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Los Angeles County Banning New Oil, Gas Wells
After the city moved last month to ban new oil and natural gas drilling within its borders, the Los Angeles County board has followed suit, banning new drilling activity beginning this month.
County officials unanimously voted to adopt an ordinance amending the zoning law, banning any new oil and gas wells or production facilities in all county zones. The vote followed one by the City of Los Angeles in December.
According to the latest data from the California Geologic Energy Management Division (CalGEM), combined gross oil and condensate production from the City of Los Angeles and Los Angeles downtown in 2019 hit 42,730 bbl. Combined gross natural gas production in the region, meanwhile, reached 30.12 MMcf in 2019.
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California’s net natural gas production dropped about 8.1% from 2018-2019, according to CalGEM’s latest data. Associated gas production also decreased to 148.2 Bcf in 2019, from 162.1 Bcf in 2018.
Beginning later this month, existing oil and gas wells that may be lawfully operating, but not with an approved conditional use permit, would be in violation of legal uses of property under the updated county code.
According to the ordinance, which was first introduced last September, any of these wells need to be within the site maintenance provisions, or be plugged and abandoned. Beginning in February 2025, operators of existing wells would be required to file with the Los Angeles County Board for indemnity bonds that cover conditions related to operations, with a bond of at least $152,000/well.
Bonds would cover the costs of wells that are not plugged and abandoned.
Natural gas and natural gas liquids wells in California have dipped from their 2012 peak of 4,356 to 3,583 wells in 2020, according to the latest data from the U.S. Energy Information Administration.
In reaction to the rulemaking, California Independent Petroleum Association CEO Rock Zierman told NGI that “these actions are short-sighted and bring a tremendous amount of economic, environmental and health problems to underserved communities.
“California oil producers live under AB 32,” aka Assembly Bill 32 or the Global Warming Solutions Act of 2006. The bill contains “strict environmental and labor laws,” Zierman said.
“However, Saudi Arabia, Iraq, Russia and Ecuador are exempt from those laws,” he noted. He citing data showing increased shipments of diesel particulate matter (DPM) to the Port of Los Angeles.
According to the port’s latest Inventory of Air Emissions, the port has seen “significant year/year increases since 2020,” though DPM emissions are still on track to meet targets set by San Pedro Bay’s Clean Air Action Plan.
Zierman added, “Somehow the Board of Supervisors conveniently ignores the environmental and health impacts of having hundreds of oil tankers stationed off the California ports to meet current petroleum demand. The residents of Los Angeles are also still waiting to see a full economic report on the impact of shutting down oil production in Los Angeles County.
“Where is the cost report for taking the mineral or the additional costs motorists will have to pay each time they fill up? And how does the county plan to meet current petroleum demand?”
Sacramento-based CIPA represents natural gas and oil producers, royalty owners, and affiliated service and supply companies throughout the Golden State.
What About Natural Gas Prices?
In related news, Los Angeles County Supervisors Kathryn Barger (District 5) and Holly Mitchell (District 2) pressed forward with a motion to investigate the surge in the cost of procuring natural gas by Southern California Gas Co. (SoCalGas). According to the motion, SoCalGas’ latest price increase, effective at the start of the year, has led to a 300% increase in residential natural gas costs in January 2023 compared with year-ago rates.
In December, at a time when storage inventories were low, heavy precipitation and frigid temperatures across the West Coast led to historically high natural gas prices not seen since 2018.
“SoCalGas cited numerous factors affecting the price increase, including widespread, below-normal temperatures, high natural gas consumption, reduced natural gas flows and pipeline constraints,” according to the motion. “These communications came shortly after bills were received by consumers.”
The Board of Supervisors recommended asking state officials to investigate statewide natural gas prices and request funding to harden and increase the resiliency of public utility infrastructure.
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