Instead, Catherine Reheis-Boyd, president of the Western States Petroleum Association, put out a perfunctory statement emphasizing that any such drilling would be subject to “stringent” and “overlapping” state rules as well as federal rules. And Golden State environmentalists and elected leaders pointed to all the different tools with which California could thwart the Trump administration initiative.

The most obvious is that the State Lands Commission controls and has long-established authority over the first three miles off California’s coast. No energy exploration company will pursue an offshore drilling project without certainty that it can get the oil or natural gas it pumps to refineries and related infrastructure onshore. Assemblyman Al Muratsuchi, D-Torrance, and Sen. Hannah Beth Jackson, D-Santa Barbara, announced that they are preparing legislation to forbid the Lands Commission from approving new pipelines or infrastructure related to new offshore drilling. If the state of California blocks the construction of pipelines offshore and needed facilities onshore, offshore drilling isn’t economically feasible.

Former Coastal Commission lawyer sees plan as ‘grandstanding’

The huge obstacles led Ralph Faust, former general counsel for the California Coastal Commission, to tell the Los Angeles Times that the Trump administration’s plan “just seems like grandstanding.”

The Coastal Commission also has tools that give it a potential veto over what is happening in the federally controlled waters beyond three miles from shore – if it finds federally sanctioned actions are incompatible with the state’s offshore management plan. The federal courts have at times sided with states and at times with Washington when such claims are made.

While California is the third-largest oil-producing state in the United States – after Texas and North Dakota – its untapped potential has frustrated energy exploration companies for decades. No new offshore drilling, such as the facility off the Santa Barbara coast that is pictured on this post, has been approved in more than 30 years.

On land, some geologists think there are vast amounts of oil in the Monterey shale – a massive underground area along the Central California coast and inland – that could be recovered with fracking. Similar finds have yielded billions of dollars for oil exploration firms and substantial new tax revenues in North Dakota, Texas, Ohio and Pennsylvania.

But while Gov. Jerry Brown initially seemed intrigued by the possibility of drilling in the Monterey shale after taking office in 2011, his interest disappeared after the U.S. Energy Information Administration’s 2014 decision to sharply reduce estimates of recoverable oil under the Golden State.

Florida’s request for exception quickly granted; California gripes ignored

Instead of grandstanding, as the former Coastal Commission counsel suggested, it’s also possible that the Trump administration and Interior Secretary Ryan Zinke are trolling Gov. Jerry Brown and other Democratic leaders in the deep-blue Golden State.

On Tuesday, Zinke announced he was dropping plans to lease drilling sites off Florida at the request of the state’s governor, Rick Scott, a Republican.

Zinke has offered no comment on the far more vociferous objections to his offshore drilling plan from California’s top elected officials.

It took some time, but a 2011 report by the Federal Energy Information Administration that estimated that California’s Monterey shale underground land mass formation had 15.4 billion barrels of accessible oil and a follow-up study that put the figure at 13.7 billion barrels of oil — about twice as much as the rest of the nation combined — got plenty of folks’ attention. Advances in hydraulic fracturing, known as fracking, made extracting the oil cost-effective.

Excitement about a possible oil bonanza was stoked by a 2012 City Journal analysis. That continued to build in early 2013 after word spread that oil companies were already buying land above the 1,750-square-mile shale formation, which extends across much of central California to the Santa Barbara-San Luis Obispo coast. Then came a 2013 USC study that estimated development of the Monterey shale could boost the state’s economic activity by 14.3 percent and had the potential to generate nearly $25 billion in new state tax revenue by 2020.

In January 2014, Gov. Jerry Brown made headlines when he said he was open to allowing fracking in California, getting blasted by environmentalists as a result. Fracking, which involves the use of underground water cannons to eradicate rock formations and allow access to previously unreachable oil and natural gas reserves, has been targeted by green groups on safety and health grounds for a decade.

But it’s been all downhill ever since for those enthusiastic about oil exploration in the Golden State. It’s not just that low oil prices have left energy companies facing a “world of hurt,” in the words of the Houston Chronicle, and without the resources to pursue large new drilling programs in California or elsewhere. It’s specific, daunting developments.

