A California 'Black Gold' Rush
Energy: An amazing number of oil finds have been made this year, including the biggest in California in 35 years. If the world is running out of oil, why do we keep finding more of it?
The mantra of the anti-drilling crowd has been that oil companies like to sit on their leases and the oil in the ground, hoping to drive up the price. They should use the leases they have or lose them, these critics say. They also like to add that the world is running out of oil so it doesn't matter anyway.
Occidental Petroleum hasn't been sitting on anything. For the past decade it's been actively acquiring drilling rights and leases in California where the oil, at least on land, has been said to be an exhausted resource.
But Occidental felt there was more to be found and that the technology for finding and recovering it had advanced somewhat from that day in 1859 when America's first well was drilled in Titusville, Pa.
It was only a matter of time before the "code" of California's seismically fractured underground was deciphered. That code was cracked this summer, when Oxy announced that it had found the equivalent of between 150 million and 250 million barrels of oil and natural gas in an undisclosed part of Kern County.
"In our view, Oxy's declared discovery may only scratch the surface of the ultimate potential of its acreage in the San Joaquin basin," said Doug Leggate, an oil analyst at investment firm Howard Weil Inc. "We suggest the resource potential could reasonably exceed 1 billion barrels."
Continued technological advances may - at least in the oil industry - change an old adage to: When you're in a dry hole, keep digging. The U.S. Geological Survey continually assesses petroleum reserves and the potential for new discoveries. In both 2003 and 2007, the USGS said it was likely that an additional 4 billion barrels would be added to existing fields.
In the larger scheme of things, this may seem like small potatoes. But it shows that if we're allowed to seek more oil, we will find it. And plenty lies off the coast of budget-challenged California, which is currently off-limits to further exploration.
As reported in the Los Angeles Times, a county board of supervisors report quotes the federal Minerals Management Service as estimating that there could be "technically recoverable, median-value reserves" of 5.74 billion barrels of oil and 10 trillion cubic feet of natural gas off-limits from the northern tip of San Luis Obispo County to the Mexican border.
Critics of offshore drilling, including Gov. Arnold Schwarzenegger, use the spill of 80,000 barrels of crude some six miles off Santa Barbara nearly four decades ago to block efforts to corral the billions of barrels of recoverable oil off the California coast.
The Santa Barbara spill occurred when TVs still used vacuum tubes, laptops and iPods didn't exist, and you couldn't ask your car for directions. Drilling technology has advanced to the point where offshore rigs can take the full force of Category 5 hurricanes and spill barely a drop of crude.
More than 200 discoveries have been reported so far this year in dozens of countries by companies large and small. New oil discoveries have totaled about 10 billion barrels in the first half of this year, according to HIS Cambridge Energy Research Associates. At this pace, 2009 could be the most productive oil discovery year since 2000.
Think of it: American oil creating American jobs while lowering gas prices. It's there, and oil companies are willing to go after it - if we let them. But Congress continues to place most of the Outer Continental Shelf, the Arctic riches of the Chukchi Sea, as well as ANWR and the shale-rich Rocky Mountain West, off-limits.
Those electric cars we've been promised are a ways down the road. Meantime, go West, young entrepreneur.