The California State Senate is set to vote on a package of bills that could impact small California oil companies and their workers while expanding foreign oil contracts, particularly with Saudi Arabia. If this legislation is passed and signed into law, the California State Legislature will effectively guarantee Saudi Aramco an even more significant windfall in the coming years.
Let This Sink In:
"Saudi Aramco reported a net profit of $121 billion for 2023, more than the combined profits of the West's five largest oil companies. Aramco increased its dividend payout to $98 billion, a significant source of income for the Saudi state, and promised even higher payments this year." (Economist, March 16, 2024)
Overview of the Bills:
AB 3233 (Asm. Dawn Addis, D-Morro Bay)
This bill allows local governments to object to downhole operations despite their lack of expertise in oil field operations. Notably, it prevents local governments like Kern County from approving downhole permits, allowing only denials or the adoption of more stringent rules.
This legislation is designed to circumvent a unanimous Supreme Court ruling on Monterey County's illegal ordinance banning water re-injection. However, it does not address the issue of federal preemption, which the court also found was violated by the Monterey County ordinance. The bill intends to reduce in-state production and increase imports from Saudi Arabia. CIPA strongly opposes this bill.
AB 2716 (Asm. Isaac Bryan, D-Los Angeles)
This bill unfairly targets a single company in one field across the state, subjecting normal operations to an arbitrary fine of $10,000 per day.
The bill categorizes wells producing fewer than 15 barrels per day as "low producing," even though 81% of all wells in California fall into this category.
The author offers no evidence of harm from wells that drop from 16 to 14 barrels per day. This arbitrary measure is designed to halt production in Inglewood and increase imports from Saudi Arabia. CIPA strongly opposes this bill.
AB 1866 (Asm. Gregg Hart, D-Santa Barbara)
This bill would increase the number of idle wells companies must plug annually by 500% to 3,000%.
The state already has a successful program; companies have eliminated 11,000 idle wells in the past 2.5 years alone. Additionally, CalGEM has hired 25 new staffers, costing the industry millions annually, to collaborate with each company on eliminating idle wells. There is no need for this new program, especially when the proposed targets are arbitrary and could put companies out of business.
Activists aim to drive small independent companies out of business and increase imports from Saudi Arabia. Their plan is succeeding—California’s in-state production has declined by 40% over the past four years, while imports from Saudi Arabia and Iraq and deforestation-driven oil from the Amazon Rainforest in Ecuador have surged.
What You Can Do:
CIPA is vigorously fighting these bills but needs participation from its members. Members can contact their State Senator and urge them to vote “NO.”
Independent producers must continue to fight these bills on the Senate Floor and in court. The activist-driven bogus science behind these bills will not withstand scrutiny in a court of law, where truth still matters. The state's case will quickly fall apart once these baseless claims are exposed in a legal setting.
For more information, contact Sean Wallentine.