Your Public Pensions Are Funding Drilling Across California

CalPERS' and CalSTRS' Investments in Fossil Fuels

CalPERS and CalSTRS invest your pension money in fossil fuels, an industry that is poisoning our communities.  CalPERS had roughly $30.4 billion and CalSTRS $14.7 billion of investments in the fossil fuel industry – totaling $45.1 billion dollars – as of mid-2022.

In California, CalPERS and CalSTRS invest in at least three fossil fuel companies that are listed as operators for thousands of drilling and fracking operations across California:

• Chevron
• California Resources Corporation (incorporating THUMS and Tidelands Oil Production)
• Berry Petroleum Corporation 

Exxon, which sold off most of its California wells to the German company IKAV when the Exxon-Shell partnership in Aera Energy was dissolved,  has an additional six idle wells that are still on its books. Berry Petroleum Corporation [in which CalSTRS invests] operates 1,247 wells.

(SOURCES: FracTracker.org, CalPERS.ca.gov, CalSTRS.com)

Chevron and California Resources Corporation operate a majority of California’s active wells. In 2022 alone, Chevron got permits for 646 new wells and California Resources Corporation added 400 new wells in California.

SOURCE: FracTracker.org

California’s Fossil Fuel Industry is in Decline

As  much of the easy-to-extract oil was already recovered in California, well operators began using fracking as the method for secondary oil recovery, and then enhanced oil recovery (EOR), including injecting water and steam, gas (usually CO2), and chemicals to bring up more oil. 

Super-polluting “Reworking” Wells, and Wells Classified as “Idle”

Wells need a permit to be reworked to increase the oil production, and fracking and EOR assume that wells will be reworked several times to make the operation profitable. These extraction operations tend to extract heavier (dirtier) oil, and often end up with pits of toxic water and other liquids that are stored nearby and are harmful to the environment in a variety of ways. Idle wells are in limbo: they could be truly idle, and should be properly plugged; or they could be given a rework permit to pump oil again.

As CalPERS and CalSTRS Continue to Invest in Fossil Fuels, They Leave a Legacy in California of Oil Wells that Continue to Pollute 

CalPERS and CalSTRS used to have much larger investments in California oil extraction – but many large operators (companies) have been selling off their California assets to avoid the cost of safely shutting down wells, as the amount and quality of California oil continues to decline. California produces  3% of total US oil, ranking 7th among oil-producing states. State climate goals, regulations, and legislation have periodically limited the number of permits for new wells, although more than 1,500 rework permits were granted this year so oil operators can produce more oil from wellbores created by fracking and then requiring EOR to extract the oil.. Governor Gavin Newsom has declared a goal to phase out oil drilling in the state by 2045, but his state agency's permitting practices are at odds with this goal.

With profit-taking by the oil majors as they sell off assets has resulted in a record number of wells that are inactive – either idle or orphaned. Many of these wells are in limbo, which adds to the public health impacts of oil extraction. 

 

Public Health Impacts of Oil Wells 

Active Wells

The public health impacts of active oil wells have both direct and indirect consequences on the well-being of nearby communities. These impacts vary depending on factors such as the proximity of oil wells to populated areas, the size of the operation, and the effectiveness of environmental regulations. 

1. Disease: Studies have shown that living near oil and gas operations increases risk for diseases such as asthma, cancer, liver damage, immunodeficiency, and neurological symptoms.
2. Pregnancy Complications: Research shows elevated risk for preterm birth, low birth weight, and other negative birth outcomes in mothers who live in close proximity to oil and gas wells. 
3. Air pollution: Oil wells release pollutants into the air, including volatile organic compounds (VOCs), particulate matter, sulfur dioxide, and nitrogen oxides. These pollutants contribute to poor air quality, exacerbate respiratory conditions, and increase the risk of cardiovascular diseases. 
4. Water contamination: Oil drilling and extraction processes can contaminate groundwater and surface water sources through spills, leaks, and improper disposal of wastewater. Contaminants such as heavy metals and hazardous chemicals pose a risk to drinking water supplies and aquatic ecosystems, potentially causing long-term health problems.
5. Mental health effects: Oil wells can cause stress and anxiety among nearby residents due to concerns about health risks, property values, and community disruption. This stress can have long-term effects on mental health.

Inactive, Idle, and Plugged Wells

The public health impacts of inactive oil wells still present several potential concerns for communities and the environment. 

1. Benzene & methane emissions: Inactive wells leak harmful chemicals like benzene, a carcinogen. They also continue to emit methane, a potent greenhouse gas, into the atmosphere. Methane leakage contributes to climate change and can indirectly affect public health by exacerbating extreme weather events and air quality issues.
2. Water contamination: Abandoned oil wells risk groundwater contamination through leaks or spills of residual oil and chemicals left behind from previous operations. This contamination can jeopardize local drinking water supplies and harm aquatic ecosystems.
3. Health and safety hazards: Abandoned oil wells are safety hazards for nearby communities. Open wellheads, rusted equipment, and exposed pipes pose risks of accidents, injuries, and even fatalities, particularly to children and trespassers.
4. Aesthetic and economic impact: The presence of inactive oil wells negatively affects property values and the aesthetics of the surrounding area. This, in turn, may lead to economic stress and reduced well-being for residents.

 

Oil Extraction Near Homes, Schools, and Communities

In 2022, the climate justice movement across California came together to successfully pass a piece of landmark legislation - SB 1137, requiring a 3,200 ft setback between oil drilling and communities. Meanwhile, the fossil fuel industry spent $34 million on Sacramento politics to shut down key climate initiatives. Then the fossil fuel industry and its California lobby groups spent an additional $20 million dollars to overturn the setback law via bounty-hunting (pay-per-signature gathering) to put an opposing initiative on the ballot.

As a result, the new health setback law has not taken  effect, leading to close to an additional 700 permits for fossil fuel operations within the 3,200 ft setbacks in 2023 alone. 

Disappointingly, our public pensions – CalPERS and CalSTRS – continue to support these fossil fuel companies with stock and bond investments. CalPERS and CalSTRS are enabling the continued expansion and dominance of the fossil fuel industry with public money, contrary to state climate goals.  Even as some oil majors continue to abandon fossil fuel production in the state, our pension funds continue to underwrite fossil fuel expansion. In response, Californians – from high school youth to elders – are coming together as the California Fossil Fuel Divestment Coalition to reclaim their power, boot the fossil fuel industry out of the state Capitol, divest California’s public pensions, and build a fossil-free future for workers, teachers, and communities.

Take Action

Act now >>> The best way to get CalPERS and CalSTRS out of the fossil fuel business is to pass divestment legislation. Take one minute to email your Assemblymember and let them know: it's time for California's public pensions to get out of the oil drilling business. Let's pass SB 252!