California, the seventh-biggest U.S. crude oil producer, has put a near halt on issuing permits for new drilling this year, according to state data.

The state's Geologic Energy Management Division, known as CalGEM, has approved seven new active well permits in 2023. That compares with the more than 200 it had issued by this time last year.

The stalled approvals represent the latest tension between California's bold environmental ambitions and its role as a major oil and gas producer and consumer.

New drilling permits have steadily declined since Gavin Newsom became governor in 2019, but the current rate of approval represents a sudden and dramatic drop.

"It's just fallen off the cliff," Rock Zierman, CEO of the California Independent Petroleum Association (CIPA), said in an interview. The industry has more than 1,400 permit applications for new wells awaiting CalGEM approval, half of which are more than a year old, he said.

In an email, CalGEM attributed the smaller number of approvals to both the broader decline in California oil production and litigation that has paused permitting by Kern County, the center of the state's oil industry.

CalGEM is processing far more approvals to permanently close wells than for any other activity, the agency said.

"We expect this permitting trend to continue as California transitions away from fossil fuels," CalGEM said.

The approved new wells include one for Sentinel Peak Resources in San Luis Obispo County and five for E&B Natural Resources Management in Kern County.

In an apparent concession to the oil and gas industry, approvals to improve or repair established wells are up nearly 50% to 1,650 in the first half of this year, according to an analysis of the CalGEM data by environmental group FracTracker Alliance that was provided to Reuters by the consumer advocacy non-profit Consumer Watchdog.

Reworking existing wells to boost their production cannot replace volumes from new wells that are needed to meet California's energy needs, CIPA's Zierman said.

The governor wants to phase out oil drilling in the state by 2045.

California also passed a law last year banning oil and gas drilling within 3,200 ft of structures including homes, schools and hospitals. But CIPA has blocked implementation of that law by qualifying a referendum to overturn it for the November 2024 ballot.

Nearly half of the wells with rework permits approved this year are within the contested buffer zone.

Consumer Watchdog criticized those approvals as a threat to public health because they extend the lives of low- and non-producing wells, which the group argues would likely have been plugged had the setback law not been paused.

“The state is simply helping the oil industry cut costs by issuing permits to tinker with unproductive wells rather than making them plug and remediate those wells that endanger the public and environment by emitting toxic compounds," said Liza Tucker, a consumer advocate for Consumer Watchdog.

CalGEM said it is required to evaluate permits so long as the law is barred from being implemented.

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