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.

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.

Meanwhile, in Texas, they’re chortling — mildly, not meanly — at our expense. This is from a Dallas Morning News editorial:

“Any way you slice it, Toyota’s decision to consolidate operations in North Texas is a huge coup. …

“Plano Mayor Harry LaRosiliere attributes the behind-the-scenes legwork securing the deal to Gov. Rick Perry, Lt. Gov. David Dewhurst, Texas House Speaker Joe Straus and the Dallas Regional Chamber, all of whom promoted North Texas’ economic strength, available land and lower cost of living. No doubt also playing significant roles were the closing power of $40 million from the Texas Enterprise Fund, other yet-to-be-specified incentives from Plano and the northern suburb’s strong school system.

“Some might not be comfortable with the idea of states wooing companies with wayward eyes from other states. But that is the way the game is played these days. States compete to attract and retain companies; those slow off the mark stand to lose major development opportunities.”

Toyota considered moving to Colorado

The DMN coverage also provided important context: Toyota didn’t just want out of California so it could be close to its manufacturing facilities in the South. This is one of the points brought up those who say this as no big deal. Toyota was also considering … Colorado! Not exactly home to a lot people who say “y’all.”

“Toyota wanted out of California for many reasons: high taxes, steep operations costs and unpredictable state politics. The automaker reportedly had kicked the tires on several locations in Texas as well as in Denver, Atlanta and Charlotte, N.C. And Toyota’s not the only one racing for the exits. In recent years, more than 250 companies have bolted from California, and relocation experts in that state say Texas was their No. 1 destination.

“’When you look at the whole package, it’s difficult to be a business here,’ said Torrance Mayor Frank Scotto, whose city is the big job loser in Toyota’s move to North Texas. …

“As companies leave California, many are finding new homes in Texas. Here are some of the latest announced moves:

” • Occidental Petroleum Corp. moving a portion of its operation from Los Angeles to Houston.

” • Raytheon Co. transferring its space and airborne systems unit to McKinney from Southern California.

” • Trend Micro Inc., a Tokyo-based security software company, moving its U.S. headquarters from the Silicon Valley to Irving.”

They won’t be the last. As I wrote in the U-T San Diego, it’s a metaphysical certainly that more big companies will leave a state that is indifferent to their presence for states that actually believe it is a good thing to help the private sector.

By Chris Reed

President Obama’s first energy secretary, interior secretary and EPA chief all at various times in his first term depicted hydraulic fracking — aka fracking — as safe. His Energy Department put out a report in 2011 describing the newly improved energy exploration process as just another dirty heavy industry that isn’t much of an environmental concern if it is well-regulated. The president himself even campaigned on the boom in U.S. natural gas production created by tracking.

But repeated Nexis hunts have shown that this fact inexplicably has never been reported in The Los Angeles Times. Last month, the paper’s intent to deceive Californians on this topic was made crystal-clear when it covered a speech by new Interior Secretary Sally Jewell on fracking rules for public and Indian lands. In the speech, as The New York Times reported, Jewell offered a ringing endorsement of fracking’s long and safe history. But the L.A. Times left this out, instead citing a petroleum industry spokesman as making the case for fracking’s long and safe history. I wonder how LAT reporters Neela Banerjee and Wes Venteicher sleep at night.

It was on the op-ed page — but at least it was finally in the LAT

On Friday, however, Jewell was finally quoted and the Obama administration’s position was finally acknowledged by the Times. It may have been in an op-ed by Rock Zierman of the California Independent Petroleum Association, not in an editorial or a front-page analysis, but it was there in black and white and can no longer be denied.

“The ‘safe fracking’ question has been asked and answered many times over by government regulators, scientists and other technical experts, and they have concluded that hydraulic fracturing is a fundamentally safe technology. Interior secretaries and EPA heads have repeatedly said that fracking can be done, and is being done, so that it doesn’t present environmental or public health problems.

“That’s been the case for decades, Interior Secretary Sally Jewell, a former petroleum engineer and a former president of REI, the outdoor equipment retailer, said in May. Jewell’s predecessor, Ken Salazar, testified to Congress that hydraulic fracturing ‘has been done safely hundreds of thousands of times’ and warned lawmakers against anti-fracking ‘hysteria.'”

If Obama views were known, polls would change

The LAT web page with the op-ed, alas, has a link to a poll showing Californians are deeply worried about fracking — thanks to the deceit of enviro reporters like Banerjee and Venteicher.

But if the views of the Obama administration were actually regularly acknowledged, we wouldn’t just have polls that are much more favorable to fracking. We’d have a completely different public debate, one in which the default view is that fracking’s critics are, as former Interior Secretary Ken Salazar suggests, “hysterics.”

