HOW CAN FORSAKEN REVENUE BE GOOD FOR CALIFORNIA?

Bob Tippee

A state government in a fiscal crisis would never spend money in order rid itself of a revenue source—would it?

It might if the state it governs is California.

Gov. Gray Davis wants the federal government to buy back 36 undeveloped oil and gas leases on the Outer Continental Shelf off central California.

"What's good for Florida is good for California," he declared after the federal government bought back seven disputed leases off Florida for $115 million last May.

He might end up wishing he hadn't said that.

In a letter to Davis expressing willingness to negotiate, Interior Sec. Gail Norton pointed out that Florida, unlike California, had never shared in revenue generated by the repurchased leases.

"As we consider resolution of these leases in California," she wrote, "it is important to note that the federal government will expect the state of California, which has received substantial revenues from some of those leases, to be a contributor to such a settlement."

She helpfully added that California has received $2,017,703,578 from all OCS activities since 1968.

In fiscal 2001 alone, California received $32,416,425 in federal disbursements related to the OCS.

For a state with a general budget of $80 billion/year, that's not a lot of money.

For a state that will accumulate a deficit totaling an estimated $52 billion over the next 5 years, however, any revenue at all has to be welcome.

…Unless, of course, the state is California and the revenue comes from offshore oil and gas.

The $32 million/year the state receives from OCS activities is a fraction of what the figure could be. But California has stymied exploration and development of a federally owned resource, so oil and gas production remains far below potential. And so do royalties.

Oh, well. The state government just doesn't want the money.

And soon it might help the federal government buy back leases purchased in good faith during 1968-84 for a total of $1.1 billion.

How a deal like that can be good for a broke state like California is a mystery. It's certainly rotten for the rest of the country.

(Online Aug. 23, 2002; author's e-mail: bobt@ogjonline.com)

Related Articles

Cenovus gets AER approval for Grand Rapids oil sands project

03/21/2014 Cenovus Energy Inc. reported that it has received approval from the Alberta Energy Regulator (AER) for its wholly owned Grand Rapids thermal oil sa...

Shell lets contracts for Majnoon development

03/18/2014 Shell Iraq Petroleum Development BV has let engineering and procurement services contracts to Foster Wheeler Kentz Energy Services DMCC, Dubai, for...

Ivanhoe halts Tamarack oil sands project citing lack of regulatory ‘clarity’

03/18/2014 Ivanhoe Energy Inc. has suspended activity on its Tamarack oil sands project pending approval for its thermal oil sands application from the govern...

Madagascar Oil provides Tsimiroro field activity update

03/18/2014 Madagascar Oil Ltd. reported that its steam-flood pilot (SFP) in Tsimiroro heavy oil field has increased oil production from 222 b/d in December 20...

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected