Gov. Gavin Newsom's regulatory crackdown on California oil production is beginning to take a toll on Kern County's economy.
Bakersfield-based oil producer Aera Energy LLC said Friday it will remove one drilling rig from its earlier-planned lineup of six in 2020. That's a 17 percent reduction the company said will take away 90 direct jobs from half a dozen of Aera's local contractors, including Golden State Drilling.
Aera attributed the reduction to two recent state regulatory changes: extra layers of permitting scrutiny for the well-stimulation technique known as fracking and a temporary ban on high-pressure steam injections. Both technologies are commonly used in western Kern.
"One of those disruptions alone, we could’ve weathered through. But the two of them together just presented some challenges,” Aera spokeswoman Cindy Pollard said.
"This is unfortunately just a very difficult time of the year," she added, "because that means that there are folks here in Kern County that won’t have jobs to come back to after the holidays.”
A receptionist at Golden State Drilling's Fruitvale Avenue headquarters said the company was unable to provide comment Friday.
State officials said it's not clear that the reduction in Aera's 2020 rig count will cost anyone's job. They said there is more than enough local demand for oil rigs, including for well-abandonment services, to provide assignments for anyone displaced by Aera's cutbacks.
They emphasized the regulatory crackdown Newsom began in June is separate from the governor's plan to "manage the decline" of California's oil industry. The fracking- and steaming-related measures announced in November, they asserted, were more about making sure the state's permitting processes are appropriate.
California's secretary for natural resources, Wade Crowfoot, said he and other state officials look forward to working directly with the Kern County Board of Supervisors to strengthen the local economy.
“This includes being very clear about these (regulatory) actions and understanding their perspective on the importance of oil and gas to the local economy," Crowfoot said.
The end of the year is usually when oil producers finalize their drilling plan for the following 12 months. The number of rigs a company expects to use in the year ahead figures prominently into its financial, operating and contracting expectations.
State officials said that, apart from Aera, no local oil producers have told Sacramento regulators the fracking- and steaming-related measures will result in job reductions.
Local oil producer California Resources Corp. said it has no plans to cut back its 2020 rig count as a result of the new measures out of Sacramento.
“CRC does not anticipate changing our rig count based on the Department of Conservation’s recent moratorium on high-pressure cyclic steam wells or its review of pending well stimulation permits,” the Santa Clarita-based company said by email Friday.
Another local oil producer, Bakersfield-based Berry Petroleum Co. LLC, said by email it does not anticipate needing any fracking permits to carry out its 2020 plan, "so no impact from that."
But it added that the moratorium on issuing new, high-pressure steaming permits will force it to shift its focus from drilling in local diatomite formations to drilling in sandstone, at least temporarily.
"If the state does not reinstate a timely review and issuance of new drilling permits, that will definitely impact us," Berry spokesman Todd Crabtree wrote in an email. "We would expect to know more in the coming weeks what the actual impact might be and how we will manage our assets accordingly."
Editor's note: This story has been edited from its initial version, which incorrectly stated that all 90 of the jobs expected to be lost would come only from Golden State Drilling.