BEAR, Berkeley Economic Advising and Research

ProjectsCalGEM

CalGEM: phasing out well stimulation permits in California oil production

Economic analysis and modeling for the Standardized Regulatory Impact Assessment of CalGEM’s regulations ending new well stimulation permits, including hydraulic fracturing, from 2024. The SRIA names the Berkeley Economic Advising and Research (BEAR) forecasting model.

Maps of wells stimulated since 2014 over population density, in select Southern California counties and in Kern County
Wells stimulated since 2014, over 2010 population density. Figure 4 of the CalGEM SRIA (2023).

The question

What would ending new well stimulation permits cost oil and gas operators and the California economy, and what would it save?

What BEAR found

1,442Fewer wells drilled over ten years, all in Kern County
0.04%Average reduction in real GSP over 2024 to 2032
$53MAnnual reduction in state income tax revenue

First-year direct costs, in forgone production, are $28 million against $20 million in direct benefits from stimulation costs not incurred. Fewer than twelve operators are affected, about five of them active in the last five years, all in Kern County.

Real gross state product falls about $2 billion a year on average over 2024 to 2032, 0.04 percent of baseline, with about 300 fewer new jobs a year. State income tax revenue falls $53 million a year, and state agencies save $11.6 to $12.3 million a year.

Method

The BEAR dynamic CGE model (60 sectors on 2020 IMPLAN data), run over 2024 to 2032 against the Department of Finance’s May 2022 conforming forecast, using CalGEM well stimulation and production records back to 1977.

Public record

How to cite

California Department of Conservation, Geologic Energy Management Division, with Berkeley Economic Advising and Research (2023). Standardized Regulatory Impact Assessment: Well Stimulation Treatment Permitting Phase-Out Regulations.

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