2.19.13 - California - FEATURED

Will oil and gas produce a more golden future for California?

The Golden State might be looking a little more golden. That’s the gist of a piece in the most recent issue of The Economist about California’s plans to deal with its huge bounty of shale oil. According to the U.S. Energy Information Administration, California’s Monterey/Santos shale play might hold an astounding 15.4 billion barrels of oil.

How much is that? Enough to meet California’s current level of petroleum consumption for 44 years.

It’s also more than four times the technically recoverable resources of the Bakken Shale in North Dakota or the Eagle Ford Shale in Texas, two massive formations that, in combination with the Barnett and Marcellus Shales, are already changing the U.S. energy equation. The United States is now on track to becoming something few would have predicted just a few years ago – a major energy exporter.

The real question is: Will California join in this energy bonanza, or will it remain aloof despite the tremendous potential for new job creation and badly needed government revenues?

Signs are that Golden State leaders recognize the potential economic benefits and additional tax revenue that could accrue from allowing increased oil and gas production to occur in a responsible manner. Not long after taking office, Governor Jerry Brown felt compelled to remove two state officials who had been rejecting the vast majority of applications for drilling permits in California. He replaced them with regulators not instinctively hostile to oil and gas production.

It is easy to see why Governor Brown acted. The Los Angeles County Economic Development Corporation reported that the state’s permitting delays were holding up $1 billion in capital investment every year, while preventing the positive economic impacts that investment would bring.

More recently, a study of the 1,200-acre Inglewood oil field in Los Angeles – the largest urban oil field in the United States – found that hydraulic fracturing operations could be conducted safely and would not harm the environment.

That is surely good news as state officials prepare rules to govern future unconventional oil and gas production from hydraulic fracturing. An initial draft suggests a desire by California officials to allow safe, responsible energy development from unconventional oil and gas sources like shale, rather than using regulatory processes to stifle such development. The rules won’t be finalized until later this year.

Energy expert Mark Mills noted recently in The Wall Street Journal that opening up the Monterey Shale field to full-scale production could provide overall economic benefits to the state of $1 trillion.

He added, “One can only imagine the impact on California’s education system, social programs, infrastructure, and even energy-tech R&D. Moreover, with that kind of revenue, Sacramento tax collections could wipe out debt and deficits.”

Let’s hope California policymakers imagine it as well.


5 Comments

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  1. Bruce Fouraker says:

    Your article expresses that California should open up its lands production. The outline makes an excellent case for them to do so. I hope the government officials there come to their senses and start exploration and production at the earliest posible moment. Unfortunately with California being what it is, I will not hold my breath.

  2. Juli Viel says:

    80 percent of the Artic Ice has melted. The jet stream has slowed, the earth warmed and conditions for more droughts and more severe storms. Ken have you even read the National Climate Assessment 2013 found on globalchange.gov? YOU just might want to take a look at it. The FUTURE of this earth WILL BE IMPORTANT. Do you even have kids or grandkids?

  3. Bill Jones says:

    Juli Viel, do you realize how much fossil fuel YOU just used to post this? How about the energy it takes to just READ it on your monitor? Is your home heated as you write this, and do you realize your comfort is provided by fossil fuels? 95% of what you use daily is produced by oil companies…even the plastic on your keyboard and the mucrochips in your computer. Or are you wearing animal skins in a teepee living in the woods doing this with smoke signals? Grow up.

    • Mark Ayres says:

      It is not infantile to worry about Global Warming. I do think that we have to accept the fact that mankind will access the very concentrated stores of carbon that were formed in previous eons from the abundant solar energy in those times. Pointing out that it enhances Global Warming will not stop it. We have to look into ways to mitigate the extra CO2. Maybe large scale efforts to pull the CO2 out of the atmosphere and sequester it.

  4. Roger Ware says:

    the government should open all oil production in the USA and flud the market here in the USA.It is unbelievable to me . that we ship our oil to other county and do not take care of our self .

  5. Bruce Fouraker says:

    Your article expresses that California should open up its lands production. The outline makes an excellent case for them to do so. I hope the government officials there come to their senses and start exploration and production at the earliest posible moment. Unfortunately with California being what it is, I will not hold my breath.

  6. Juli Viel says:

    80 percent of the Artic Ice has melted. The jet stream has slowed, the earth warmed and conditions for more droughts and more severe storms. Ken have you even read the National Climate Assessment 2013 found on globalchange.gov? YOU just might want to take a look at it. The FUTURE of this earth WILL BE IMPORTANT. Do you even have kids or grandkids?

  7. Bill Jones says:

    Juli Viel, do you realize how much fossil fuel YOU just used to post this? How about the energy it takes to just READ it on your monitor? Is your home heated as you write this, and do you realize your comfort is provided by fossil fuels? 95% of what you use daily is produced by oil companies…even the plastic on your keyboard and the mucrochips in your computer. Or are you wearing animal skins in a teepee living in the woods doing this with smoke signals? Grow up.

    • Mark Ayres says:

      It is not infantile to worry about Global Warming. I do think that we have to accept the fact that mankind will access the very concentrated stores of carbon that were formed in previous eons from the abundant solar energy in those times. Pointing out that it enhances Global Warming will not stop it. We have to look into ways to mitigate the extra CO2. Maybe large scale efforts to pull the CO2 out of the atmosphere and sequester it.