Last week, Los Angeles-based U.S. District Judge Michael Fitzgerald halted plans to allow fracking of the Monterey shale on public lands in central California and rebuked the U.S. Bureau of Land Management for failing to do a full review of the environmental effects of the extraction technique.

In July 2015, state officials released final rules on fracking that were billed as the toughest in the nation. They were seen as much more onerous than the tough-but-manageable draft rules released in fall 2013 to the applause of energy companies.

And in May 2014, the federal Energy Information Administration — the same agency that triggered the interest in the Monterey shale in the first place — cut its estimate of how much oil could be recovered from the underground rock formation by 96 percent, to 600 million barrels.

Obama administration still backs fracking in state

Who remains enthusiastic about oil exploration in California? U.S. Interior Secretary Sally Jewell, who last year criticized local governments in the Golden State for adopting fracking bans.

“There is a lot of misinformation about fracking,” Jewell told KQED in an interview. “I think that localized efforts or statewide efforts in many cases don’t understand the science behind it and I think there needs to be more science.”

That may surprise some, given the Obama administration’s aggressive pursuit of a global climate-change strategy that is based on much less use of fossil fuels. But President Obama campaigned for re-election in 2012 on an “all of the above” strategy for energy production and has continued with the approach in his second term.

Jewell endorsed the fracking plan for California public land that was blocked last week by the Los Angeles federal judge. The Bureau of Land Management, the agency the judge criticized, is part of the Interior Department.

Occidental has long been upbeat about fracking’s potential on lands it already owns or controls in California. This is from a piece I wrote in 2012:

Oxy estimates the shale reserves on California land it already controls to have over 20 billion barrels of potential oil –- a claim that the company says is made in accordance with the Securities and Exchange Commission’s rule that only “economically producible” reserves can be cited in SEC filings.

So where have professional investors and energy speculators come down? So far, as the stock chart at right shows, they’re skeptics.

But it appears to be due to market conditions — the plunging cost of oil — not because California Resources is considered poorly managed or to be facing political opposition.

In The Street’s Real Money Pro column of Nov. 14, analyst David Katz predicted CRC’s early plunge — and said it would then be an attractive investment:

At the end of November, Occidental Petroleum (OXY) will distribute the majority (at least 80.1%) of its stake in California Resources (CRC) to OXY shareholders. It’s not uncommon for a new spinoff’s share price to decline in the weeks after distribution as the company’s ownership base changes. And unless the price of oil rallies in the next month, CRC shares are likely to be under even more than the usual selling pressure. However, we think California Resources is an interesting energy production growth story and if you have a 12-18 month time horizon, you may be richly rewarded for picking up the shares from distressed sellers.

The worst two examples of this conscious decision to leave out perhaps the strongest argument that pro-fracking forces can offer were in the Sacramento Bee and the L.A. Times.

In 2013, the Bee’s Pulizer-winning environmental reporter, Tom Knudson, wrote a voluminous, harshly critical look at fracking and California. He never mentioned that the Obama administration believes it to be just like another heavy industry that can be made safe enough with proper regulation.

Also in 2013, U.S. Interior Secretary Sally Jewell held a news conference announcing rules for fracking on federal land. The New York Times noted that Jewell’s remarks included pointed criticism of those who depicted fracking as unsafe. The Los Angeles Times covered the same press conference. Rather incredibly, it ignored Jewell’s remarks and instead quoted an oil industry figure as saying fracking was safe.

Cabinet member hits fracking ‘misinformation’

Now Jewell may have made it close to impossible for the California media to continue ignoring the Obama administration’s view by weighing in with KQED on what she sees as the poor logic behind local fracking bans.

President Obama’s chief custodian of federal lands says local and regional bans on fracking are taking regulation of oil and gas recovery in the wrong direction.

“I would say that is the wrong way to go,” Interior Secretary Sally Jewell told KQED in an exclusive interview. “I think it’s going to be very difficult for industry to figure out what the rules are if different counties have different rules.”

