Wednesday, 24 September, 2025 / Edition 77

It was a rough weekend for my Houston sports teams, as the Astros and the Texans lost crucial games. The Texans started the season with a 0–3 record. The Astros lost three in a row to their rival the Seattle Mariners, greatly reducing their chance of making it to the MLB playoffs. Hopefully, both teams will bounce back soon.

Now, let’s look into a couple of energy newsbytes from the past week.

Shangyou Nie

Editor, Well Read

New California Bill Will Grant 2,000 Drilling Permits Per Year Until 2035

Mark Geistweite/Shutterstock.com

Last week, California passed a law enabling Kern County (near Bakersfield in Southern California) to issue 2,000 drilling permits each year for the next 10 years, with the hope of bringing oil drillers back to the region to help supply local refineries. The Golden State, America's leader in the energy transition, is taking a step back to stop upstream and downstream companies from leaving.

About the new law:

• Kern County is located north of Los Angeles near Bakersfield and other producing oil fields.

• Senate Bill 237 aims to address growing concerns about affordability, primarily the price of gas, and the planned closure of two of the state’s 14 refineries.

• In the meantime, SB 237 introduced tighter requirement on pipelines, making it difficult for offshore drilling in California.

California’s production and gasoline:

• California oil production has been on a steady decline from 1.2 million barrels in 1985 to 260,000 barrels per day in 2025, based on data from the Energy Information Agency.

• In May 2025, Houston-based Saber Offshore Corp. restarted oil production from a platform off the coast of California at 6,000 barrels of oil per day.

• California has some of the highest gasoline retail prices in the country, averaging $4.65 per gallon, $1.45 higher than the national average, according to the WSJ.

On CA refineries:

• California producers could only supply about 25 percent of crude needed to its refineries.

  • The refineries had to rely on imports from the Middle East and South America.

• California has enough refining capacity to meet the state's needs now, but further closures could lead to a shortage and even higher gasoline prices.

• The number of refineries has decreased from 40 in 1983 to 14 in 2024, according to the WSJ.

More context:

• California Resources Corp., the state's biggest oil producer, announced an all-stock $717 million acquisition of Berry Corp. two days after SB 237 passed.

• California also decided in August to delay implementing a profit cap law (SB X1-2) which would give the state the authority to penalize oil companies for making too much profit.

• Last week, California also decided not to replace the $7,500 Federal EV tax credit after it expires in September.

What they’re saying:

• “Kern County knows how to produce energy,” said state Senator Shannon Grove (R-Bakersfield); “We produce 80 percent of California’s oil if allowed, 70 percent of the state’s wind and solar, and over 80 percent of the in-state battery storage capacity. We are the experts. We are not the enemy.”

• “It’s really a truly significant change. The state is signaling a need for California production,” said Francisco Leon, president and CEO for California Resources Corp. during the analyst call when his company announced the Berry acquisition.

• “A year ago, we were kicking the oil companies around, and now we’re trying to put resources together to keep them here,” said Andrew Acosta, a California political consultant.

What to watch: Will more pipeline companies be willing to invest in the state to connect the fields with the refineries?

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Chevron Joins Occidental and Westlawn to Enter Peru for Exploration

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Chevron has signed a farm-in agreement for three offshore blocks off the Pacific coast in Peru. The world’s second-largest oil company will join fellow American companies Occidental Petroleum Corp. and Westlawn. This is Chevron’s latest effort to capture overseas acreage.

About the deal:

• According to its new partner Westlawn, Chevron signed a farm-in agreement to acquire 35 percent for three offshore blocks (Z-61, Z-62, Z-63) in the Trujillo Basin.

  • These three blocks are located roughly 100 kilometers offshore Peru, with water depth between 100 and 2,400 meters.

• Chevron (35 percent) and Westlawn (30 percent) will join Occidental (35 percent), who has previously been the license holder for these blocks.

  • According to Upstream, Occidental will remain the operator.

• Terms of the farm-in were not released, including whether Chevron and Westlawn had to pay for past costs or if they will have to carry Occidental in E&P programs going forward.

• The partners have committed to reprocess and interpret a 3D seismic survey carried out in 2024.

• The three companies will decide whether to enter Phase 3 after the conclusion of the seismic work, estimated to be completed in Q1 2026.

  • Phase 3 requires the companies to drill one exploration well.

About Westlawn:

• Westlawn is a private E&P company, established in 2021 and based in Houston.

• Its subsidiary Westlawn Americas Offshore (aka WAO) is the new license holder in this deal.

  • WAO focuses on the Americas, including the U.S. Gulf of Mexico, Latin America, and the Caribbean.

  • WAO has acquired several E&P assets since 2023, with net production of 20,000 barrels of oil equivalent per day.

  • WAO leadership is made up of industry veterans, including Greg Hebertson (founder, executive vice president, and COO, ex Murphy Oil Corp.), and George Easterly (CFO, ex Apache)

  • Hebertson recently spoke at IMAGE ‘25 at a session entitled, “Global Upstream for the 2030s,” run by WoodMackenzie.

What’s happening in Peru?

• According to the Energy Institute, Peru produced 125,000 barrels of oil per day in 2024, part of a general declining trend over the past five years from 144,000 barrels of oil per day in 2019.

• Peru produced 1.5 billion cubic feet of gas per day in 2024, a historical high for the country. This included production from the Peru LNG project with the onshore Camisea gas fields in the Amazon Basin.

  • Peru LNG is still the only operational LNG project in South America, with 4.45 million tons per annum of capacity.

  • Hunt Oil Co. is the operator (35 percent) for Peru LNG, with partners MidOcean Energy (35 percent), Shell (20 percent), and Marubeni (10 percent).

🚨Trend alert:

• Peru is another new country entry in Chevron’s portfolio, though this time it is entering as a non-operator.

• Chevron has recently accelerated its pursuit of international exploration growth opportunities.

  • Last week, Chevron joined a local company to submit bids for two offshore blocks in Greece.

  • Chevron is reportedly in discussions with authorities in Algeria and Iraq for potential (re)-entry.

• Westlawn is one of a few small independent companies trying to grow its E&P position internationally.

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✉️ To get in touch with Shangyou, send an email to editorial@aapg.org.