California: Sitting atop black gold, forgoing for the green?

posted at 7:51 pm on February 4, 2013 by Erika Johnsen

While touting his ostensible “all of the above” energy plan and working the campaign trail not so very long ago, President Obama would justify his many expensive green-energy plans by repeatedly saying something along the lines of, “America consumes 20 percent of the world’s oil, but only has two percent of its reserves” — which is about as bogus a statistic as it gets. America only having two percent of the world’s oil relies on measures of its proven reserves, i.e., the amount of oil that has both been discovered and is technologically and economically feasible to extract, remaining static.

New technology means that oil deposits the world over are suddenly a lot more available for cost-effective human productivity, and while certain states have taken advantage of the effectively growing oil-and-gas abundance — North Dakota has been raking it in by tapping into the Bakken shale formation — California is sittin’ pretty atop a formation four times the size of that one. The NYT reports:

These wells are tapping crude directly from what is called the Monterey Shale, which could represent the future of California’s oil industry — and a potential arena for conflict between drillers and the state’s powerful environmental interests. …

Comprising two-thirds of the United States’s total estimated shale oil reserves and covering 1,750 square miles from Southern to Central California, the Monterey Shale could turn California into the nation’s top oil-producing state and yield the kind of riches that far smaller shale oil deposits have showered on North Dakota and Texas.

For decades, oilmen have been unable to extricate the Monterey Shale’s crude because of its complex geological formation, which makes extraction quite expensive. But as the oil industry’s technological advances succeed in unlocking oil from increasingly difficult locations, there is heady talk that California could be in store for a new oil boom.

Economic growth, private-sector job-and-wealth creation, more tax revenue, prosperity that can help lift up California’s poorer populace without government intervention? You know what that means — enter the environmental-lobby hissy fit.

The Monterey Shale has also galvanized California’s powerful environmental groups. They are pressing the state to strictly regulate hydraulic fracturing, or fracking, the drilling technique that has fueled the shale oil and gas boom elsewhere but has drawn opposition from many environmentalists. In December, the State Department of Conservation released a draft of fracking rules, the first step in a yearlong process to establish regulations. …

Though oil companies have engaged in fracking in California for decades, the process was only loosely monitored by state regulators. …

Environmental groups, including the Sierra Club and the Center for Biological Diversity, are suing the Bureau of Land Management and the Department of Conservation to prevent the opening up of further land to oil exploration and to enforce stricter environmental practices.

California remains the United States’ fourth-largest oil-producing state, although production has been declining — but California’s green groups are also some of the most powerful and zealous in the land. With the state currently under the governorship of a liberal supermajority, I don’t know that the traditional energy interests should be all that hopeful, especially since Gov. Brown’s “budget surplus” plan has lulled them into a false sense of security — can they really afford to hold out forever, what with all of their highly ambitious and expensive green-energy programs that need financing?

A cursory glance at Governor Jerry Brown’s new budget could make you believe that California’s days of fiscal gloom are over as he champions a balanced budget and newfound “fiscal restraint.”

California had been floating in debt. Then Brown persuaded voters in November to increase sales and income taxes. Now he releases a budget that, as Brown said at a news conference last week, advances a progressive agenda but does so based on available dollars.

Is California on to something? Is Brown’s formula — a combination of government idealism, tax increases and tough- minded budget choices — the answer for the nation, as well?

As tempting as it might be to buy this story line, the answer is no. In reality, the Brown approach is the latest in a series of “kick the can down the road” budgets that ignore the buildup of debts. It rewards public-employee unions with pay and benefit increases — while shielding them from desperately needed pension reforms — and ignores deep problems within the state’s economy.


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Yes indeedy

Idiots

Not one more dime to that bloody state…. cripe

cmsinaz on February 4, 2013 at 8:00 PM

Not one more dime to that bloody state…. cripe

cmsinaz on February 4, 2013 at 8:00 PM

The Beverly Hillbillies would be better to stay in Texas..

Electrongod on February 4, 2013 at 8:02 PM

Electrongod on February 4, 2013 at 8:02 PM

True. Amazing how a bunch of Libs can screw up such a beautiful state.

KCB on February 4, 2013 at 8:05 PM

I’ve paid attention to California for a while. My brother in law likes to tout how great the state is.

My conclusion (other than what they did with Gray Davis*), is take what California does…and do the opposite.

