Converting L.A. County’s numerous oil wells into CRE projects comes with risks and potential rewards
By Nick Trombola, published on Nov. 11, 2025, in the Commercial Observer
Southern California’s commercial real estate industry doesn’t want to drink each other’s proverbial milkshakes — they want to build on top of them. Yet redeveloping land used for oil extraction is potentially lucrative and risky in similar measures.
Before the film industry was born, and before aerospace made landfall, L.A. was an oil town — and how. What geologists call the L.A. Basin contains 68 named oil fields, each with a cadre of wells that have been dug by the thousands since the underground seas of black gold were discovered in Southern California in the early 1890s. At its peak, three decades later, the region produced roughly 25 percent of the global oil supply, and oil had surpassed agriculture as the Golden State’s largest industry.
Both the City of L.A. and L.A. County plan to reintroduce separate ordinances early next year to phase out oil drilling (both having repealed previously enacted phase-outs due to new laws passed by the state), and many of L.A. County’s roughly 20,000 active, idle, and abandoned wells have already ceased operation. (“Abandoned” is a technical term in the energy trade, implying that an asset was permanently taken out of service. Each well can cost between $50,000 to $3 million to properly abandon, according to Joe Derhake, CEO of engineering and environmental consulting firm Partner Engineering and Science.
In this latest Commercial Observer article, Joe Derhake, CEO of Partner Engineering and Science, joins the discussion on the risks and rewards of converting L.A. County’s numerous decommissioned oil wells.
