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ARB fines Oxy subsidiary over $250,000 for a 50 lb gas leak

ARB fined THUMS, operators of oil and gas islands in Long Beach, $254,100 for a small leak of SF6 gas.
ARB fined THUMS, operators of oil and gas islands in Long Beach, $254,100 for a small leak of SF6 gas.
U.S. Department of Energy

The California Air Resources Board (ARB) yesterday announced a settlement with a California oil company to resolve violations of a state greenhouse gas emissions regulation. Under the settlement, THUMS Long Beach Company was fined $254,100 for excessive emissions of sulfur hexafluoride (SF6).

ARB fines THUMS, an Oxy subsidiary, over $250,000 for a 50 lb gas leak
U.S. Department of Energy

According to the ARB, SF6 is a potent greenhouse gas (GHG) with a global warming potential of nearly 24,000 times that of carbon dioxide. Users of SF6 are subject to California's SF6-GIS regulation which sets emission rate limits for SF6 and requires owners of SF6-GIS equipment to report their emissions each year. The regulation was written as a result of the state's landmark climate change law, the California Global Warming Solutions Act of 2006 (AB 32).

ARB said that THUMS violated the regulation by submitting an inaccurate report and exceeding a 2011 allowable maximum emission rate of 11 percent. THUMS subsequently eliminated all of its equipment subject to the regulation and cooperated with the investigation.

Of particular interest is the amount (mass) of leaked gas relative to the fine assessed against THUMS. Although ARB did not explicitly state in its press release the mass amount of emissions that were considered to be in excess, a review of the settlement agreement that was linked in the release shows that only 46.8 lbs of the substance exceeded the annual allowed limit. Using the global warming potential above, this is roughly equivalent to a little over 1 million lbs of excess carbon dioxide.

Nevertheless, this may still appear to be a trivial amount when compared to average allowed emissions of carbon dioxide into the atmosphere. One million lbs of CO2 equals 500 tons of CO2. Oil companies and other major sources of GHG emissions each routinely and legally emit millions of tons of CO2 per year from their California operations. To some people, issuing a fine of a quarter of a million dollars for an "excess" emission that is insignificant compared to the total CO2 loading from other sources who pay no penalty for their emissions may be unfair and excessive.

In 2012, California's GHG emissions were calculated to be 459 million metric tons. The excess released by THUMS is about 0.0001 percent of that!

However, ARB felt the fine was justified. Indeed, James Ryden, ARB's Enforcement Division Chief, said, “It is imperative that industries conduct operations so that emissions remain within allowable limits. These excess emissions will remain in the atmosphere for 3,200 years.”

THUMS is an offshore oil and gas producer, notable for conducting its operations near Long Beach, CA on four, man made islands. The islands and the surface equipment on them were developed so that the oil and gas production operations were not visible to the public, using camouflage, soundproofing, and even waterfalls. Additionally, great pains were taken to ensure environmental protections were implemented to protect wildlife and plant habitat.

THUMS is a subsidiary of Occidental Petroleum Corporation (OXY). The company is very familiar to Bakersfield and Kern County residents, operating the massive Elk Hills oilfield just west of Bakersfield.

OXY recently announced that it will be spinning off its California assets into a new company, California Resources Corporation. The latest ARB action is another example that suggests California's stringent environmental requirements appear to be one of the reasons for the move.

OXY CEO Steve Chazen recently said during a phone call with investors that the new company won’t drill in communities that oppose oil and gas activity or hydraulic fracturing, known as fracking, such as Beverly Hills, which have passed limits on fracking.

“To the extent that towns don’t want us there, we won’t be there,” Chazen said. “Maybe the people in Beverly Hills should park their Rolls Royces and ride bicycles going forward. You can see why I’m not going to be part of the California company.”