Los Angeles, CA–Consumer Watchdog and FracTracker Alliance said today that the latest oil and gas data confirms a long-term, irreversible trend. California’s oil production is in terminal decline, and no amount of new permitting will change this regardless of the damage new drilling inflicts on transparency, climate, and public health, the groups said.
This reality undermines the push for new permits via legislative efforts backed by Governor Gavin Newsom. The recently signed Senate Bill 237 (Grayson) green-lights permitting of up to 2,000 new wells annually in Kern County.
“The narrative that regulatory rollbacks will spur a production boom is a fantasy,” said Kyle Ferrar, Western Program Director at FracTracker Alliance. “The data are clear. We are getting less and less return for each new well drilled. The oil industry here is dying, and our focus should be on managing its sunset, not expanding it.”
“The whole premise of SB 237 was to expand oil production, providing supply stability during the energy transition in order to avoid gasoline price volatility and more refinery closures,” said Consumer Advocate Liza Tucker. “Thinking that we will be able to torture lots more oil out of the ground is flawed logic. What we need is a well-crafted energy transition plan, not more oil production infrastructure, and the truth is, we don’t have one that fits today’s reality.”
The third quarter permitting data shows a continuing decline in new drilling permits with only two approved in a 94% plunge over the same quarter last year. Permits for reworking or redrilling existing wells yielding less oil over time ticked up by 19%. Concurrently, the number of permits to plug wells safely fell by 20%, raising concerns about the state’s progress on well remediation. (See Table 1.)
*Table 1.
*CalGEM data analyzed by FracTracker Alliance. For more on permit counts and locations, go to: Newsomwellwatch.com, a website jointly provided by Consumer Watchdog and FrackTracker Alliance.
This permitting data is part of a larger, undeniable story. California’s oil production peaked in the mid-1980s, and the trajectory has been downward ever since. FracTracker analysis of the 2015 to 2019 period, a time when Kern County’s previous drilling ordinance (KOGO) allowed thousands of new permits before being challenged by litigation, shows that oil production continued its steady decline, regardless of increased permitting and drilling. Since 2019, production has continued to fall. (See Table 2.)
*Table 2.
*Times series plot by FracTracker Alliance of annual permit counts and new drilling counts on one y-axis, and annual oil production on the other (2015-2025). The plot shows continuously decreasing production even as the permit counts and new drilling increased 2016-2019. Data obtained from the California Department of Geological Energy Management (CalGEM) and the U.S. Energy Information Agency.
In California, declining oil and gas production and a backlog of aging wells have created significant risks for taxpayers. Many smaller operators, and some portfolios of larger firms, face thinning margins or mounting liabilities. Although the regulator CalGEM has clear authority to issue mandatory plugging and abandonment orders for idle or neglected wells, analysis suggests the tool is under-utilized. The insufficient bonding regime and large number of wells at risk of abandonment mean that taxpayers could still face billions of dollars in eventual cleanup burdens.
“The industry’s terminal decline, combined with the state’s underutilization of existing regulatory tools, makes any new wells permitted and drilled today exceptionally risky for taxpayers,” said Ferrar. “Additionally, every new well drilled under Kern County’s fast-track permitting scheme, regardless of its productivity, will create new pollution in the most-polluted air basin in the country, lead to more methane leaks that worsen the climate crisis, and undermine transparency and public process given the lack of any meaningful opportunity for public notification and input on projects.”
“The economics of drilling oil wells in California have long been based on the avoidance of plugging and abandonment costs,” said Liza Tucker of Consumer Watchdog. “Even above average producing wells can take up to a decade to recoup capital expenditures, with steep decline curves leaving little left for covering reclamation and remediation. Regulators and the AGO should be closely watching any operators that choose to drill new wells given these economic conditions.”
The path forward is clear, the two groups said. The state must use every tool at its disposal to accelerate well plugging and abandon the false promise that new drilling permits will lead to anything but increased environmental liability and a stalled energy transition.
