Technology Advancements Help California Capitalize On Untapped Oil Resources
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SIGNAL HILL (CBS13) – Oil derricks are a common sight in Southern California, but they’re slowly making their way north. Many believe they could be the solution to the state’s ongoing budget crisis.
It’s been said throughout California’s history, “there’s gold in them hills.”
One-hundred-fifty years later, we’re talking about black gold, oil, and lots of it.
Advances in technology and the high price of crude are now making what was once impossible, possible.
In this unusual California city, oil production is everywhere. It’s next door to homes, behind basketball courts, and even in front of restaurants.
“Oil comes first in this town. It’s paid a lot of bills, paid a lot of taxes,” said a Signal Hill resident.
Oil is everything in Signal Hill, which is virtually owned by Signal Hill Petroleum.
“There’s a lot of oil in California, a lot of oil still to be accessed,” said Executive Vice President Dave Slater.
How much oil?
Petroleum companies are salivating over the potential that lies within what’s known as the Monterey-Santos shale formation.
It’s the nation’s largest shale oil deposit, stretching from Stanislaus County, all the way down to Kern County.
Experts say it’s responsible for 95 percent of California’s oil production and is estimated to hold 15.4 billion barrels of recoverable oil. California uses about 2 million barrels of oil a day.
That’s why proponents of oil drilling are banking on an oil boom for the rest of California within the coming year; and its not just oil companies. Landowners could see more profits too.
On a cattle ranch in Northern California, the family that’s run it since the 1880s has been making money by leasing their land to oil companies.
“That means that we have agreed to a certain percentage of the royalties,” land owner Mary Orradre said.
“The number of jobs that have the potential to be generated in California, I mean, it’s in the tens of thousands,” said Director Dave Quast, Energy In Depth California said. “So this is really a conversation we need to be having in a state that’s having some hard times.”
The boom is being driven by improved technology, making hydraulic fracturing, or fracking, more viable. Fracking uses a combination of high-pressurized water, chemicals and sand to blast through shale formations and squeeze-out vast untapped amounts of oil.
It’s a technology that has some California environmental groups weary.
“Fracking is a dangerous new method of oil and gas extraction. It’s an enormous threat to our water, our air, our wildlife,” said Kassie Siegal, Center For Biological Diversity.
One reason, no one knows for certain what chemicals are used in the process.
So why not ask the oil companies?
“I think most of them would say it’s none of your business,” said Assemblyman Bob Wieckowski, who wrote a bill that would require that disclosure. “I think the biggest concern is you have an accident and you have contamination of our water system. That’s the big enchilada in this debate.”
Regulators still won’t know what that contaminate would be. His bill died in committee in August.
One vineyard owner wonders what impact it could have on her business if a neighbor started leasing land to an oil company.
“Having an oil derrick behind your vineyard is not sending the message you want to send,” she said.
The Shale Oil rush is already transforming economies in other states.
A production increase of 209 percent in North Dakota has led to a $1 billion budget surplus, while a 66 percent increase in Texas has led to a 3.3-percent unemployment rate in the oil town of Midland.
But California, the third leading oil producing state, has actually dropped in production by 5 percent.
Despite the new technology, oil companies here have not found fast success; and the creation of new state regulations on fracking is rapidly underway.
“It’s going to be contentious sure, and there’s a lot of passion on both sides,” said Quast. “So what we’re trying to do is bring some light to the conversation and educate people.”
The oil is here, people in Signal Hill see it everyday.
“It’s just kind of relaxing to watch the pump go up and down and see it taking oil out of the ground, and sending it on to processing centers and making money for us,” said Signal Hill resident Joel Schoen said.
Drilling for dollars, this may be the way a California comeback will look.