By Chris Reed

The coming battle over fracking in California is going to be a doozy. There’s too much money to be made in the “brown energy” revolution for monied interests to not pursue the reserves in the Monterey Shale.

Soon to be the face of evil in California: Occidental Petroleum. As I wrote about last year, the company is already poised to pounce in the Central Valley:

“Even if California’s media haven’t caught on to the state’s potential for a Bakken-style economic boom, the oil industry has. By far the BLM’s biggest 2011 lease [for use of federal land for oil and gas exploration in California] was the $180,000 paid for a 200-acre parcel by Vintage Production California, a Bakersfield-based subsidiary of Occidental Petroleum, the third-largest U.S. oil and gas producer. On Oxy’s website, it 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.”

Now the Ventura County Star reports that Oxy, as it is known, is busy in the coastal county as well:

“Anticipating that new drilling techniques will make it possible to tap vast oil reserves thought to be unrecoverable, a Los Angeles-based oil company has been aggressively securing mineral rights beneath thousands of acres of Ventura County land.

“Documents filed with the Ventura County Recorder’s Office show that Vintage Petroleum, a subsidiary of Occidental Petroleum, has entered into 192 lease agreements over the past six months in deals involving at least 9,000 acres.

“Most of the leases, largely on rural land in the Santa Paula-Fillmore area, were recorded during the last week of March.

“’They’re making a big play,’ said attorney Stuart Nielson, whose A to Z law firm in Oxnard has represented several of the lessors.

“Nielson said the pace of oil-leasing activity is unlike anything Ventura County — once a more prolific oil-producing area — has seen in decades. Most of the oil rights involved have long been dormant.”

By Chris Reed

Bloomberg News, which is doing an increasingly good job covering California of late, had an important article Wednesday about likely problems in developing the Golden State’s massive shale reserves. Those reserves could transform the state’s economy, according to a University of Southern California study that said drilling for the energy reserves could generate as many as 2.8 million jobs and $24.6 billion in state and local tax revenue by 2020.

Why was it important? Because its downbeat tone mostly didn’t come from the expected sources: the green cultists who hate fossil fuel and who constantly dispense lies about hydraulic fracturing, the improved drilling process behind the brown energy revolution in the Dakotas, Montana, East Texas, Ohio and Pennsylvania. The skepticism instead came from credible people.

From Wall Street:

“’The Monterey shale was supposed to be the greatest thing since sliced bread, but so far has not lived up to the hype,’ Fadel Gheit, an oil and gas analyst at Oppenheimer & Co. in New York, said in a telephone interview. ‘It’s not conclusive that the emperor has no clothes. So far, it has not shown any big sign that this is going to be another Bakken or Eagle Ford.'”

From Chevron:

“’Based on our drilling results, our view is that the oil has migrated out of the formation and is now found in pockets outside of the Monterey shale,’ said Kurt Glaubitz, a spokesman for San Ramon, California-based Chevron Corp. (CVX), the second-biggest U.S. oil producer. ‘We don’t believe it’s going to compete for our investment. We have other opportunities that are more economical for us to develop.’”

And from a scientist who explained what’s behind the skepticism:

“The Monterey shale is more expensive to explore than the Bakken shale that’s yielded an oil boom in North Dakota and the Eagle Ford shale in Texas, said Amy Myers Jaffe, executive director of energy and sustainability at the University of California, Davis.

“’The Eagle Ford is like a pound cake,’ Jaffe said in a telephone interview. ‘The Monterey shale is like a nine-layer chocolate cake and to get all the layers straightened up and put in all the frosting every place we wanted — that’s going to be more complicated and it takes more skill.'”

Betting — and betting big — that the skeptics are wrong

But the company that’s got the most invested in drilling the Monterey shale is far more confident than the skeptics. As I wrote in November, Occidental Petroleum Corp., the Los Angeles-based energy giant, “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.”

That last point is not a small one at all. Energy companies have a history of being cautious in their stock prospectuses and in representations to shareholders and regulators. Oxy has been eying the Monterey shale for a long time and believes it is up to the challenge.

And the context is crucial to remember here. It wasn’t long ago that the Bakken and Eagle Ford shale formations were considered impossible to develop. But then along came the information-technology revolution. The reason hydraulic fracturing, or fracking, is so much more efficient than it used to be doesn’t have to do with crude factors. It’s not the drillers using more powerful streams of water or larger water cannons to fracture rock underground. Instead, IT now allows drillers to use the equivalent of MRIs of vast swaths of underground areas, and to use this information to know where to precisely aim their water cannons.

NYT: ‘New Technologies Redraw the World’s Energy Picture’

And hydraulic fracturing is getting more refined and more efficient with every year. So if Occidental believes it can access California’s Monterey shale, it has good reason to be optimistic.

