Drought-Wracked California Allows Oil Companies to Use High-Quality Water. But Regulators’ Error-Strewn Records Make Accurate Accounting Nearly Impossible

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Last month, with California in the grips of a megadrought, Gov. Gavin Newsom announced a plan centered on “the acute need to conserve water” in the face of a drier, hotter future caused by climate change. The plan outlines actions to “transform water management” and calls on California residents to step up and do their part to conserve water. 

Yet the plan does nothing to limit use of California’s dwindling water supplies by one of the primary drivers of climate change: the oil and gas industry.  

An Inside Climate News analysis of data collected by the California Geologic Energy Management Division, or CalGEM, shows high-quality water is being diverted from state domestic and agricultural supplies, predominantly in Kern County, to extract viscous crude from some of the world’s most climate-polluting oilfields. 

The analysis also reveals deep problems with the quality of the data collected by CalGEM that make it very difficult to establish the quantities of water used to produce oil—despite a 2014 law that was supposed to overhaul the industry’s water-use reporting in order to provide greater transparency.

Oil and gas extraction in California uses tens of billions of gallons of water each year. It also generates massive amounts of wastewater, known as “produced water,” which returns to the surface with extracted fuels. This produced water is laced with cancer-causing chemicals added to facilitate oil extraction, harmful petroleum-derived compounds and naturally occurring toxic elements such as arsenic and radium. 

Although most of the water the industry injects into wells to help extract oil is recycled produced water that is used again to pry out more oil, some extraction techniques require high-quality water. Under these circumstances, it can be cheaper to buy clean water from municipal suppliers than it is to treat produced water to remove contaminants.

Extracting heavy crude oil in parts of Kern County requires more water, and disproportionate amounts of high-quality water, than other regions in California because the oil is so viscous and the wells are so old. 

Kern County produces about three-quarters of California’s onshore oil and gas, but wells there account for more than 99.5 percent of this high-quality water injected for fossil fuel extraction across California, according to the Inside Climate News analysis. This water could otherwise go to farms and municipalities that have had to ration their water supplies.

Across the rest of the state, only about one hundredth of one percent of the water used to extract oil and gas came from sources marked as suitable for domestic use or irrigation. But for Kern County over the same time period, the figure was almost 1.3 percent, or more than 1.5 billion gallons. That’s enough water to supply 2,300 households over that time range.

This high-quality water comes from two main sources: Bodies of water at the surface and domestic water systems, which CalGEM defines as primarily intended for residential or commercial use.

Diversion from the State Water Project

Last March, California water officials reduced allocations from the State Water Project, a massive system of dams and aqueducts that ferries rain and snowmelt from the Sierra Nevada mountains to thirsty Southern California, to 5 percent of most water agencies’ requested amounts, citing the driest start to a year in more than a century. 

The industry has touted its role in providing a reliable source of water to farmers in drought-stricken California. But as the Inside Climate News data analysis shows, the industry is also using freshwater that might otherwise have gone to farms.

The vast majority of the surface water injected into wells in Kern County, totaling more than 645 million gallons, was diverted from the State Water Project. Between 2018 and 2021, about two-thirds of this water was used by Berry Petroleum, a Texas-based company that develops conventional oil reserves in California and Utah. Berry Petroleum did not respond to requests for comment. 

The diversion of water from the State Water Project for injection into oil and gas wells in Kern County has been falling in recent years, according to CalGEM’s data, from more than 234 million gallons in 2018 to around 58 million gallons in 2021. But the fact that any of this increasingly scarce resource is still being used for oil extraction points to a dangerous paradox: It makes little sense that a state regarded as a climate leader lets the oil industry use water needed by farms and cities to boost the extraction of the fossil fuels that drive global warming and have left water reservoirs critically depleted. Yet, experts say, limiting the oil industry’s use would require an act of the state Legislature.

To cope with exceptionally dry conditions, California passed emergency water conservation measures in June and threatened residents with mandatory restrictions, in addition to cutting State Water Project allocations that supply 27 million residents and hundreds of thousands of farmland acres. 

“We’re suffering from one of the worst droughts we’ve ever had,” said Brian Gray, a water policy expert at the Public Policy Institute of California. “Why is any State Water Project water going to oil and gas production at this point?”

Thomas Borch, an expert on treating and reusing produced water at Colorado State University, hopes oil companies will have cheaper treatment options available in the future. “But it’s hard to compete with the low cost of freshwater,” he said. “However, that might not matter since we are running out of freshwater.”

Use of Domestic Water Supplies

In total, CalGEM’s records indicate that more than 681 million gallons of high-quality water from domestic supplies were injected into oil and gas wells in Kern County between 2018 and 2021.  But as Inside Climate News dug further into the data and quizzed oil companies about their water use, it became clear that CalGEM’s data is riddled with errors, making it impossible to determine accurately how much high-quality domestic water has been used for fossil fuel extraction.

Sentinel Peak Resources, an operator based in Colorado that has focused on acquiring and developing wells in California, accounted for more than two-thirds of the use of this high-quality water, according to CalGEM’s records. When approached by Inside Climate News, the company disputed the figures, blaming errors in its quarterly reports for a surge in its reported use in 2021. “Upon further investigation, it appears that there are inaccuracies reflected in our reports which overstate our use of freshwater. We will work expeditiously to correct this issue,” a company spokesperson replied. “The 2021 number reported is inaccurate.”

Additional analysis revealed clear discrepancies between the numbers Sentinel submitted in its quarterly reports and those in monthly reports covering the same periods. Indeed, Sentinel’s monthly reports failed to document any use of water from domestic suppliers across all of its wells—making it impossible to reconcile the company’s quarterly and monthly reporting.

Queried about its use of water from domestic systems, Chevron admitted that it had used substantial quantities of water supplied by the West Kern Water District, but had mislabeled this high-quality water as being unsuitable for domestic or irrigation use in its quarterly reports to CalGEM. 

“We are continuing to investigate and will take appropriate corrective action,” said Chevron spokesperson Sean Comey, who blamed software errors for the problem. He noted that the company’s use of this high-quality domestic water in Kern County had decreased, from 369 million gallons in 2018 to around 20 million gallons in 2021. Chevron discontinued the use of this high-quality water for oil extraction in early 2021, Comey added.

Still, adding Chevron’s corrected numbers to CalGEM’s data more than doubled the amount of high-quality water from domestic suppliers used for fossil fuel extraction in Kern County from 2018 to 2021, to a total of more than 1.4 billion gallons. That’s about 4,500 acre feet, in the units favored by policymakers, or enough to supply nearly 2,400 households with water over the same period. 

The problems revealed by the Inside Climate News analysis and reporting reinforce earlier complaints about the quality of CalGEM’s data.

Concerned about freshwater availability, state legislators overhauled oil industry water-use reporting requirements in 2014, during the last devastating California drought, when they passed Senate Bill 1281. The law required companies to provide more details on the sources of water used, which CalGEM made publicly available in quarterly reports. This data was used for the Inside Climate News analysis.

The quarterly reports offered unique insights into the industry’s water use, scientists with the nonpartisan California Council on Science and Technology, or CCST, wrote in a report released last year. But their review of CalGEM’s records flagged “systematic reporting errors,” leading mostly to underreporting of industry water use. Numerous data quality problems, the scientists concluded, “made accurate analysis challenging.”

The CCST report offered “pages upon pages” of recommendations to improve the accuracy of the data and serve the intent of the law, said Laura Feinstein, a lead author of the report and sustainability and resilience policy director for San Francisco Bay Area Planning and Urban Research Association, or SPUR,  a public policy nonprofit. “I don’t think they’ve done a single one.”

Without accurate records, state regulators and public advocates can’t tell whether the oil industry is using excessive amounts of high-quality water that could otherwise go to cities and farms—the reason legislators required expanded reporting in the first place. 

Last fall the nonprofit environmental group FracTracker Alliance analyzed CalGEM data to determine how much water the oil industry was using in drought-stricken California. The results should be “considered a minimum” due to numerous omissions in the data and “very different” amounts recorded in different reports for the same years, the report cautioned.

That study’s author, Kyle Ferrar, western program coordinator for FracTracker Alliance, said it’s “incredibly difficult” to track oil industry water use in California even as competition for scarce water supplies intensifies. “When oil company operators inject water, it is gone forever, removed from the water cycle,” he said.

Inside Climate News asked CalGEM what the agency has done to implement the CCST report’s recommendations to improve the quality of its data, but the agency failed to provide a clear answer.

“CalGEM is committed to continuously improving data collection and analysis. CalGEM relies on sound science, including research in the CCST report, to help inform its work,” said CalGEM public outreach coordinator Christina Jimenez in an emailed statement.

Fran Pavley, a former state senator who wrote the law requiring better accounting of oil industry water use, had hoped for better results.

“It’s important, especially during this extended drought, that every drop of water counts,” said Pavley, who chaired the state senate’s Natural Resources and Water Committee. “I authored S.B. 1281 during the last drought to provide at least transparency to the oil industry’s water usage and wastewater disposal practices.”

California’s most overdrafted aquifers are often in the vicinity of many of the state’s oilfields, which monitoring has shown affect groundwater, Pavley said. Careful monitoring, reporting and oversight by regulators, she said, “are essential.” 