In November, two California counties added themselves to a growing list of local bans on hydraulic fracturing. Voters approved measures in San Benito and Mendocino Counties by wide margins.

“There are a lot of fears out there in the general public and that manifests itself with local laws or regional laws,” Jewell said.

The recent move by New York to extend a statewide ban does not sit especially well with Jewell, who, as a former petroleum engineer, has hands-on experience with fracking.

“There is a lot of misinformation about fracking,” Jewell said. “I think that localized efforts or statewide efforts in many cases don’t understand the science behind it and I think there needs to be more science.”

Will the Bee, the Times and other California newspapers ignore this latest affirmation of the Obama administration’s view that fracking is not the devil?

I don’t see how they can — even though it will remind people how long they’ve covered up the views of Jewell, Obama and the administration in general.

But this summer, we’re seeing something freaky. Prices are going down, even with unrest in many oil-producing nations and rising tensions throughout the Middle East. The Christian Science Monitor has the details:

The average US gas price is now $3.52 per gallon, according to a Thursday report released by automotive group AAA, making current prices the lowest since March of this year. This July, US consumers saw a bigger drop in gas prices than in any July over the last six years. The price at the pump fell every day but one over the course of the month, according to AAA. Gas prices generally rise in the summer months, as Americans hit the road and drive up demand for gas. The federal government also mandates that refineries produce a more costly, lower-emission blend of gas in the summer – and those increased costs are passed onto motorists. …

Though forecasters expected that expanded domestic oil production would translate into good prices for consumers, they couldn’t have predicted prices quite this low.

July gas prices drop by amount they usually increase

Gas prices have averaged going up 16 cents in July in the U.S. This July, they went down 16 cents.

The fracking revolution is real. The 21st century was supposed to be when green-energy sources took over from fossil fuels. But instead, fossil fuels are having a renaissance, almost entirely based in the U.S.

It’s why the U.S. is now the world’s leading producer of both oil and natural gas. It’s why a nation that used to consider energy independence a major foreign-policy goal could soon be on the brink of becoming a major exporter of oil and natural gas. And it’s why we see freaky things like plunging gasoline prices in the summer in a world of rising unrest and discord.

California could join in this Texas- and North Dakota-led revolution. Occidental Petroleum believes the state has more recoverable oil than Texas and North Dakota combined.

But so long as the green religionists control so much of state government, the Golden State is likely to stay on the sidelines — and only enjoy the indirect benefits of fracking: lower gas prices. Not the direct benefits of well-paying jobs and a revenue gusher.

Great. Just great.

Rarely do accounts offer stark statistics that illustrate just how big the boom has been. Thankfully, a new American Enterprise Institute analysis does so in dramatic fashion.

In a dozen years, North Dakota went from being one of the nation’s poorest states, grouped with some Southern states, New Mexico and West Virginia, to one of the richest, trailing only another energy giant — Alaska. That’s a pretty stunning success story — comparable to Japan’s and West Germany’s delayed post-World War II rebound in the 1960s and early 1970s, or to South Korea’s emergence in the last 20 years as a nation that’s wealthier than most of Europe.

Here are the details from AEI:

“In 2000, North Dakota was the 8th least economically prosperous US states, ranking No. 43 in the country for per-capita real GDP that year … with GDP per person ($35,738) that was more than 20% below the national average ($44,808). In that year, North Dakota was a relatively minor oil-producing state, ranking ninth among the US states for oil production … .

“Starting around 2007, private oil drillers started successfully drilling for shale oil in North Dakota, thanks to advances in drilling and extraction technologies that allowed ‘petropreneurs’ to finally tap into oceans of previously inaccessible unconventional oil in the Bakken oil fields in the western part of the state. … In just the three years between 2007 and 2010, North Dakota moved up 18 places in state rankings for per-capita real GDP, from No. 30 in 2007 to No. 12 in 2010. …

“After more than doubling from 2007 to 2010, annual oil production in the Peace Garden State more than doubled again in the two-year period from 2010 to 2012 … North Dakota was producing so much shale oil in the Bakken that it surpassed both Alaska and California to become the nation’s second-largest oil-producing state in 2012, behind only Texas. … by 2012, the energy-driven stimulus to the state’s economy moved North Dakota to the No. 2 spot in the country for per-capita real GDP at $64,871 behind only Alaska at $72,281, and 33.6% above the national average of $48,567. 

