and reduce the carbon footprint of the energy system towards the State’s 2045 net-neutral ambition. Aera has the engineering expertise and project management skills to develop solutions and competitive projects with the right regulatory and legislative support. We are excited about the potential of Carbon Capture and Sequestration (CCS), for example, a proven technology that not only improves the carbon footprint of today’s supplies but also creates the infrastructure to pipeline and sequester other hard-to-decarbonize industries into the future. There are 2.5 million people here in the Southern Central Valley, many with direct or indirect ties to the oil and gas industry. Creating legislative and regulatory pathways to encourage this industry to develop a CCS hub in the Central Valley is a win/win for the state and its people.

Our commitment to moving forward together

At Aera, we are going to keep safely and responsibly producing the oil that Californians depend on. We will stay focused on the facts and science and continue to work with our industry partners to make sure those facts are clear in every way we can.

We agree that change is needed for us to achieve the energy future that California is looking for. And we believe that Aera and its people can help the state get to where it wants to go. But the Governor’s most recent announcement will not advance California towards its climate change objectives.

We will continue to advocate for policies that support a cleaner future, such as carbon capture and storage which would significantly reduce carbon emissions from our processes and potentially those from other necessary heavy industries. We will work with stakeholders to develop a more compelling alternative to the future, that is smarter, and helps more Californians than what we have on the table today.

We simply must protect the economy and the people of California while we produce oil in a way that protects public health and the environment. The people of California deserve nothing less.

If you want to stay connected to what we’re doing at Aera, and how we’re making a difference, I encourage you to follow us on social media to become a part of the discussion. You can find Aera Energy LLC on Facebook, LinkedIn and Twitter.

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