Lingering Arsenic Concerns

California is in the third year of another severe drought, exacerbating historic disparities in access to clean, safe drinking water for communities in Kern County and other parts of the San Joaquin Valley. In Arvin, a small predominantly Latino farmworker town in Kern County, the local water district finally met federal drinking water standards for arsenic contamination by drilling new wells with the help of $20 million in funding from the state. Exposure to arsenic is linked to cancer, skin disorders, heart disease, diabetes, cognitive problems and other serious conditions. 

For years, Arvin’s domestic water supplies had dangerous arsenic levels, likely from natural sources contaminating groundwater. But scientists have also linked arsenic contamination of groundwater to oilfield operations. 

Extracting Kern County’s notoriously viscious crude from aging oilfields requires more and more water to get the same amount of oil. Oil operators statewide produce more than 130 billion gallons of wastewater a year, and their disposal practices have polluted threatened groundwater supplies.

Over the past two and a half years, as deeper wells helped bring safe drinking water to Arvin, oil companies injected nearly 20 million gallons of wastewater into disposal wells in the oilfield the town straddles, according to CalGEM’s online data dashboard. If that wastewater leaks from disposal wells, it could trigger chemical reactions that release arsenic from sediments into groundwater.

Last month, a withering report from California’s state auditor blasted water regulators for delaying efforts to provide clean drinking water to Arvin and other economically strapped Central Valley towns, placing the lives of nearly a million people at risk. More than half of those without safe water—codified in state law as a human right—live in five counties, including Kern. The risks of having contaminated drinking water, and having to bear the costs of buying expensive water, disproportionately affect communities of color.

Estella Escoto has long fought for the right to clean water as president of the Committee for a Better Arvin. She is proud of an early victory in that fight, when nearly a decade ago she helped bring filtered drinking fountains and bottle-filling stations to local schools. But many Arvin residents either haven’t gotten the word that their tap water now meets federal arsenic standards, Escoto said, or remain unconvinced by official assurances that it’s finally safe to drink. 

When Escoto learned from a community organizer that oil companies still use high-quality domestic water supplies elsewhere in Kern County to extract fossil fuels, she was angry. “If we had information about this,” she said, “we would definitely push towards making sure it didn’t happen.”

Kern County Board of Supervisors Chairman Zack Scrivner did not respond to multiple requests to explain why the county allows the oil industry to draw on its coveted supply of freshwater.

Oil companies could reduce their impact on regional water sources with treatments that remove all the contaminants from wastewater. But treatments to produce high-quality water can be expensive, experts say, and point to a simpler solution.

“You have the State Water Project carrying Sierra water right down the center of the valley,” said David Bunn, a former director of the California Department of Conservation, which includes CalGEM. Instead of saddling Central Valley towns with arsenic-laden groundwater people can’t drink, he suggests regulators let towns tap into that clean Sierra water, though the necessary infrastructure is currently lacking. 

Even so, Bunn said, “Access to safe drinking water ought to be a first priority coming out of the state project.”

That’s exactly what Arvin resident Gabriela Ojeda thinks. “They asked us to make sure that we use as little water as possible,” she said through an interpreter. “And they’re using a lot of water to drill. It just doesn’t seem fair.”

An Incoherent Approach to Managing Water 

Without a rapid reduction in fossil fuel emissions, scientists say, California’s droughts will only get worse. So why does the state allow its increasingly scarce water supplies to support oil and gas production? 

The short answer: California does not restrict oil and gas companies’ water use. Rather, the state treats the industry as a “beneficial” water user like any other industrial user that generates economic value per gallon of water (by, for example, creating jobs and contributing state and local revenues).

The Department of Water Resources, which oversees State Water Project allocations, has no jurisdiction over the oil and gas industry’s water use, an agency spokesperson said. And the State Water Resources Control Board regulates water quality, not how much anyone uses. 

California is considered this “big regulatory state,” yet it doesn’t quantify or manage water in a coherent way, said Felicia Marcus, a fellow at Stanford University’s Water in the West program and former chair of the State Water Resources Control Board. 

And no one’s allocating water for a particular use, said Marcus. When it comes to surface water, “you either have a water right or you don’t.”

And regulators’ power to govern those rights took a blow on Monday, when an appeals court ruled that the state water board lacks authority to curtail water use for those with senior rights.

The vast majority of high-quality water used by the California oil industry comes from the West Kern Water District, which relies primarily on groundwater.

But regulators had no authority to regulate groundwater until 2014, when the Sustainable Groundwater Management Act, or SGMA, was enacted.

SGMA, passed during the height of a severe drought alongside the law that expanded oil industry water reporting, requires local agencies to bring long-exploited aquifers into sustainable levels of pumping and replenishment by 2040.

Declining water tables from groundwater pumping left thousands of domestic wells without water at the peak of the last drought, researchers reported in 2020. Those wells were mostly in the southeastern Central Valley, where oil companies also draw on groundwater.

