California’s Hidden Oil Reserve Uncovered: A Game-Changer for Energy and Economy

As numerous oil producers and refineries exit California, Patrick McDonald, the CEO of Carbon Energy Corporation, has discovered a more welcoming environment in Ventura County, which he describes as being more supportive of the industry.

Located in Ojai, California—a quaint and artistic community that has recently attracted celebrities seeking a break from Hollywood’s hustle—is also home to some of the state’s oldest oil wells.

“The first well in the Ojai field was drilled in 1867, and we continue to operate there,” McDonald shared with The California Post. “Similarly, the Sespe field saw its first well in 1887, and we remain active in that area as well.”

According to CalMatters, California now imports about 64% of its oil from abroad, a stark contrast to 1982 when only 6% of its oil came from foreign sources.

Despite the state’s abundant oil reserves, stringent environmental regulations have hindered the industry’s growth, prompting many companies to relocate.

Unlike the broader state trend, Ventura County has taken a more collaborative approach, working alongside oil producers to facilitate their success, according to McDonald.

“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.