“In 2013, for the second year in a row, North Dakota again ranked No. 2 among US states for real GDP per capita at $68,804 … more than 40% above the national average.”

California could enjoy a similar miracle

The AEI number-crunching bears huge relevance to California, where the Monterey Shale’s oil reserves in the Central Valley and central Pacific coastal counties are believed to be several times as big as those in the Bakken Shale.

Federal energy officials have recently been more downbeat on California’s chances of accessing those reserves than they used to be, allegedly because of new concerns about geologic obstacles that they didn’t used to have. This doesn’t make sense — energy companies are better than ever at overcoming such obstacles. But it wasn’t all that surprising, given how often green bureaucrats pursue their own agendas.

Unsurprisingly, Occidental and other oil energy-exploration firms are far less apprehensive and continue to show great interest in expanding fracking of California’s shale. In its reports to shareholders — reports that Occidental must answer to the SEC for if they are judged deceptive — the energy company has estimated that California has more than 20 billion barrels of recoverable oil in its shale.

That’s more than twice as much as the rest of the U.S. combined. That’s 30 percent higher than the highest federal estimate before officials suddenly began to see geologic obstacles they hadn’t before.

2.8 million new CA jobs. Repeat: 2.8 million new CA jobs

That translates into a ton of money, to put it modestly. If anti-fossil fuel religious crusaders could be overcome, what might that mean for California? The USC report from March 2013 still seems like a good guide.

“Development of oil-shale deposits through Central California using fracking and other techniques may boost the state’s economic activity by as much as 14.3 percent, a University of Southern California study said.

“Such drilling in the Monterey Shale Formation, in addition to increasing per-capita gross domestic product, may add as much as $24.6 billion in state and local tax revenue and as many as 2.8 million jobs by 2020, according to the report … .”

Those numbers seemed outlandish to some folks when they came out 16 months ago. If you look at the AEI’s report on North Dakota, they don’t seem outlandish at all.

“Thirty years ago, energy companies began drilling for natural gas in the Barnett Shale, a huge underground formation in Central Texas. Their high hopes were not shared by the U.S. Geological Survey, which estimated only 1 trillion to 3 trillion cubic feet of natural gas were ‘technically recoverable’ in Barnett. For more than a decade, this skepticism seemed dead-on.

“But then increasing refinements to an old drilling technique known as hydraulic fracturing demolished assumptions about what was ‘technically recoverable.’ By 2003, nearly 1,800 wells had successfully tapped the Barnett Shale, triggering an economic boom that continues to enrich Texas to this day.

“So far, the Barnett Shale has yielded 13 trillion cubic feet of natural gas. An estimated 31 trillion more cubic feet is now seen as ‘technically recoverable.’”

Fracking keeps improving — and proving estimates wrong

That’s from my U-T San Diego editorial. Here’s some more:

“[Energy firms] remember what was said about the Barnett Shale — and they know that because of technological gains, hydraulic fracturing just keeps getting more and more effective. In hydraulic fracturing, or fracking, giant underground water cannons are used to pulverize rock formations that block access to oil and natural gas reserves. With every passing year, energy companies are able to more precisely map underground drilling areas — and aim their water cannons — using the equivalent of immense MRIs.”

I know California’s underground geology is so fractured because of seismic activity that experts say it will be much more difficult to access oil and natural gas reserves than in North Dakota or Texas. But it seems a decent bet that the biggest obstacle to fracking in California remains not our geology but the intense opposition by enviros — which is greatly aided by the bizarre refusal of the California media to acknowledge that the greenest president in history considers it safe.

