CRC pitches data center in Elk Hills oil field

As communities across the U.S. fight new data centers over noise, water contamination, and energy bills, California Resources Corporation is unveiling a different plan: sit an AI-grade data center inside the Elk Hills oil field, more than a mile from the neare

For years. data centers have met resistance wherever they’ve gone—neighbors worried about noise. water contamination. and energy bills. and local communities across the country fighting back. Recent polling found that Democrats and Republicans alike oppose having one in their neighborhood. Now. after politicians spent years courting tech companies. many are vowing to protect their constituents from the next wave of development.

In the past month alone, policymakers in New York, Texas, Pennsylvania, and Utah have proposed limits on the facilities. For AI startups racing to secure more computing power, the question is starting to shift from which projects will be built, to which ones can dodge the backlash.

This week in California’s Central Valley, a project unveiled by California Resources Corporation offers a striking answer. The state’s largest oil company wants to build a 600. 000-square-foot data center in the Elk Hills oil field. about two hours north of Los Angeles. The plan is explicitly designed to sidestep some of the familiar conflicts that follow data centers into farmland and residential areas—especially the diesel generators residents often fear.

California Resources Corporation announced Monday that it aims to position the effort as “responsible development” for the AI buildout. In a statement to Grist. Chris Gould. the company’s chief sustainability officer and the head of its carbon capture venture. said the proposal is meant to support California’s digital infrastructure needs while minimizing impacts on local communities. He pointed to “repurposing an existing industrial site. creating jobs and tax revenue in Kern County. utilizing dedicated on-site power. and employing one of the industry’s most water-efficient cooling systems.”.

The pitch depends on geography. The proposed Golden Valley Technology Hub would sit on 100 acres within an oil field that stretches across tens of thousands of acres. The site would be more than a mile from the nearest homes. The project also faces a strict environmental review, which the company says could take about a year.

California Resources Corporation has already held community meetings with residents of nearby Taft and Buttonwillow. and it has promised financial support for community groups and public infrastructure such as roads. In its permit application. the company included around 150 signatures from nearby residents who support the data center; at least five of the names are affiliated with the local oil industry.

Energy supply is at the center of the plan. Data centers, the company argues, need electricity—and Elk Hills has it. California Resources Corporation says the oil field runs on a 550-megawatt natural gas power plant that has long been used to generate steam for drilling operations. Elk Hills no longer produces as much crude as it once did. so the power plant is operating well below capacity. The proposed data center would be able to run almost exclusively on that excess energy.

Water is another pressure point. California Resources Corporation says the data center would use a closed-loop cooling system that would consume enough water to fill an Olympic swimming pool over the course of 10 years. The company also plans to erect noise barriers around the site.

Even with those safeguards, the idea lands in a politically complicated place. California has seen gasoline demand fall about 15 percent over the last decade. and crude production has fallen by more than half during that time. in part due to strict regulations rolled out by Governor Gavin Newsom. State lawmakers struck a deal last year to stabilize in-state production as part of an effort to avoid gasoline price spikes. but few experts expect production to return to previous levels.

California Resources Corporation is responding to that decline by investing in carbon capture. Executives have said they expect revenue from those projects to become essential as oil demand declines in California. The company has invested billions in carbon capture projects across the state. and it acquired two of its largest competitors—Aera and Berry—over the past two years. Together, it now accounts for nearly two-thirds of California’s production. Last year. a senior executive likened the company to Equinor. the Norwegian state oil company that produces both oil and wind power.

Carbon capture is already part of the foundation for the Elk Hills site. This year. California Resources Corporation launched a first-of-its-kind system that captures CO2 emitted by another oilfield gas plant and stores it in depleted wells. and the company plans to build such a system for the plant that would supply the data center. While the existing system absorbs about 7 percent of the plant’s total emissions. California Resources Corporation says it has storage space to capture several hundred times as much carbon underground.

The company’s argument is that data centers can become a new market for energy—and for oil operators—rather than something that forces them to compete with wind and solar on new territory. In the Permian Basin. for example. data centers can draw on natural gas that might otherwise be burned or vented as a byproduct of drilling. Chevron signed a deal to supply methane to a Microsoft data center in west Texas. and oil service companies Schlumberger and Halliburton assist data center developers with energy and construction.

Gabriel Collins. an expert on energy and water issues who is a research fellow at Rice University’s Center for Energy Studies. said the model depends on where the infrastructure sits. “Where you stand on these things depends on where you sit. ” Collins said. who has studied the potential of Texas’ enormous Permian Basin to support data centers. “If you’re already out in the middle of an area that’s seen heavy industrial activity for a long time. there’s already a precedent. and folks there will probably find it easier to deal with.”.

Collins also pointed to a second dynamic: decline. “In the Permian Basin. it’s a different dynamic. because the oil field and the data centers are gonna compete with each other for power. ” Collins said. “If you have a declining oil field and you had that big captive asset there. then plugging it in to run digital infrastructure instead makes a lot of sense.” The same logic. he said. would apply to Elk Hills. where production has fallen and California Resources Corporation no longer needs as much electricity.

This is where the project becomes more than a siting debate. California Resources Corporation says the data center could create at least 1. 500 union construction jobs and as many as 250 permanent jobs. along with ample tax revenues. Kern County’s oil and gas job base has fallen from around 12. 000 to around 6. 000 since 2015. and oil assets make up around 10 percent of its property tax income. compared to 30 percent a decade ago.

The broader transition is already visible in politics. California Resources Corporation’s previous carbon capture project earned a stamp of approval from Newsom. who is long an opponent of oil. Newsom called it “proof that innovation and ambition are the California way.” Newsom’s office said decisions about the data center should be left to Kern County.

Not everyone agrees that carbon capture and industrial jobs can arrive in the same package. Many climate groups in California oppose California Resources Corporation’s push. Earthjustice has said the carbon storage project would “open the door to a range of new polluting facilities that could be built from scratch.” It also argued that carbon capture could increase emissions by prolonging the life of the Elk Hills oil field or leading to more gas power production. Earthjustice. the Center for Biological Diversity. and a number of other groups sued the county over its approval of the carbon capture project. Neither Earthjustice nor the Center for Biological Diversity responded to a request for comment on the data center.

In the company’s view, tech and oil are already converging. California Resources Corporation signed an agreement last year to capture carbon from a nearby gas power plant owned by a Canadian company. That power plant can produce twice as much electricity as the one at Elk Hills. and could. in theory. support another data center.

For communities wrestling with new data centers—and for politicians weighing new limits—it may be the location that changes everything. The Elk Hills plan is trying to take the fight out of neighborhoods and place it. instead. inside an existing industrial zone. For developers chasing compute capacity. it’s a wager that distance from homes. pre-existing infrastructure. and a different story about energy use could be enough to keep projects moving when others stall.

data centers AI infrastructure oil and gas carbon capture Elk Hills Kern County water-efficient cooling natural gas power plant noise barriers environmental review Rice University Earthjustice