While oil producers and refineries are closing their doors and leaving California, Patrick McDonald, CEO of Carbon Energy Corporation, has found something of a safe haven in Ventura County — an area he said is more industry friendly.
Nestled in Ojai, California — a small, eclectic artist community that has seen a recent influx of A-listers seeking reprieve from the Hollywood lifestyle — is also home to some of the oldest oil wells in the state.
“The first well in Ojai field was drilled in 1867, we still operate that field,” McDonald told The California Post. “The first well in our other field, Sespe, was drilled in 1887 and we still operate that part of the field.”
California imports roughly 64% of its oil from foreign countries, according to an analysis from CalMatters, in 1982 that number was only 6%.
While there is no shortage of black gold in the state, strict environmental regulations have stifled industry growth and forced companies to leave California.
Rather than push oil producers out, McDonald said Ventura County has been more aligned with helping them succeed.
“We find Ventura County to be cooperative,” McDonald told The Post, “through a more transparent permitting process, a board of supervisors that’s amenable to environmentally conscious oil and gas operations.”
While the county might be more willing to work with oil companies, McDonald said there are still major challenges halting growth and preventing new companies from wanting to come to California — specifically the restriction on permitting to drill new wells.
“We currently have 100 additional well locations that are off limits due to Senate Bill 1137, which is the setback from a sensitive receptor,” he told The Post.
The bill creates a 3,200-foot Health Protection Zone around sensitive areas like homes, schools and hospitals — but McDonald said it is effectively being used to “put a halt to all activity.”
If those restrictions were relaxed, McDonald said he could double his oil and gas production — a move that is already underway in Kern County through Senate Bill 237.
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“The state is now allowing Kern County to issue their own permits for drilling, so that has dramatically changed the relatively restrictive policies that were in place at the state level and transferred that authority directly to Kern County, which is far more amenable and understands how the industry needs to work,” McDonald said, adding that he is hopeful the same change could come to Ventura County.
McDonald called the Kern County move a “breakthrough” for the industry, and perhaps a signal of broader change in California that could lead to a revival of oil and gas.
“From time to time we get inquiries from Texas people that say, ‘We think California is going to start being more of a relaxed regulatory environment, and thus we’d like to start learning more about California,’” McDonald told The Post. “So there does seem to be some interest, if we could just take away that specter of regulatory overreach.”
Another hurdle is Assembly Bill 1167, which McDonald said is keeping investors from wanting to take a chance in the Golden State.
The statewide law requires anyone who acquires the rights to operate a well or production facility to post a bond — equal to an amount determined by the State Oil and Gas Supervisor — and sufficient enough to cover all reclamation costs.
“That bonding is just not available in the financial market, so it’s put a real crimp on one’s ability to bring in additional capital or to sell to a more financially capable buyer, who could execute on additional drilling opportunities,” McDonald said, adding that the two laws have “really put a lid on development within the state of California.”
If companies had access to more capital and eased the permitting process on drilling new wells, McDonald said it would result in more domestic production and a chance for one of the highest petroleum-consuming states in the country to rely less on foreign oil.
“Perhaps if the regulatory environment were more conducive to oil and gas producers, we would see some of the larger independents from outside of California start to come in and find it attractive,” he said.