*- If they hadn’t have so stupid as to elect him in the first place, they wouldn’t have had to recall him.

cozmo on February 4, 2013 at 8:06 PM

Jobs, freedom, prosperity, all foreign words to liberals and environmental wackos

sadsushi on February 4, 2013 at 8:07 PM

California’s “green groups” are just communist fronts – their goal is to control the state by driving the middle class out. Once the middle class is gone they will start kicking the Mexicans out…..
That is where they will fail. Mexico will take back California in 30 years or so…..
Along with Arizona and New Mexico – Texas will be a different fight all together…..

redguy on February 4, 2013 at 8:07 PM

California’s “green groups” are just communist fronts – their goal is to control the state by driving the middle class out. Once the middle class is gone they will start kicking the Mexicans out…..
That is where they will fail. Mexico will take back California in 30 years or so…..
Along with Arizona and New Mexico – Texas will be a different fight all together…..

redguy on February 4, 2013 at 8:07 PM

coo coo

Nessuno on February 4, 2013 at 8:11 PM

CA doesn’t even need it. Every lefty tool I know has been vomiting the CA balanced its budget! detritus

Slade73 on February 4, 2013 at 8:11 PM

We’ll make fuel from corn, sagebrush, algae and mushrooms and God knows what else if we could.. but we won’t take it from the oil that lies right beneath our feet.
Liberals aren’t just liberal.. they are mentally ill. We are being lead around by people with mental illness.

And quite frankly, it’s not libs vs conservatives. It’s Marxists and the insane verses Americans.

JellyToast on February 4, 2013 at 8:13 PM

Kalifornia is going to show the rest of the nation WHAT NOT TO DO.

We import 1/3 of our electricity. Just wait until those other states decide they NEED what they generate.

To see the future of the rest of the state, just look at Los Angles today.

GarandFan on February 4, 2013 at 8:16 PM

…if you can’t smoke it…it can’t be any good!

KOOLAID2 on February 4, 2013 at 8:21 PM

I said this a few months ago. States will see an uptick in revenue because a lot of people especially the wealthy who make up a sizable portion of CA’s budget utilized an income recognition strategy the end of last year to avoid higher taxes this year and beyond The problem is CA will project future revenues off of this anomaly.

Wigglesworth on February 4, 2013 at 8:24 PM

La Raza, once it establishes Azlan and kicks the gringos out will be so thankful for the oil to make Mexico strong again.

Bulletchaser on February 4, 2013 at 8:25 PM

Hispanics will overtake the white population of Cali this year.Good luck with that.

docflash on February 4, 2013 at 8:28 PM

Cut them off from energy not derived from in state. Make them survive on green energy alone. People don’t reject Liberalism until forced to live it.

Charlemagne on February 4, 2013 at 8:32 PM

So. Im sitting on top of two-thirds of the United States’s total estimated shale oil reserves….

Maybe I’ll stick around a spell. See what happens.

MichaelGabriel on February 4, 2013 at 8:32 PM

Since California is so environmentally minded, I think that all water, oil and gas pipelines entering the state should be cut off, just for a start. Then they should be no longer be able to “import” electricity from out the state.

SC.Charlie on February 4, 2013 at 8:33 PM

California: Sitting atop black gold, forgoing for the green?

Yes, and next these voodoo environmentalists will want the rest of us taxpayers to bail them out.

No way.

CA must be made to go bankrupt and start all over again.

petefrt on February 4, 2013 at 8:46 PM

Where are the unions in all of this? They have to have more money than the greenies.

GrrandpaCaligula on February 4, 2013 at 8:59 PM

Hey EG

cmsinaz on February 4, 2013 at 9:03 PM

The Monterey Shale has also galvanized California’s powerful environmental groups.

Religion is a powerful thing.

Hispanics will overtake the white population of Cali this year.Good luck with that.

docflash on February 4, 2013 at 8:28 PM

There might be a opportunity here. While a lot of republicans and conservatives freak out over the Hispanics, I see an opportunity. Why? Hispanics are not really environmentalist. Green folks are usually white and come from wealthy families. They are Hollywood! They are in SF bath houses! I actually hope Brown does not let any fossil fuel development occur at all. I hope he sides with the “green” folk.

Conservatives have to understand the Obama coalition is a divided and rather weak one. They are only held together by fear and because Republicans have yet to figure out how to exploit those divisions. Hispanics are not going to be led around by the nose by rich white progressives and African-American social activist for much longer. At the street (including gangs, ethnic conflicts) and local political level the conflict is already underway it has just not bubbled up to the state and national level yet. Hispanics will be very supportive and open to fossil fuel production. That means jobs, money and political power for them. That is a powerful message the GOP should start using (in 2014 ad 2016)instead of just giving up on a group. That message along with other messages can be used to drive a wedge between the old school progressives who run California and Hispanics.