Most well failures happen in economically disadvantaged communities, leaving families of modest means struggling to pay for bottled water when nothing comes out of the tap. 

“It’s an embarrassment that this is happening in California,” said study author Scott Jasechko, a water resources expert at the University of California, Santa Barbara. 

Yet no one really knows how much water is being withdrawn from depleted aquifers, Jasechko said. 

Skirting Environmental Review

In 2015, former Gov. Jerry Brown announced “the most aggressive benchmark enacted by any government in North America,” to reduce carbon emissions to 40 percent of 1990 levels by 2030. 

The same year, Kern County supervisors—who have dismissed local oil producers’ contributions to global warming—voted unanimously to streamline permits for tens of thousands of new oil wells over the same period.

Several groups quickly challenged the county’s 2015 ordinance, including Escoto’s Committee for a Better Arvin, after a potentially explosive gas leak forced eight families to evacuate for nearly nine months. 

“It’s dangerous to have wells in the middle of neighborhoods,” Escoto said, frustrated that the hazards aren’t obvious to regulators. “We’re asking for basic human protection. I don’t understand why that’s so much to ask.”

The county’s environmental review had failed to account for the serious effects expanded drilling would have on water supplies, air quality and farmland, among other issues, the challenge argued. 

The threat of contamination from oil and gas operations in a water-starved state is a major concern for SPUR’s Feinstein, who oversaw the CCST oil industry water use report. Her fears are well-founded. 

Lax oversight of the industry’s waste disposal practices posed widespread risks to groundwater, researchers reported last year in Environmental Science & Technology. In the few cases when monitoring did occur, impacts to groundwater needed for municipal and agricultural supplies were deemed too expensive to clean up. 

Keith Gardiner, a third-generation Kern County almond farmer, was a victim of that lax oversight. 

The trouble started when an oil company began injecting wastewater into an old oil well next to Gardiner’s property, contaminating his irrigation well. “It happens all the time,” he said. 

Gardiner had to stop using his polluted well and drill a much deeper one. He settled with the responsible company, which shut down its disposal well, and his orchard recovered. Gardiner won’t say more, citing a gag order. 

“They’ll tell you that there’s never been a suit that’s been won or lost for water contamination,” he said. “That’s because they settle them all.”

Gardiner later heard about the county’s plan to fast-track permitting with limited environmental review, an effort spearheaded by the oil industry’s major lobbyists, the Western States Petroleum Association and California Independent Petroleum Association.

The county and oil companies were making pulling permits much easier, Gardiner said, “like an over-the-counter kind of deal.”

But the county didn’t plan to offset damage caused by oil operations as required by the California Environmental Quality Act, Gardiner said. So he filed another lawsuit, this time against the county, and soon joined legal forces with Escoto and her allies.

Kevin Slagle, a spokesperson for the Western States Petroleum Association, said he could not comment on an ongoing legal case.

The Committee for a Better Arvin charged the county with failing to account for oil operations’ effects on residents’ health and safety and vulnerable water supplies, among other harms. “We have to make sure these things don’t happen because they’re not happening in a safe way,” Escoto said. “We don’t feel safe.”

County officials projected that industry demand for municipal and industrial water  would reach nearly 4 billion gallons by 2035, a 34 percent increase that would significantly impact regional water supplies. Then they decided against making any effort to mitigate those impacts, calling available methods either unfeasible or unaffordable, even as they conceded that there was “no surplus water” in the region.

In 2020 a court agreed with Escoto and Gardiner, ruling that Kern County violated California environmental law by, among other things, failing to mitigate water impacts. 

Kern County did another review, reapproved its ordinance but then quickly turned on “the permit firehose,” said Kevin Bundy, a partner at Shute, Mihaly & Weinberger. Bundy went back to court on Gardiner’s behalf in a joint case with Escoto’s coalition. The county had to wait until the court determined whether its new review complied with state environmental law, they argued in the appeal.

The court agreed and in June ordered Kern to stop issuing permits until it had come to a decision. That ruling is expected soon.

Board Chairman Scrivner did not respond to requests for comment about the board’s plans.

While local and county politicians were eager to let the oil industry extract more oil in violation of California’s Environmental Quality Act, regulators for the state—which proudly touts its environmental bona fides—did nothing to intervene. 

“This is such a critical moment for addressing both climate change and the public health and community impacts of the fossil fuel industry,” said Bundy. “And it is breathtaking how the industry is doubling down at every level of government to preserve business as usual.”

It’s inspiring to see the people of Arvin stand up against “one of the most powerful industries on earth” and its government allies, Bundy said.

Escoto, though, won’t rest until regulators make sure oil companies’ wastewater stays far away from Arvin’s new drinking water wells. And save high-quality water for the many communities in need.