Dan Walters: California could see an oil boom

dwalters@sacbee.comFebruary 13, 2013 

Dan Walters

California had one of the globe's earliest oil industries and was once more than self-sufficient in gasoline and other petroleum products, but as demand grew and production waned, we became an importer, mostly from Alaska and Southeast Asia.

New recovery techniques, such as steam injection and later hydraulic fracturing (fracking), kept older fields, particularly those in Kern County, in production, and California is still the nation's No. 3 petroleum producer.

Meanwhile, oil production is booming in other states, principally North Dakota and Texas, due to extensive use of fracking to tap into deposits in shale – so much so that the U.S. may soon become an exporter again.

But what about California? It's been estimated that deep shale deposits in California, particularly those along California's Central Coast and in the Central Valley, contain as much as 400 billion barrels of oil, equivalent to half of Saudi Arabia's oil fields.

But whether California experiences a new oil boom similar to one it saw in the early 20th century depends on whether the state's extraordinarily sensitive environmental consciousness can tolerate more fracking, particularly along the coast.

That was the issue hanging over a daylong legislative hearing Tuesday in which representatives from the industry, environmental groups, state agencies and local governments kicked around whether widespread fracking will be allowed, and if so, under what conditions.

As with many environmental issues, Gov. Jerry Brown finds himself somewhere in the middle.

Early in his administration, Brown got an earful of complaints that new state regulators were micromanaging oil recovery in Kern County and inhibiting production. He fired those regulators and eventually named a new team that promised more flexibility.

That raised the hackles of environmental groups which oppose the expansion of fracking. When Brown's chief appointee, Mark Nechodom, appeared recently before the Senate Rules Committee, he was grilled sharply about fracking – but was later confirmed by the Senate.

The state's oil and gas agency, which has not been directly regulating fracking, has drafted new regulations, and they figured prominently in Tuesday's hearing.

Environmental groups and many Democratic legislators are openly skeptical that they would not prevent pollution or overuse of water supplies as mixtures of water and chemicals are injected deeply into underground strata to crack shale and release oil and gas trapped within.

So will California see a new oil boom?

Not immediately, but the potential is there to supercharge a somewhat stagnant economy, create many thousands of jobs and pump billions into state and local government coffers, especially if an extraction tax is part of the deal.

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