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This file photo shows pumping units at work in Kern County.

This file photo shows pumping units at work in Kern County.

Kern County oil producers that would otherwise be drilling at a time of historically high oil prices are instead making do with existing wells lately because of a permitting slowdown accompanied by the industry's tighter focus on controlling costs.

Drilling activity has surged in other states along with recent barrel prices, but in California, it has lagged and even declined since an appellate judge paused county government's oil-permitting system last fall.

Oil field permits are being approved, though not quickly enough for an industry frustrated with what it sees as a reprioritization of regulatory reviews. Some procedures that were common a few years ago have been taken off the table altogether.

The situation has contributed to what was until recently a buyer's market for local oil property. The Newsom administration's anti-oil drive was one factor, but so were financial losses from plummeting demand during the early part of the pandemic.

Also in play is a new approach to oil field management that took hold after the 2014 oil crash. More than they used to, industry players tend to favor value over tapping new reservoirs, if only to attract skittish investors.

Despite prices hovering around $100 per barrel recently, midsize local oil producer Berry Corp. told analysts during an earnings conference Wednesday it plans to limit drilling and well workovers this year, doing only enough to make up for declining output. Keeping production flat is the goal.

"If we want to add growth, we can do it in the second half of the year," said Cary Baetz, executive vice president and chief financial officer at Dallas-based Berry. "But at this point in time, the plan right now is maintenance, holding maintenance, and returning capital and showing that we have the discipline and the industry itself has the discipline to, again, attract investors back into the space."

A shortage of drilling and other permits remains a big concern, however. An analysis by the California Independent Petroleum Association concluded the state's average review time for a new well application has lengthened during the past three years.

As of Feb. 11, it said, 17 of the 1,156 drilling permit applications pending before CalGEM, the California Geologic Energy Management Division, dated back to 2018. It reported 9 percent of them were filed in 2019 and 18 percent were from 2020.

CIPA CEO Rock Zierman said things seem to move more quickly in Sacramento for well plugging and abandonment work. The trade group's analysis found that of the 4,311 applications filed for such work in 2021, three-quarters were approved the same year.

"They do find the time somehow to give that permit," Zierman said.

CalGEM, the state's primary oil regulatory agency, defended its record in an email saying it issued 3,437 permits between August and January, and 76 of them were for new drilling and well work such as reworking, sidetracking and deepening.

It said permitting has come along more slowly for oilfield work in Kern because of last fall's court ruling that halted the resumption of application approvals by county government. CalGEM affirmed it continues to issue oil permits and has begun taking on the role of lead permitting agency in the county's place.

Even so, CIPA's data says only nine permits have been issued for new drilling since October.

Permitting concerns came up Thursday during an earnings call hosted by California Resources Corp., a local oil producer based in Santa Clarita.

President and CEO Mark A. "Mac" McFarland and General Counsel Michael L. Preston tried to reassure analysts about last fall's county permitting setback, saying the company has permits to do new drilling this year and that there remains flexibility to cover any need for additional wells by moving around rigs.

They said the company is hopeful county government will soon be allowed to return to its system of over-the-counter permitting and added CRC has not been affected by the Newsom administration's bans on cyclic steaming and the well completion procedure known as fracking, both of which the industry has challenged in court.

Local oil producer David Hartley, who used to focus on exploring for new oil reservoirs, said he has instead focused lately on buying up production in the form of active oil fields in Fresno, Kern and Tulare counties.

Prices were favorable through much of the pandemic, Hartley said, because of the high number of willing sellers. More recently, prices have gone up along with oil prices, he added, but the number of buyers remains relatively small.

Hartley characterized recent sellers as "a mixture of people who had been in the business a long time and it was time for them to sell anyway."

"For some people," he added, "they were just tired of the fight" against the Newsom administration's moves against the industry.

Bob Devine, a Nevada-based marketer of oil produced in Kern, said he sees less investment flowing to oil fields in the county.

"Lot of people (are) trying to bail out," he said. "They've had enough."

Taft-based TRC Operating Co. Inc. reported having received permits recently for work such as well recompletions and targeting new production zones, both of which can quicken production.

But Secretary-Treasurer Charlie Comfort said the review process takes longer than it used to and the company still can't get permission to drill.

"We'd like to be able to pair that up with new wells, you know?" Comfort said.

Oil industry drilling rig counts document a recent slowdown in California at a time when such activity has increased elsewhere. They also show, along with numbers from other sources, how much things have changed since oil prices last topped $100 per barrel in mid-2014.

Oil field service company Baker Hughes reported the number of drilling rigs active nationwide dropped by three-quarters in the two years after 2014, when supply flooded the market. But since mid-2020, there has been a steady rise from 200 to more than 500.

In California, the crash was steeper — a drop of as much as 91 percent from 2014 to 2016 to as few as four active rigs. After mid-2020, the number rose from four to as high as 10, but since November it has remained at seven, according to Baker Hughes.

Another view comes California Employment Development Department figures showing oil and gas extraction in Kern County employed 54 percent fewer people in the second quarter of 2021 than it did seven years earlier, when the category had 3,219 workers. There were also, at 37, 31 percent fewer companies doing the work in early 2021.

EDD data from that period also points to a 36 percent drop in the number of people working in local oil and gas drilling, and a 52 percent decline in industry support workers. Reported totals in those two categories were 1,184 and 3,062, respectively in the second quarter of last year.

California's reliance on foreign oil has increased during that same time, but not vastly.

According to the California Energy Commission, the share of imported oil refined in California, not including that which came from Alaska, went from 51.6 percent in 2014 to 58.4 percent in 2019.

State regulators responding to a federal ultimatum have indicated they might not be able to come into full compliance with oilfield injection …

Positive Cases Among Kern Residents: 274,041

Recovered and Presumed Recovered Residents: 263,893

Percentage of all cases that are unvaccinated: 72.51

Percentage of all hospitalizations that are unvaccinated: 83.34

Source: Kern County Public Health Services Department

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