A Free-Market Energy Blog

California Energy Update: Part II

By -- October 30, 2013
  • CA’s Green Energy Swan Turning Into Ugly Duckling; $5 Gas in CA? Lack of Cap-and-Trade Price Ceiling Could Bring It;
  • Santa Barbara Picks Drilling Over Greening;
  • Green Actions Cause One-Third of Human Caused Earthquakes; Study Questions Whether Fracking Causes Earthquakes;
  • New Fracking Website Posted Online by Western Petroleum Association

California’s Green Energy Swan Turning Into Ugly Duckling

In the upside down world of California energy, no longer are the hot summer months or the occasional winter cold snap the only peak period of hourly risk to the state’s electric grid. The new daily peak hours of each day from 4 pm to 7 pm during the “shoulder months” of March, April and May and September, October, and November are the new peak month/hour times. What is causing this shift in peak time power is California’s transition to solar energy as the major source of base load power during day. California is in the process of transitioning up too 33%, and eventually to 51%, of its power from green energy sources under the Global Warming Solutions Act of 2006 (also called Assembly Bill 32).

Of particular concern to California’s Independent System Operator (ISO) are three hour periods in the Spring and Fall. It would be the sunset period of each day, not mid-day, that is already beginning to present a critical challenge to the reliability of electricity for customers. The problem during the critical hours from 4 to 7 pm is the steep ramp up of conventional gas-fired power as solar power winds down at sunset.

This ramping challenge has been visually depicted by the ISO in its now famous “duck graph” (click on the word “duck graph” to see this visual aid then click on the graphic to enlarge it). The sudden demand for conventional power to replace solar power at sunset is portrayed by the “neck” and “beak” of the duck figure. The tail of the duck is the drop in conventional gas-fired power around 8:30 am when solar power starts to kick in and crowd out conventional power. In California, green power gets to trump conventional power regardless of price.

The ISO has cautioned that what is going to happen, if it has not already happened, is that solar power will start to be dumped near sunset hours each day during Spring and Fall to assure system reliability. So taxpayers who have heavily subsidized solar power will see their subsidized power dumped from the grid even though customers have had to pay for it.

Of particular concern is how California’s grid is going to handle this increasing problem as the state mandates the shut down or retrofitting of all its coastal power plant to shift from ocean-water cooling (euphemistically called “once through cooling”) to air cooler systems. Many of the power plants that can’t afford this new air cooling equipment will shut down creating a compounded problem of how to schedule conventional gas fired power each day from 4 to 7 pm with fewer power plants. The San Onofre Nuclear Power Station in Southern California is already permanently shut down due to malfunctioning cooling rods.

The infamous “Duck Graph” phenomenon is what is driving new legislation in California to begin building very expensive battery power storage into the state’s electric grid. California’s new energy system is being put together by a process of “muddling through” rather than some grand design. While solar farms in Kern County can tout 8 cent per kilowatt power, total system costs are ignored. Part of the problem is nobody knows what total system costs will be for new green power. Green power typically requires new dedicated transmission lines so that pulsing due to variable sun and wind doesn’t throw the voltage pressure out of whack resulting in black outs. Green power also requires rebalancing systems. Thermal solar requires a source of desert cooling water for steam turbines. And now battery storage is needed to meet the “Duck Graph” problem.

Read more here.

$5 Gas in CA? Lack of Cap-and-Trade Price Ceiling Could Bring it

When California’s Air Resources Control Board (CARB) designed its Cap and Trade emissions reduction program it put a cap on industrial and utility air emissions. But CARB put no cap on the price that pollution permits (called “allowances”) can be bought for in Cap and Trade auctions by industries and electricity utilities that would rather buy a permit to pollute than reduce pollution.

This has resulted in several experts issuing warnings that if there is no price ceiling put on Cap and Trade pollution permits that there could be a sudden spike of gasoline prices by 50 cents to one dollar per gallon out of nowhere. Severin Borenstein of U.C. Berkeley Energy Institute, Robert Stavins of Harvard, and Todd Schatski of the Analysis Group have all issued warnings that if CARB’s auction prices go higher than $50 per ton of air pollution that gasoline price shock would hit California. Stock prices of oil companies could also suddenly plummet if emissions “allowance” prices get too high.

