Oil giants sell thousands of California wells, raising worries about future liability.
A series of recent developments in the energy industry have raised widespread concern about the future of California’s ability to pay for the electricity it consumes or exports to other states.
The most significant is the $18 billion sale by Chevron Corp. to Royal Dutch Shell Plc., a buyer that is not subject to California’s landmark “streamlining” law. Chevron said it hopes to close its deal by this month, subject to additional regulatory approvals in Nevada, a step that will take at least a few more years.
Another large deal is that Exxon Mobil Corp. and its partner, Occidental Petroleum Corp., have agreed to sell nearly 1,000 oil and gas wells in the Monterey Shale in Northern California, a much larger sale than Chevron’s but one that may face even longer times to close.
The oil industry has also sold thousands of natural-gas wells and is close to completing a partnership with another industry giant, Phillips 66, that may have the largest single stakeholder change in California history.
The industry’s willingness to sell oil and natural-gas assets in California raises questions about the state’s ability to continue paying for electricity bought from utilities that are owned or operated by the utilities themselves.
In response to a lawsuit filed by the Public Utilities Commission of Texas that challenges the utility industry’s plans to seek a $12.2 billion in fees from the California Department of Water Resources to fund its purchase of electricity and infrastructure, the California Public Utility Commission adopted a resolution calling on the state to negotiate with the new buyer, a plan that experts believe will have to be completed by the end of the year.
“If the PUC action succeeds in getting the new buyer off the back of the table and negotiating an agreement with the state, we will have done a very good job and the PUC will have been very successful,” said Peter Fosnight, the commission’s general counsel.
A series of recent developments in the energy industry have raised widespread concern about the future of California’s ability to pay for the electricity it consumes or exports to other states, a concern