While the Culver City SubCommittee on Oil Drilling was already scheduled to meet on July 11, 2019, there was no idea that the day would be such a landmark for oil in the state of California. Governor Newsom’s decision to fire the head of the state agency, the Division of Oil, Gas and Geothermal Resources, (DOGGR) Ken Harris, is a major step forward to cleaning up both drilling and corruption in the state.
While the meeting in council chambers looked at a study to define the costs and consideration of shutting down drilling in the portion of the Inglewood Oil Field within Culver City, Newsom was putting Harris out of a job.
At a press conference on July 12, 2019 at the Culver City dog park, The Boneyard, was talking about the impact of the governor’s decision. Council member Daniel Lee spoke along with local attorney Deborah Weinrauch, and the founder of the Coalition for a Safe Community, Paul Ferrazzi. “For too long the health of our community has suffered from dirty oil wells at the Inglewood oil field,” said Weinrauch.
Noting that it had been roughly a year since the city council had voted to explore closing down the oil drilling operations in Culver City, Mayor Megan Sahli-Wells addressed a public meeting of the Oil sub committee on July 11 at City Hall at 5 pm. The panel also included council member Alex Fisch, the other member of the council on the sub committee. Melanie Doran Traxler, the contracted project manager retained by the city, Carol Schwab, the city attorney, and Heather Baker, the assistant city attorney.
At the meeting at City Hall, Traxler presented a timeline for research and investigation into the cost of amortizing culver City’s portion of oil field, starting in July of 2019 and ending in January of 2020. Beginning with data gathering and base case development, continuing on through creating a base case model and validation, going ahead to calibration and sensitivity analysis, preparation of a report, and the presentation of findings.
Traxer noted that much of the investigation would be challenging, as the companies that have managed the oil field over the last decade did not have clear records on many of the critical financial issues.
Newson’s firing of DOGGR head Harris noted the problems were systemic, and affected every oil well in California, not just those adjacent to Culver City.
A review of state conflict of interest forms showed that eight regulators managing the state’s oil and gas well approval and inspection process have hundreds of thousands of dollars invested in the oil companies they regulate. One of the regulators is among the top three in command at the DOGGR.
From January 1 to June 3, 2019 DOGGR approved 2,365 new oil and gas well permits and 191 fracking permits. The data shows that this year regulators have considerably increased the number of permits granted for drilling new wells (by 35.3%), well reworks (by 28.3%), and hydraulic fracturing (by 103.2%) as compared to the permitting rate during the final year of the Brown administration in 2018.
Of the 2,365 well permits issued, 1064 or 45% of them benefitted oil companies invested in by DOGGR officials.
Culver City’s push toward amortization, generally defined as the practice of paying off a debt over time, is in this case, the cost of stopping oil drilling, or more specifically, the investigation of the many factors involved in that cost.
The three companies that have held the oil field in the last decade – PXP, Freeport-McMoran, and now Sentinel Peak Resources, have all been obtuse in their financial and legal reports to the city.
The firing of Harris may be the tip of the iceberg in uncovering the corruption between the oil field and the government regulation of the industry.
Additional text Consumer Watchdog