Oil giants sell thousands of California wells, raising worries about future liability
By JOSHUA GOODMAN
Associated Press
NEW YORK (AP) — Chevron’s efforts to extract shale oil from the United States helped spark a major public relations battle with California regulators that could have major implications for the energy industry in the west.
California regulators say Chevron overstated its reserves when it applied for an oil drilling permit and that its drilling operations in California may be in violation of state rules, if not federal law.
Chevron’s announcement is just the latest battle in what is shaping up to be a major federal showdown over the industry in the West.
State officials said they were concerned that the company had not yet drilled enough wells, and at least one of the wells may not be producing oil. They also said additional production could potentially violate federal environmental laws, and possibly expose Chevron to more lawsuits.
The company said it would appeal the rulings and “will continue to vigorously defend itself against these unfounded allegations.”
The federal government sued Chevron in October over the company’s California operations, saying the company’s plan to use oil from an old refinery to make gasoline was an attempt to take a “high-risk, high-reward drilling adventure.”
The suit accuses Chevron of violating federal environmental law and trying to get around government regulators by having the state’s Department of Conservation weigh in first.
The state filed its lawsuit in October, but the federal government decided to take action after a Chevron worker was killed in an explosion at another oil site.
“Our office is working with them to get their process under control and we are very confident they will settle this matter in California,” said Robert Dunn, deputy chief of regulatory affairs for the California Energy Commission. “This is a high-risk industry, and we are concerned that we haven’t seen the last of this problem.”
The California Department of Conservation ordered Chevron to stop all new drilling until the state can determine whether the company is in compliance.
Dunn said the agency found that Chevron had not done enough tests to