At its October 24-25 board meeting, the California Air Resources Board will reconsider its “Market Based Compliance Mechanisms” in its Cap-and-Trade program. CARB uses a 7% reserve of permits to flood the auction market with should prices get too high. The way California’s Cap and Trade system works is that each year the number of pollution permits will be intentionally reduced so that industries and utilities are forced to reduce emissions rather than buy permits. So it is inevitable that auction prices for permits will climb.

See more here.

Santa Barbara Picks Drilling over Greening

Santa Barbara is ground zero for the environmental movement in California after the infamous Union Oil Company oil spill in the Santa Barbara Channel in 1969.  Almost 45 years later, the Santa Barbara County Planning Commission approved 136 new oil wells on 32 acres in the unincorporated area of Orcutt in Santa Maria Valley.

The Orcutt project signals that local governments are now willing to overcome environmental opposition in return for jobs and tax revenues.  Over 80 percent of Santa Barbara County’s debt comes from unfunded pensions.

Offshore oil and gas drilling has historically gotten all the scrutiny and opposition form environmentalists in Santa Barbara County. But inland oil and gas drilling permits could be obtained over the counter at the County Planning Department with no public hearing or environmental review. However, now that California has a Cap and Trade law, oil and gas drillers have to be exposed to a public hearing as to how they plan to reduce their emissions under the state’s emissions cap. So now environmentalists from Al Gore’s Climate Group 350 Santa Barbara are showing up at public hearings that weren’t necessary heretofore. The group gets its name from 350 parts per million of CO2 in the atmosphere is a tipping point.

Santa Barbara’s Planning Commission approved 136 new oil wells at a site that has been conducting oil drilling for over 90 years. The 136 new wells would reflect one third of Santa Barbara’s total onshore oil wells. The new oil well site will not use fracking. Instead they will use conventional pressurized steam methods to extract the oil. The water will come from a reclaimed water pipeline from a local community.

The proposed 136 new oil wells will produce 3,000 barrels of oil per day.  Today’s spot price for oil is $142 per barrel.   Twenty-six pilot wells are already in operation. So, the Orcutt field would generate a $426,000 dollars per day; or over $155 million per year. –

The County Planning Commission authorized exceeding the Cap and Trade emissions threshold of 16 percent.  This left the project developer — Santa Maria Energy — with having to buy emissions allowances from the state’s Cap-and-Trade program for the 78,000 tons of emissions exceeding 10,000 tons.  At the going rate of $10 per ton at recent cap-and-trade auctions, that would equate to $780,000 in additional taxes imposed on the project.  When emissions allowances increase to $25 per ton, the cap-and-trade tax would rise to $1,950,000 per year.

Paradoxically, Santa Barbara Channel has the largest natural oil and gas seeps in the Western Hemisphere. About 86,000 barrels of oil seep from the ocean bottom each year, the equivalent to the 1969 Santa Barbara Oil Spill.   Since 1970, there have been the equivalent of forty three “1969” oil spills.

See more here

Green Actions Cause One-Third of Human Caused Earthquakes

Environmentalists have been in a state of near hysteria in the California media about the prospects of expanding fracking in the state. Environmentalists are clutching at any reason they can find to call for a moratorium or outright ban on fracking in California. A recent bogeyman for California’s liberal media has been the possibility of fracking causing earthquakes.

A new 2013 study from the University of Durham in the U.K. sheds some light on the risks of earthquakes from fracking. The Durham University study found 198 man-caused earthquakes from 1929 to 2013. About 65% of those human caused earthquakes were from industrial related activities. But about 35% of man-caused earthquakes surprisingly came from green activities such as: geothermal power plants, reservoirs, carbon sequestration, seismic academic research, green water solution salt mining techniques, and mandated disposal of fracking and oil drilling waste water in deep injection wells to comply with toxic waste laws.

