Occidental Petroleum Corp. (Oxy) CEO Stephen Chazen last Wednesday said the permitting process to drill in California has been streamlined, and he credited Democratic Gov. Jerry Brown for the turnaround.
Chazen’s positive remarks about California’s permitting were in stark contrast to his complaints last year, and come after Brown surprised some in the industry by firing two top state oil/gas drilling officials for allegedly putting too many roadblocks in the state’s permitting process (see NGI, Nov. 14, 2011).
“The governor is very pro-jobs and industry, and he has been someone who understands that industry adds a fair number of jobs here in California,” Chazen said. “He is very interested in this [industry] and employment here in the state, so we’re pleased with the governor’s help.”
Brown recently announced a package of reforms in the stringent California Environmental Quality Act (CEQA) that he promised will “simplify and expedite” approvals for key job-creating projects. Brown’s action is part of the implementation of two new laws to streamline the CEQA process in the state.
Oxy has received injection permits for the first time in a long time, and the oil company is noticing “a real change in attitude” by the state, said Chazen. “The question is where do you get the permits as opposed to how many you get,” he said. “Based on current trends, I think by mid-year we should have a sizable opportunity and we feel pretty good about [the permitting] at this point.
“Once we get rolling and permits start coming at a more normal rate, the rig count [in California] will pick up. But we still now have to wait until the permits are in hand.”
Chazen said he is confident the company eventually will begin getting the permits for new fields and for wells in existing fields. The permits in existing fields allow Oxy to have a “decent and predictable” drilling program, he said, but there are always going to be “things that aren’t perfect for us. Nevertheless, overall, we’re pretty encouraged right now.”
Oxy plans this year to devote about 20% of its $8.3 billion in capital spending to California, where its rig count is expected to stay stable at 31, indicative of the fact there has been “significant improvement” in the permitting process. “The regulatory agency is responsive and committed to working through the backlog of permits,” Chazen said.
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