If the CA fracking debate built off the understanding that the Obama administration has repeatedly attested to its safety, the tone of the debate would be much different. Green true believers wouldn’t change their minds. But lots of moderates — and lots of poor people tired of living in the state with the nation’s highest poverty rate — might take a fresh look at fracking.

]]> https://calwatchdog.com/2014/05/25/64010/feed/ 22 64010 https://calwatchdog.com/2014/04/20/will-ca-ignore-the-lessons-of-north-dakota/ https://calwatchdog.com/2014/04/20/will-ca-ignore-the-lessons-of-north-dakota/#comments Sun, 20 Apr 2014 13:15:59 +0000 http://calwatchdog.com/?p=62758 It was just less than two years ago that City Journal had the first high-profile story laying out the enormous economic potential of certain of California’s natural resources:

“The biggest onshore story is the potential of the Monterey Formation (also known as the Monterey Shale), a zone of petroleum-rich rock that extends much of the state’s length. The Monterey holds an enormous amount of oil, estimated at up to 500 billion barrels. Though it has long been difficult to extract oil directly from it, advancing technology, along with rising oil prices, has put much more of its oil within reach. If even a small fraction of its reserves proves accessible, the Monterey would be the biggest shale oil play in the nation. In July 2011, the federal Energy Information Administration (EIA) estimated that the Monterey had 15.4 billion barrels of recoverable crude—four times what’s estimated to lie within the Bakken shale formation, which is fueling North Dakota’s current oil boom. Those 15.4 billion barrels would be worth about $1.5 trillion at today’s crude prices.

“The potential impact of 15.4 billion barrels of oil is enormous. Even if California managed to tap just half of that quantity over the next 35 years, the state would be adding an average of 220 million barrels a year—doubling its current output and matching its peak year of 1985. It would also be pumping $22 billion each year into its economy if crude prices stayed near their current levels (in light of global demand, it’s more likely that prices will rise). If the EIA estimate is reasonably close to the mark, the Monterey Formation would be in a class with oil fields in Saudi Arabia.”

Since then, Gov. Jerry Brown has signed legislation that sets the framework for hydraulic fracturing, or fracking, to be expanded in California to access this huge resource. But this has triggered a backlash from his fellow Democrats, and there are signs everywhere that a multifront legal war will be mounted on all aspects of any plan to sharply increase energy exploration in California, whether it involves fracking or not. The president, at least ostensibly, declares his support for an “all of the above” approach to creating additional energy for America. Not California liberals.

No better option for middle-class job growth

Too bad. Allowing California’s natural resources to be developed could trigger a massive boom in middle-class energy-exploration jobs — which don’t necessarily require college degrees.

Joel Kotkin, the wonderful Los Angeles writer and futurist, took a road trip to Fargo, North Dakota, to see how fracking and other economic initiatives had transformed the remote state:

“North Dakota leads the nation in virtually every indicator of prosperity: the lowest unemployment rate, and the highest rates of net in-migration, income growth and job creation. Last year North Dakota wages rose a remarkable 8.9%, twice as much as Utah and Texas, which shared honors for second place, and many times the 1% rise experienced nationwide.”

Fargo isn’t in the drilling area, as Kotkin notes, and owes its transformation to many factors. But the old JFK line about a rising tide (economy) lifting all ships certainly holds for North Dakota in general. California could benefit immensely from the same economic multiplier — at least if it can overcome the green religionists and their trial-lawyer buddies.

@chrisreed99: Many #Fracking practices are secret including but not limited to chemicals. Covered-UP extensively starting in 70s. @TXsharon

— Andrea Leon Grossman (@AndreaLeon) October 1, 2013

I wrote a straightforward piece on California and its enormous fracking potential over the weekend that mentioned the Obama administration’s support for the energy-exploration process. That led me to a Twitter run-in with some hardcore green cultists who have elaborate theories about an “X-Files”-esque coverup of the truth about the process — allegedly abetted by the president!

Oh, groan. Fracking has been around for decades. Greens didn’t mind it when it was inefficient. When it became so efficient that it threatened the green-energy bandwagon, then it was declared evil.