People are motivated by self interest. It is not in Hispanics (and Asians for that matter) best interest to gain political power over a state that will be bankrupted and ruined by the time they get it by a bunch of goof ball tree huggers. The modern environmentalist movement is not in their best interest.

The quote from Sun Tzu is most useful in this case (but has been said by almost every great strategist throughout history, divide and conquer):

If your enemy is secure at all points, be prepared for him. If he is in superior strength, evade him. If your opponent is temperamental, seek to irritate him. Pretend to be weak, that he may grow arrogant. If he is taking his ease, give him no rest. If his forces are united, separate them. If sovereign and subject are in accord, put division between them. Attack him where he is unprepared, appear where you are not expected.

William Eaton on February 4, 2013 at 9:24 PM

The uber-left enviro-mentalists will never let the shale/oil get harvested…

They’ll let the (my) state go bankrupt and burn first…

Khun Joe on February 4, 2013 at 9:25 PM

because Republicans have yet to figure out how to exploit those divisions.

William Eaton on February 4, 2013 at 9:24 PM

funny line. Left/media have been pulling Rs chain for so long Rs don’t
know any other way. Rs really believe the left-wing narrative about them

r keller on February 4, 2013 at 10:07 PM

because Republicans have yet to figure out how to exploit those divisions.

William Eaton on February 4, 2013 at 9:24 PM

Republicans have yet to figure out much of anything, period.

MelonCollie on February 4, 2013 at 10:17 PM

Back as late as the early 1960′s – pre-moonbeam and tree humpers – southern California used to be dotted with oil derricks along the highways.

A few pics here, courtesy of Shorpy.

locomotivebreath1901 on February 4, 2013 at 10:21 PM

A couple of facts here concerning the Ca oil industry.
1 The Monterey shale is significantly different geologically than the other onshore US resource plays. The real value of Ca oil production exists offshore, and that will be even a more difficult proposition than the current Hell NO attitude from the libertards that infect the state.
2. The onshore production is hampered by increasing regulations that will restrict most drilling operations and add years to projected production schedules.
3. The largest US oil spill EVER occurred near Taft Ca that produced a lake of oil that was 10x the total amount of oil spilled from Macondo, in 1910. That area has been reclaimed and is currently under agricultural management.
4. Ca has some very large refineries, artifacts of a past generation that have not been shutdown by the green nazis. Their source of oil is from Alaska, brought into the state by tankers that use near ancient offshore (former) production platforms that are approaching disrepair status to access the old pipelines that were installed in the 50s and 60s. This is going to become dangerous, and I would not want any of the responsibility for this process

We have much better potential oil supplies than Monterey shale. Fracing it is not the optimum response.

gonnjos on February 4, 2013 at 11:10 PM

The Beverly Hillbillies would be better to stay in Texas..

Electrongod on February 4, 2013 at 8:02 PM

I thought they were from Tennessee.

AshleyTKing on February 4, 2013 at 11:40 PM

Some think that they have an idea, but here goes.

1. I come to HotAir infrequently these days because the articles are rather clueless based on herd thinking rather than knowledge and the commenters are not any better.

2. The Monterey Shale Formation underlies several of the largest oil fields discovered in the history of the U.S.

3. The type of oil is very heavy crude about 10 API gravity, as heavy as any produced in Venezuela or Canada. Like black was shoe polish and room temperature

4. California’s refineries are not from a bygone era, but modern efficient very complex refineries easily capable of refining heavy crude (that produced in CA is already heavy)

5. California USED TO use a lot of Alaskan crude blended with local very heavy crude, but relies on imported crude these days to blend with local crude.

6. Kinder Morgan’s proposed pipeline from Alberta to the Pacific Coast is to sent over 75% to CA via ship rather than China like the ignorant believe. It’s a natural fit for refineries already designed and configured to handle very heavy and heavy crude oils.

7. The stage has already been set by Gov. Brown http://stevemaley.com/2012/12/02/name-the-oil-friendly-governor-rsrh/ and it’s OIL FRIENDLY.

8. The two main players already are Occidental and Venoco. Venoco’s owner bundled for Obama.

9. There are still wells being drilled and producing off the coast of California. It’s that they are in state territory NOT federal. Directional drilling was used a lot in CA when it began. Most of those wells alongside PCH in Huntington Beach reach way offshore.

