California has substantial oil reserves, though its relationship with the resource is complex and evolving. Historically, California was one of the world’s most prolific oil-producing regions, leading the nation in production for much of the early 20th century. While production has declined significantly from its peak, the state remains a substantial oil producer with large, proven reserves. The modern industry operates under unique geographic and regulatory constraints that distinguish it from oil production in other U.S. states.
Major Oil Producing Regions
California’s oil reserves are concentrated primarily in two geological areas: the Central Valley and the Los Angeles Basin. The vast majority of current production occurs onshore, centered in the southern portion of the Central Valley. Kern County is the state’s major production hub, accounting for over 70% of California’s oil extraction.
The San Joaquin Valley contains several of the largest oil fields in the contiguous United States, including Midway-Sunset, Kern River, and South Belridge. These “super giant” fields have each produced over a billion barrels of oil. They are defined by substantial, heavy crude oil deposits, which require specialized techniques, such as steam injection, for efficient recovery.
The Los Angeles Basin now hosts a smaller portion of active production, often intermingled with urban development. Fields like Wilmington extend both onshore and beneath the harbor, accessed through directional drilling. The state also holds significant offshore reserves, but new drilling in state waters has been prohibited for decades following the 1969 Santa Barbara oil spill. These coastal reserves remain largely untapped due to long-standing moratoriums on new leases.
Scale of Current Production
California ranks as the eighth-largest crude oil producer among U.S. states, supplying approximately 300,000 barrels of crude oil per day. This output represents a substantial decline from the state’s peak in the 1980s, driven by mature fields and increasing regulatory pressures. Despite this decline, the state holds an estimated 1.716 billion barrels of proven crude oil reserves, accounting for approximately 3% of the total U.S. proved reserves.
The oil extracted is predominantly heavy crude, a dense, viscous variety challenging to transport and process. This heavy crude is uniquely suited for the state’s extensive refining infrastructure, which is the third-largest in the nation by capacity. California’s refineries are specifically configured to process this type of crude, along with similar heavy oil imported from foreign sources. The state’s unique environmental regulations and fuel standards have created an “energy island” that relies heavily on this specialized crude to meet its substantial demand for fuels.
Regulatory Environment
The oil industry in California operates under the nation’s most restrictive regulatory framework. The state government has adopted policies explicitly intended to transition away from fossil fuels, directly impacting the permitting and operation of wells. The California Geologic Energy Management Division (CalGEM) oversees oil, gas, and geothermal operations, including the review and approval of all drilling permits.
State policy has placed significant restrictions on specific extraction methods. Hydraulic fracturing, or “fracking,” has been effectively phased out; CalGEM stopped issuing new permits, and a formal rule was approved in 2024 to permanently ban the practice. The state is also pursuing a long-term phase-out of all oil extraction, with a goal to end it no later than 2045.
This phase-out is supported by mandates, including a permanent ban on new offshore drilling leases in state-controlled waters. Local jurisdictions can impose their own restrictions, and new state rules require significant setback distances for wells from sensitive areas like homes and schools. These actions ensure that new drilling projects face intense scrutiny and are often denied based on climate and public health concerns. The future of oil production in California is one of managed decline, reflecting a tension between its historical role and its commitment to aggressive decarbonization targets.