That Durham University coincidentally found one third of man-caused quakes are green related is timely in California. The state legislature has passed a bill authorizing a new earthquake prediction system be implemented statewide but authorized no funds for it yet. The estimated $80 million in funding needed for such a system will likely come from shaking down oil and gas companies allegedly because their drilling operations caused earthquakes. But so do green geothermal power plants and carbon sequestration.

The impetus behind the call for an earthquake prediction system is the 2011 ocean earthquake and nuclear power plant destruction. But another impetus is a recent study done by a University of California at Santa Cruz geologist that geothermal power plant earthquakes can be predicted. The overwhelming number of quakes from geothermal power plants are small in magnitude. But the timing of this study couldn’t be more perfect to creating yet another bureaucracy in California. In L’Aquila, Italy, they have convicted seven earthquake experts for manslaughter for failing to adequately warn residents before a 2009 quake that killed over 300 people.

Read more here:

Study Questions Whether Fracking Causes Earthquakes

The study referenced in the above news synopsis is titled,Induced Seismicity and Hydraulic Fracturing for the Recovery of Hydrocarbons,” conducted by  Richard Davies, PhD of the University of Durham, U.K. It reported that, of 198 human-induced earthquakes since 1929, only one was indirectly related to oil and gas fracking itself.

The major cause of the fracking-related earthquakes, on the other hand, was not related to fracking operations, but the disposal of fracking and shale gas wastewater required by toxic waste disposal laws.

No Fracking Earthquakes in 66- Years in California. Based on the Durham study and other online data sources found by this writer, only ten human-induced major earthquakes from all causes occurred in California over an 84-year time span concurrent with rapid industrialization (see table below).  None were from fracking per se. Four were from dams and reservoirs; 3 from geothermal power plants, and 3 from oil and gas extraction.

The total number of large natural caused earthquakes (over 5.0 on the Richter Scale) in California from 1680 to 2013 is 68. The total number of larger natural earthquakes (2.0+) in California since fracking started in 1947 is 1,675,278.

Since it isn’t fracking, but high pressure disposal of waste water from oil drilling of any kind to comply with toxic waste disposal laws that causes most petroleum industry quakes, fracking earthquakes are not thought to be a sufficient reason to set up a statewide earthquake prediction system.

California’s new fracking law regulates “acidization” as well as fracking. Acidization is an oil extraction technique used in the Monterey Formation in California rather than fracking. But acidization would present even less of a potential problem of earthquakes than fracking because the acid is flushed out of a well at the end of each job. Many oil companies are not using fracking water anyway and reportedly have shifted to using natural gas to extract oil and gas.

See more here

New Fracking Registry Posted Online by the Western Petroleum Association

In order to comply with California’s new fracking regulation law – California Senate Bill 4 –- petroleum extractors have to post online a list of their hydraulic fracturing operations sties. The website has been constructed by the Western Petroleum Association and is already up and running and is called FracFocusData.org. The database includes 55,598 well sites in the western U.S.

The website has a database search where anyone can search for a fracking site by State, County, Well, Operator, Well Number, and Fracking Ingredients. For example, I searched for how many well sites were in Los Angeles County. The FracFocus database indicates four well sites in L.A. County:

Plains Exploration and Production Company, Blair Hills, Culver City, 2011.

The Termo Company, north of Granada Hills, (2011)

Occidental Oil and Gas, industrial park in Compton, (2012)

Plains Exploration and Production Company, Blair Hills, Culver City, (2012)

The FracFocus registry can be found here.


For those interested in perusing Calwatchdog’s archived articles on energy in California here are some additional links:

CA Ratepayers Fleeced for Green Power Line in Canada (July 2)

Electricity Rate Shocks More Likely Than Blackouts This Summer (May 15)

California’s Legendary Energy Efficiency is Statistical Myth (July 16)


Wayne Lusvardi is with the Pacific Research Institute, a free market think tank in San Francisco and Sacramento. He writes for their website Calwatchdog.com, concentrating on water and energy issues. The information above is excerpted from Calwatchdog.com and other sources.


  1. MSimon  

    “malfunctioning cooling rods”

    I think you meant control rods.


  2. wlusvardi  

    To M. Simon:
    Yes, thank you for catching this.


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