The question, alas, remains whether California’s political class will allow fracking’s magic in the Golden State. Even as fracking increasingly gives the U.S. a huge competitive advantage over Europe — detailed here — the environmentalists who dominate the state Democratic Party continue to pretend the brown energy revolution isn’t happening.

Perhaps they should read The New York Times.

By Chris Reed

Sunday’s U-T San Diego editorial wraps up a three-part series on fracking with some theories on how Gov. Jerry Brown might sell it to the millions of Californians who are unaware — because of our pathetic state media — that fracking is considered just another manageable heavy industry by the Obama administration:

“First, he needs to counter the anti-fracking disinformation campaign by noting the position of the Obama administration over and over and bringing in credible surrogates like [former Democratic Pennsylvania Gov. Ed] Rendell and [current Democratic Colorado Gov. John Hickenlooper.

“And after that message sinks in, the governor should offer specifics about how billions in new state revenue from our 21st-century oil boom could be used.

“We suspect that rolling back community college, CSU and UC tuition to 1990 levels might excite a lot of young voters and their parents.

“We suspect that guaranteeing a big infusion of new money for the K-12 school system would excite educators, social justice activists and millions of people in disadvantaged communities.

“We suspect that using the oil revenue gusher to shore up a pension system for teachers that is horribly underfunded would excite teachers and their unions – and the worried families of aging teachers.

“We suspect that fixing up our aging roads, freeways, ports and airports would please the business community and anyone who leaves the house.

“And we are 100 percent certain that lower state sales and income taxes would be hugely popular.”

So far, at least, Jerry Brown seems to be resisting the Sierra Club and Natural Resources Defense Council disinformation campaign. The fracking regulations his administration put out in December were relatively straightforward.

Will pathetic media finally notice Obama stand on fracking?

But in coming months, we will see many interesting angles play out:

Will Brown be the pro-jobs pragmatist he claims to be?

Will the pathetic media finally get out of the green tank and admit that fracking is dirty but not extremely so and thus manageable, as the Obama administration believes?

Will California’s leaders and media continue to ignore the brown energy revolution in favor of the increasingly loony idea that our devotion to cleaner-but-costlier fuel is inspiring the world?

It’s going to be fun.

The over-under on honest George Skelton columns on energy issues in 2013 is 0.5.

I’ll take the under.

By Chris Reed

It’s bad enough that the media consistently depict hydraulic fracturing as new when it’s been around for 60-plus years. But what’s also amazing is that the California media covering the state government’s ongoing attempts to develop “fracking” regulations — including occasional contrarian Dan Walters — never mention the fact that the Obama administration has basically said full speed ahead. The U.S. Energy Department accepts the consensus of regulators over the past 40 years that fracking to access oil and natural gas reserves is just another heavy industry — one that’s fairly dirty but manageable.

I made this point in a U-T San Diego editorial which noted fracking’s immense potential to create an economic boom in the Golden State:

“What few seem to understand, and what the media have rarely emphasized, is that the Obama administration dismisses [environmentalists’] alarmism about fracking … .

“This is why the president’s first energy secretary, Steven Chu, said: ‘We believe it’s possible to extract shale gas in a way that protects the water, that protects people’s health. We can do this safely.’

“This is why the MIT physicist the White House recently nominated to succeed Chu, Ernest Moniz, described the risks to water posed by fracking as ‘challenging but manageable.’

“This is why the president’s first Environmental Protection Agency director, Lisa Jackson, told a House committee that she was ‘not aware of any proven case where the fracking process itself has affected water.’”

Have you seen this context in any MSM story about California’s regulation of fracking?

Nah.

The same pathetic bunch that ignored the downside of AB 32 until this year has ignored the fact that fracking has Obama’s blessing.

Pretty amazing.

By Chris Reed

In my research for a U-T San Diego editorial that’s running today about fracking’s immense promise in California, I was astounded to find that Occidental, one of the largest oil/gas companies in the U.S., says it has already secured control of drillable land in the Central Valley with quintuple the potential oil reserves of the Bakken formation in North Dakota:

“Even if California’s media haven’t caught on to the state’s potential for a Bakken-style economic boom, the oil industry has. By far the BLM’s biggest 2011 lease [for use of federal land for oil and gas exploration in California] was the $180,000 paid for a 200-acre parcel by Vintage Production California, a Bakersfield-based subsidiary of Occidental Petroleum, the third-largest U.S. oil and gas producer. On Oxy’s website, it 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.”

We can expect an immense battle over fracking in California, starting soon. The environmentalists are hugely powerful here. But with tens of billions of dollars at stake, Occidental and other oil companies won’t be scared to take them on.