The stock of California Resources Corp., the state’s largest independent oil and gas producer, bounced back somewhat on Wednesday after taking a drubbing one day earlier when Gov. Gavin Newsom imposed new regulations on hydraulic fracking and steam-injected oil drilling in the state.
California Resources, based in Chatsworth, said it does not expect the new rules to have a significant effect on its production, plans and reserves.
The company went on to say that it “is not dependent on any single field, drive mechanism or completion method.”
Shares of the company dropped 27 percent after Newsom’s announcement on Tuesday, going from $8.48 to $6.20. The stock bounced back somewhat on Wednesday, closing up 43 cents or 7 percent to $6.63 on the New York Stock Exchange.
California Resources told the Business Journal in an emailed statement that less than 10 percent of its wells were completed using well stimulation, which is the target of the new regulations and a way to get more oil out of old wells and those with heavy, viscous oil.
Steamfloods operated by the company do not require high-pressure cyclic steam injection either, the company said. Steam injection is a form of well stimulation, using heat.
The regulations are being pursued as part of a mission to “protect public health and safety while safeguarding the environment,” which was outlined in AB 1057, legislation signed by Newsom in October.
According to the initiatives, new permits for fracking will be subject to review by environmental experts and audited by the state Department of Finance in order to review compliance with state law. A moratorium will also be in place prohibiting underground oil-extraction wells from using high-pressure cycling steaming processes. Legislation also prohibits oil and gas activities within close proximity to homes, schools, hospitals and parks, Newsom said.
“These are necessary steps to strengthen oversight of oil and gas extraction as we phase out our dependence on fossil fuels and focus on clean energy sources,” Newsom said in a statement. “This transition cannot happen overnight; it must advance in a deliberate way to protect people, our environment and our economy.”