10 This crude will be different that other TIGHT shale crude oils. It is very heavy while the others are all light. The infrastructure of pipelines already exists so that all the crude can go the Bay Area or the Los Angeles Area which is where all of the refineries are in CA. Third largest refining state in the U.S.

11. The FRAC will be rather simple here in the high silica formation, just a hydrofluoric acid mix is all and not all wells will have to be horizontal in the areas where the 1200 feet of pay zone is. Cheaper to drill and complete than Bakken, Eagle Ford, etc…

BTW, it’s spelled FRAC not frack unless you are a media person or leftist that is.

Kermit on February 5, 2013 at 12:05 AM

Where is QOTD??..:)

Dire Straits on February 5, 2013 at 12:47 AM

Jed Clampett was “a poor mountaineer, barely kept his family fed.” To me, that says West Virginia. Whatever.

California is a bankrupt wasteland. If the rest of us are lucky, that furthest slice will slide quietly into the ocean one day soon.

Humphrey on February 5, 2013 at 12:53 AM

Jed Clampett was “a poor mountaineer, barely kept his family fed.” To me, that says West Virginia. Whatever.

California is a bankrupt wasteland. If the rest of us are lucky, that furthest slice will slide quietly into the ocean one day soon.

Humphrey on February 5, 2013 at 12:53 AM

What a moronic, imbecilic, ignorant comment, but then why am I surprised…if the rest of us are lucky, you will slide back quietly in the ocean of ignorance that you came from…

jimver on February 5, 2013 at 7:03 AM

Most of “flyover country” doesn’t give 2 hoots about california.

Of course, deep down most of us know they we’ll end up working all our lives to pay taxes for these corrupt wack jobs that care only about themselves and their selfish obsession with instant gratification. They are a leech and a cancer that has destroyed an entire nation. A pox on them and all that support them.

acyl72 on February 5, 2013 at 7:30 AM

If CA has more money, they’ll just waste it. Let them learn their lesson first.

jnelchef on February 5, 2013 at 9:11 AM

because Republicans have yet to figure out how to exploit those divisions.

William Eaton on February 4, 2013 at 9:24 PM

The Institutional Republicans have absolutely no interest in “exploiting divisions” on the Left, or opposing anything the Democrats do at any point. They are concentrating on declaring war on their own base, and dividing the party into the Institutional Elites, and the serfs. There is no Second Party in this country. There is the Nomenklatura and everyone else.

That is not something that can endure.

The Institutionals are failing in their understanding of Sun-Tzu, who also lists how rulers can guarantee their own defeat:

12. There are three ways in which a ruler can bring
misfortune upon his army …..

14. (2) By attempting to govern an army in the
same way as he administers a kingdom, being ignorant
of the conditions which obtain in an army. This causes
restlessness in the soldier’s minds.

Subotai Bahadur on February 5, 2013 at 12:46 PM

California used to be the Golden State, because people were drawn to the real gold in the state, and the NFL runner-up 49ers are named after the initial gold-seekers in 1849.

Today’s Californians are bent on squandering their resources–not only “black gold” but the rich agricultural land of the Central Valley, by depriving it of water. Most of California has a climate similar to that of Italy–wet and snowy in the mountains, dry in the lowlands. Over 2,000 years ago, the Romans built one of the greatest civilizations of that era by building aqueducts to transport snow-melt to farms and cities in the lowlands, and Californians of a few generations ago did the same with dams and irrigation canals. Today’s “greenies” living along the coast, in order to ensure that tiny fish don’t lose a habitat, want to undo all that progress, and let the snow-melt run out to sea. But what is so “green” about turning the rich, green Central Valley into a desert? Couldn’t those precious little fishies live in an irrigation ditch?

Several years ago, a State Governor decided to open fair competition for the exploitation of state oil and gas resources, but imposed a state tax on the use and sale of those resources, and the tax revenue enabled the state to wean itself of Federal subsidies for large infrastructure projects. This Governor also negotiated treaties enabling international trade of the state’s resources.

Governor Brown of California could reap tremendous dividends for his state’s budget and business climate by copying the policies of the Governor mentioned above. But he won’t do so, because all the brilliant, enlightened, and beautiful people in California who elected him know that Sarah Palin is stupid.

Or is she???

Steve Z on February 5, 2013 at 1:03 PM

1. I come to HotAir infrequently these days because the articles are rather clueless based on herd thinking rather than knowledge and the commenters are not any better.

+1

tlynch001 on February 5, 2013 at 7:39 PM