California News Pulse July 2023

Posted: September 1, 2023

California | July 2023

Field Overview

California, with both onshore and offshore oil production, has been supplying the U.S. with petroleum products since the 19th century. Operations are primarily focused around Kern County, the LA Basin, and the San Joaquin Valley, with the Midway-Sunset oil field in Kern County being the state’s largest.

State Drilling Statistics
Total Rigs in California- 2 (-)
Total Rigs in the United States- 664 (-10)
Total U.S. Rigs 12.4% YTD

State Permitting Data
Permits Approved (10/1/2022 to 4/30/2023) – 3

State Highlights

Only 7 Permits Approved in 2023

According to state data, California, the seventh-largest producer of crude oil in the United States, has almost completely stopped issuing permits for new drilling this year. CalGEM, the state’s division for geologic energy management, has given the go-ahead for seven new active well permits in 2023. In contrast, by this time last year, it had issued more than 200. The stalling approvals mark the most recent conflict between California’s ambitious environmental goals and its position as a significant producer and consumer of oil and gas. Although the number of new drilling licenses has slowly decreased since Gavin Newsom took office as governor in 2019, the current approval rate reflects a sharp and unexpected dip. “It’s just fallen off the cliff,” Rock Zierman, chief executive of the California Independent Petroleum Association (CIPA), said in an interview. According to him, the industry has more than 1,400 permit requests for new wells pending clearance from CalGEM, half of which are older than a year.

SB 1137: The Race

The legislation prohibits the California Geologic Energy Management Division from approving a new oil well within 3,200 feet of a ‘sensitive receptor,’ defined as a residence, education resource, community resource, healthcare facility, dormitory or any building open to the public. The new group, the Campaign for a Safe and Healthy California, plans to oppose a November 2024 ballot initiative dubbed Stop the Energy Shutdown that has received at least $20 million in funding from oil firms. Sentinel Peak Resources California LLC and other oil firms have contributed $4.5 million to the group that seeks to overturn SB1137. Since the secretary of state certified the industry-backed ballot proposal, the law has been put on hold.

“You or a Loved One May be Entitled to Compensation”

Certain attorneys have had significant victories against asbestos and narcotic makers. They are now pursuing oil and gas businesses. On behalf of local governments seeking compensation for the effects of climate change, four legal firms that focus on corporate malfeasance have launched cases against oil and gas giants in the last nine months. The papers show that new parts of the legal community are paying attention to and investing in climate liability litigation, which was previously primarily the province of environmental firms and government lawyers. “Climate litigation is increasingly seen as a commercially viable practice as legal pathways clear and the evidentiary base continues to grow,” said Benjamin Franta, a senior research fellow and the first director of the Climate Litigation Lab at the University of Oxford. Usually it was just California attorneys involved, but firms have been showing interest since the Multnomah County case in Oregon as it targets a specific “anomalous” event.