Thursday, November 15, 2012

California should lead oil-shale revolution

Yes, it should, but it won't.  One company already tried but was faced with so much opposition and lawsuits they just walked away.
A 2011 federal report on California’s biggest oil shale resource, known as the Monterey Formation, estimated it had at least 15.4 billion barrels of recoverable crude oil. That’s four times bigger than the Bakken formation, where oil drilling has turned North Dakota into an economic dynamo. Our state’s shale resource extends from the eastern edge of Silicon Valley south to Kern County.

On Dec. 12, the federal Bureau of Land Management is set to auction off drilling rights to nearly 18,000 acres in Monterey, San Benito and Fresno counties. We hope Gov. Jerry Brown and state regulators talk a calm look at fracking and its long history.

Environmentalists’ griping about fracking’s allegedly huge downside only ramped up when new methods proved transformative for oil and gas exploration.

Unfortunately, lawsuits are inevitable. A lawsuit over the Dec. 12 lease auction has already been threatened. Meanwhile, a much smaller BLM lease auction of 2,700 acres from September 2011 is already tied up in litigation filed by the Center for Biological Diversity.

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 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.

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