But it turns out that it’s just not green Golden State cultists on Twitter who are spreading myths about fracking. It’s mainstream environmental groups. If dishonesty were a crime, this account of fracking by Environment California would have its authors on death row.

Want proof it’s been around a long time and has long been a known quantity? Here’s an excerpt of my  Cal Watchdog article on fracking’s history from December.

The truth is fracking has been around since 1947, and according to a University of Texas study, has been used in the drilling of 1 million wells — yes, 1 million. … And not only has it been around for 65 years, five presidents ago, fracking was regularly described as being in “massive” use. This is the first few graphs from an 5,300-word article headlined “Massive frac treatments tapping tight gas sands in Uinta basin” in the Jan. 16, 1978, edition of the Oil & Gas Journal:

“Massive hydraulic fracturing (MHF) is giving favorable results in the low-permeability Wasatch- Mesaverde sands in Utah’s Uinta basin where earlier conventional completions gave marginal gas wells.

“As many as 24 sands over a 3,500-ft gross interval are fractured with up to 1 1/2 million lbs. of sand in one continuous treatment using staged or limited-entry techniques.

“Over 90% of the sands perforated are effectively stimulated. The treatments have given an average sevenfold increase on the nine wells stimulated to date.”

Part of ‘The New Gas Bonanza’ — in 1978

An 1,800-word Newsweek article from Oct. 30, 1978, headlined “The New Gas Bonanza,” places fracking at the center of one of the big energy stories of the late 1970s:

“Deep beneath southeastern Louisiana lies a 125-mile geological formation called the Tuscaloosa Trend. Several monstrous drilling rigs soar above the surface, probing nearly 4 miles into the earth for deposits of natural gas. The cost of drilling so deep is enormous — about $5 million for each well — and many producers have been discouraged from making the gamble by the low price of any gas they might find. But when he signs the new energy bill Jimmy Carter may give new life to the Tuscaloosa Trend project and scores of other potentially vast gas discoveries. ‘The gas industry,’ says American Gas Association president George Lawrence, ‘is entering an entirely new era.’ ….

“Under the new law, Federal price ceilings on newly discovered gas will be lifted by 1985. In anticipation of higher prices, gas men are already drilling at record levels. And the real bonanza may lie in exotic new sources. As gas prices rise, experts say, both independent drillers and major energy companies seem more likely to commit the huge investments required to tap gas trapped in deep basins or in tight sand, rock and coal formations.”

What was used to tap some of these exotic new sources? You guessed it.

“In many parts of the Northwest, large deposits of shale laid down in the Devonian age contain quantities of gas estimated at 10 trillion to 600 trillion cubic feet. The advantage of the Devonian deposits is that their gas is close to the surface of the earth — and also to gas-starved markets. Their big disadvantage is the tight grip the dense shale holds on its gas, frustrating attempts to make it flow fast enough for economical production.

“Experiments are under way to enhance the flow through advanced hydraulic fracturing. Coarse sand, bauxite pellets or glass beads are mixed with fluid pumped into the shale under high pressure to crack the rock and wedge the cracks open to allow the gas to escape.”

A ‘moderate’ risk that turned out not to be

As these articles make obvious, fracking was utterly routine decades ago. And were environmentalists terrified by the practice? No, not at all. A study by the U.S. Energy Department cited in a July 21, 1979, National Journal article found that environmental concerns associated with “massive hydraulic fracturing — using water and various chemical compounds at high pressure — [were] ‘moderate’ … They include the degradation of air quality during site preparation and fracturing activities and the risk of surface water contamination.”

These “moderate” concerns never turned into a major issue. Fracking has been common for more than 30 years. So why all of sudden is it now depicted as an evil assault on Mother Earth by environmentalists? Because in the past decade, dramatic gains in its efficiency and effectiveness have made it a game changer, allowing drilling to access immense oil and natural gas reserves in North America that heretofore were considered either unreachable or prohibitively expensive to reach. …

My full Cal Watchdog article is here. Here’s a related editorial.

The point is plain and obvious: The fracking scare has been ginned up in California for political reasons. Back to you, @AndreaLeon.