Oil drillers warn incoming setback law will have deep impact in Kern County

(The Center Square) – Independent oil and gas producers are backing a proposed referendum to repeal a California law requiring 3,200-foot setback distances between new oil wells and sensitive areas – a measure that could hobble oil-rich Kern County.

Starting in January, Senate Bill 1137 will ban new oil and gas wells within 3,200 feet of “sensitive receptors,” including homes, schools and hospitals. The law also outlines rules for wellheads that already exist within 3,200 feet of sensitive receptors, which includes limiting noise and developing a “leak detection and response plan” by 2025.

Lawmakers said the measure is necessary to protect public health, as recent studies show proximity to oil and gas wells is associated with “adverse cardiovascular, psychological, perinatal and other health outcomes.”

Oil industry members moved quickly to file a proposed referendum, seeking to repeal the law by sending it before voters in 2024. Officials announced last week that signature-gathering efforts had begun – they’ll need to collect over 623,000 verified signatures by mid-December to qualify the referendum for the 2024 general election ballot.

Opponents of the new restrictions are hoping for strong support in Kern County, which produces 70% of the state’s oil and ranks in the top seven oil-producing counties in the United States. It produces 9.9 million barrels a month, according to a 2021 report from the Kern Economic Development Foundation. Oil and gas is the top industry in Kern County for gross domestic product and tax contributions, and the county had more than 25,000 energy-related jobs in 2020, according to the report. The county is home to 78,000 oil and gas wells, including 40,000 active wells, according to the NRDC.

County Supervisors passed an ordinance last year streamlining approval for drilling and paving the way for 2,700 new oil and gas wells annually, the San Francisco Chronicle reported. The ordinance was scrutinized in court after environmental groups proved it violated state law.

While the county supports the oil industry, its position contradicts state lawmakers and Gov. Gavin Newsom’s crusade to reduce the presence of oil wells near communities.

Independent oil producers say the law will increase dependence on foreign oil often produced in environments with less stringent standards.

Chad Hathaway, founder of Bakersfield-based Hathaway LLC said the law could “severely impact” his business by taking “millions and millions of dollars” of reserves off the table. His business operates around 300 wells in Kern County.

He also questioned the decision to implement a 3,200 foot setback when the state already enforces strict emissions standards. The bill text says studies have shown “evidence of harm at distances less than one kilometer, which is approximately 3,200 feet.”

“No other industry has the level of scrutiny that we already have for emissions,” Hathaway told The Center Square. “And those are the emissions they’re saying are health hazards.”

“If you stand in your garage with the garage closed and your car running, you’re gonna die. That’s dangerous,” he later added. “Our wells are checked quarterly and they’re inspected by the state. They’re double checked, and if there’s any tiny little emissions, we get fined substantially. No other industry has that level of scrutiny.”

Other proponents of the referendum argue that the need for oil in California is still present, as Californians consume 1.8 millions of barrels of oil each day, according to the California Independent Petroleum Association.

“All [SB] 1137 does is curtail in-state production of oil – it does not reduce the demand for oil,” California Independent Petroleum Association CEO Rock Zierman told The Center Square. “As a result, it’s just going to shift more of our consumption of the oil we consume domestically produced, American-made local oil made by American workers paid for with American taxes to foreign imports.”

Zierman also criticized mandating a setback distance without an environmental review that considers how to mitigate potential impacts. The “arbitrary” setback is going to be “very problematic for a lot of production in Kern County and the rest of the state.”

Both Zierman and Hathaway also pondered how the bill would impact a new development proposed within 3,200 feet of an existing oil well. Senator Monique Limón, one of the bill’s authors, was not available to respond to The Center Square’s questions on this issue.

CIPA is spearheading the referendum effort, seeking to repeal the law in 2024. Hathaway said he sees the referendum as a “short term fix,” noting that larger oil companies who operate in Kern County are not currently putting “major capital” into the effort. Hathaway also acknowledged that it could be difficult to win enough voter support to overturn the law.

Ultimately, Hathaway said the law could force him to sue for a constitutional right to his property.