Permitting Surges, Company Consolidations, and Refinery Shutdowns Test the Resilience of California’s Oil Supply and Energy Transition.
California’s energy sector is navigating a high-stakes transformation, where historic regulatory reforms, major corporate consolidation, and unprecedented refinery closures are reshaping the state’s future. Senate Bill 237’s approval of up to 20,000 new oil well permits in Kern County, the strategic merger of California Resources Corporation (CRC) and Berry Petroleum, and a dramatic decline in refinery capacity all converge to create new challenges and opportunities for markets, consumers, and policymakers.
Figure 1. TGS Well Data Analytics displaying Kern County’s producing wells and 2025 approved permits (~400 since January 2025), pipelines provided by MAPSearch™.
Permitting Surge and Industry
Consolidation
The passage of SB237 marks a policy reversal in California, granting Kern County officials new authority to speed up drilling approvals with the goal of stabilizing energy supply and curbing price volatility. In parallel, CRC and Berry are joining forces in a $717 million all-stock merger, consolidating more than 17,000 wells and amplifying their regional production scale. Asset integration means more flexibility, deeper reserves, cost efficiencies of scale, and enhanced opportunity to capitalize on the new permitting environment. Figure 2 illustrates the merged company’s concentrated activity across Kern County, strategically positioned for growth as new permits move through approval.
Figure 2. TGS Well Data Analytics displaying current CRC and Berry well activity in Kern County along with their total combined monthly production
Production Growth vs Bottlenecks: The Kern County Dilemma
Despite optimism from merger and permitting supporters, California’s overall oil production has steadily declined for decades. TGS well data show that aggregate production in Kern County (Figure 3) has fallen by 15% over the past decade. While increased drilling under SB237 could temporarily offset these declines, any gains would depend on effectively managing downstream bottlenecks.
Figure 3. TGS Historical production decline trends in Kern County
Refinery Closures Tighten Local Supply
According to the OGJ, the downstream sector faces a capacity crisis: Phillips 66 is closing its 138,700 b/d Los Angeles refinery by late 2025, while Valero plans to shut its 145,000 b/d Benicia plant by mid-2026. California has already lost nearly 20% of refining capacity since 2020 – with more at risk. The Chevron El Segundo refinery fire in October 2025 amplified short-term risks, further straining supply and exposing market vulnerabilities. As refinery operations contract, California’s reliance on imported refined products is rising, often at a significant pricing premium and with logistical complexity.
Policy, Price, and Grid Modernization
Against this backdrop, California’s grid operators and policymakers are making major investments to modernize infrastructure. Reuters recently reported that PG&E is investing $73 billion in grid upgrades over five years, aiming to meet surging demand from data centers, electrification, and climate-driven power needs. These efforts reflect an increasing interdependence of the oil, gas, and electricity sectors, as local production, market bottlenecks, and policy decisions shape the transition toward decarbonization.
Conclusion: Navigating an Uncertain Future
California’s energy market stands at a crossroads, where upstream growth faces downstream constraints, consumers grapple with price uncertainty, and leaders balance climate ambitions with hard market realities. The CRC–Berry merger and permitting reforms may spark short-term gains, but the loss of refinery capacity and fragmented fuel markets present new risks. Continuous monitoring, leveraging advanced analytics like TGS Well Data Analytics and trusted industry sources, will be essential to guide strategic decisions in this rapidly evolving landscape.
To explore TGS available well data or schedule a demo, contact us at WDPSales@tgs.com.