Oil giants sell thousands of California wells, raising worries about future liability
As the price of oil continues to fall, oil industry companies have become more dependent on California’s shale deposits. But with their continued involvement, experts say the potential for lawsuits lies ahead.
Now a series of lawsuits has arisen against Chevron, the second-largest U.S. oil company, which recently acquired a controlling stake in California-based company Valero Energy Corp.
Two dozen oil and gas companies that operate in California have filed suits alleging that after acquiring Valero, Chevron has been reaping billions of dollars in profit by selling wells that would not have been produced without the oil giant’s help.
The plaintiffs include the largest oil and gas companies in the state — Anadarko Petroleum and Chesapeake Energy.
Chevron’s sale of natural gas assets to Mariner Energy in 2015 also is part of a flurry of lawsuits, filed in Texas and three of California’s federal courts, that seek claims for damages from the merger. Those lawsuits, brought by an array of oil and gas companies in the state, contend Chevron reaped billions of dollars from its investments in Mariner through the sale of Valero’s oil and gas assets.
Some of the plaintiffs in the suits argue that the merger amounted to “fraudulent conveyances,” under Texas’s Uniform Fraudulent Transfer Act.
The plaintiffs and some lawyers say there’s no way to tell whether the merger made Valero any more profitable.
Anadarko, which operates oil and gas fields in the Bakken shale formation in North Dakota, one of the largest formations of oil and gas in the U.S., said its lawsuit alleges that the oil giant has engaged in “fraudulent and self-dealing” by acquiring Valero’s oil and gas assets in California.
“The oil industry now operates as an oligarchy where oil, gas and related industries like pipeline and transport operators, chemical producers, and refiners enjoy enormous, unearned, and highly speculative financial rewards,” the company said in a statement.
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