Chevron Should Blame Itself Not State For 'Impairments'
Los Angeles, CA -- Chevron has only itself to blame for its $1.8 billion in "higher US upstream impairment charges mainly in California" discussed in its earnings release today, saying its own low producing wells were the cause, according to a press statement from Consumer Watchdog.
”Chevron’s wells only produce an average 3 barrels of oil per day, according to a new analysis by FracTracker. The company had hoped to dump the wells on another buyer, until a new law last year (AB 1167) required any buyer of such wells to prove that they had the financial capacity to plug them,” the group said.
Consumer Watchdog said Chevron should have long ago plugged its low producing wells and was only keeping them active in order to avoid the cost of plugging them.
Chevron’s wells have been in decline for many years. According to FracTracker, Chevron wells produced 4.34 barrels of oil per day in 2019, 3.86 in 2020, 3.74 in 2021, and 3.08 in 2022.
In a January filing with the Securities Exchange Commission, Chevron blamed "continuing regulatory challenges in the state that has resulted in lower than anticipated future investment levels its business plans."
Chevron stated in its filing:
On January 2, 2024, Chevron Corporation announced that for fourth quarter 2023, the Company will be impairing a portion of its U.S. upstream assets, primarily in California, due to continuing regulatory challenges in the state that have resulted in lower anticipated future investment levels in its business plans. The Company expects to continue operating the impacted assets for many years to come. In addition, the Company will be recognizing a loss related to abandonment and decommissioning obligations from previously sold oil and gas production assets in the U.S. Gulf of Mexico, as companies that purchased these assets have filed for protection under Chapter 11 of the U.S. Bankruptcy Code, and we believe it is now probable and estimable that a portion of these obligations will revert to the Company. We expect to undertake the decommissioning activities on these assets over the next decade
“Chevron is wrongfully blaming California for its own negligence in managing its wells,” said Jamie Court, president of Consumer Watchdog. “When an oil company is producing only 3 barrels of oil per day from its wells, just enough to fill the tank of 5 Ford F-150s, it’s time to shut the wells down. But Chevron knows it will cost more to plug them than to keep them running, despite the pollution they cause and the fact they yield almost no oil. This is a self-inflicted wound by Chevron, not the result of state policies.”
"Chevron, like all the oil majors, had counted on dumping these low-producing wells on smalls LLC's destined for bankruptcy, but are now stuck with them," said Kyle Ferrar, Western Program Director at FracTracker Alliance. "Chevron should have been plugging these bad assets over the course of the last four decades. These financial losses are their own doing."
Earnings from refining operations were down from the fourth quarter last year, but still very strong for the years according to Consumer Watchdog. Chevron's gross refining margin for the West in 2023 was 73 cents per gallon. It's gross refining margin in the West in the 3rd quarter was a whopping $1.05 per gallon.
ConsumerWatchdog has recommended a maximum gross refining margin in California set at 70 cents after which a price gouging penalty would progressively apply.
"Chevron is still making too much profit from Californians' pain at the pump through its refining operations," said Court. "A price gouging penalty that claws back Chevron's excessive margins is long overdue. California needs to put its foot to the gas to protect drivers with a price gouging penalty before price gouging season hits this summer and fall."
Corporations like Chevron are able to get away with what they do in the “’green” and “progressive” state of California and across the nation because they have captured the regulatory agencies and politicians for many decades.
Big Oil and Big Gas spent an all-time yearly record of $27,003,931 on lobbying in Sacramento in 2023. The lobbying expenditures for the last quarter alone were $4,983,305.
Chevron topped all other oil corporations in lobbying spending in 2023 with a total of $11,196,342 for the year. That includes $4,924,088 spent in the first quarter, $1,204,139 in the second quarter, $3,866,296 in the third quarter and $1,201,819 in the fourth quarter.
The Western States Petroleum Association, the largest and most powerful corporate lobbying group in the state, finished second in oil industry lobbying expenditures with $6,935,428 spent on lobbying in 2023. WSPA spent $2,380,275 in the first quarter, $1,561,555 in the second quarter, $1,381,995 in the third quarter and $1,611,603 in the third quarter. cal-access.sos.ca.gov/...
You can see the oil and gas industry lobbying expenses, including those by Aera, here: https://cal-access.sos.ca.gov/Lobbying/Employers/list.aspx?view=category&fbclid=IwAR2wAaVwwH0_1yLppeqwZiGuvKrjjUoeJo_BCGZ6QZv0hOymlLsL9pHms64
In 2024,