California News Pulse May 2021

Posted: June 15, 2021

California | May 2021

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 (End of May)
Total Rigs in California- 6
Total Rigs in United States- 457
Total U.S. Rigs up 52% YTD

State Highlights

$200 Million Approved for Well Remediation

In Mid-May, California Governor Gavin Newsom earmarked $200 million for remediating idle wells across the state. Part of the administration’s May budget revisions, the money aims to permanently plug wells that are at risk of leaking, including a number of orphan wells that have been long neglected. Many of these wells are located near low-income residential areas, leading environmental justice advocates to rejoice. Veronica Wilson, California organizer at Labor Network for Sustainability said, “All displaced fossil fuel workers and communities disproportionately impacted by pollution must be the first people who get access to these good jobs.” From an industry perspective, Kevin Slagle of the Western States Petroleum Association trade group said that the industry sees the $200 million as a positive addition to the budget and supports well remediation work. Even so, he doesn’t think that this is the first step in a “just transition” as some environmentalists would call it.

Article Link

Gas Prices $1 Higher in California and Climbing

While the national average for gas prices sits just under $3, California’s average topped out at $4.20 over Memorial Day weekend. While there are many reasons for this price hike, one factor driving a low supply is California’s requirement for gas stations to switch to a “summer blend” to cut down on seasonal smog. The transition combined with increased economic activity and travel is putting pressure on that price. Another shortage to mention is that of tanker truck drivers. It is estimated that 20%-25% of tanker trucks are parked because no one is available to drive them. Worst case scenario is a resulting shortage of gas that again triggers panic buying, which will only push the price higher and higher. Additionally, a ballot measure in 2018 was voted down that approved more future gas tax increases without requiring voter approval. In a state with an already threatened electricity sector, a gas price hike would be devastating to the local economy.

Article Link

Rig Count

California Oil Production

California Gas Production

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