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

Nelson vows to block Murkowski’s stand-alone crude oil bill

07/31/2015 The US Senate Energy and Natural Resources Committee approved Chair Lisa Murkowski’s (R-Alas.) bill to end the ban on exporting US-produced oil. Bu...

Athabasca’s Hangingstone SAGD project starts oil production

07/31/2015 Athabasca Oil Corp. said the Hangingstone 1 steam-assisted gravity drainage (SAGD) oil sands project in Alberta started oil production in July with...

Industry 2Q earnings, jobs dissolve amid continued oil-price slump

07/31/2015 A difficult year thus far for the integrated, multinational oil and gas firms caused by low oil prices has been somewhat eased by improved producti...

Junex spuds fifth well on Quebec’s Galt prospect

07/31/2015

Junex Inc. has spudded the Galt No. 5 as a follow up to its Galt No. 4 that came in at more than 300 bo/d in January.

FRA issues final rule to keep unattended trains from rolling away

07/31/2015 The Federal Railroad Administration issued a final rule to prevent unattended trains carrying crude oil, ethanol, or other highly flammable content...

Joint venture advances plan for grassroots refinery in North Dakota

07/30/2015 Quantum Energy Inc., Tempe, Ariz., and a joint-venture partner Native Son Holdings LLC (NSH), The Woodlands, Tex., have filed a minor-source air qu...

BLM seeks comments on proposed Fidelity E&P Utah oil and gas project

07/30/2015 The US Bureau of Land Management is seeking public comments on Fidelity Exploration & Production Co.’s proposed oil and gas project 17 miles no...

BLM issues draft EA for Noble Energy’s latest DJ basin oil project

07/30/2015 The US Bureau of Land Management released a draft environmental assessment for Noble Energy Inc.’s proposal to develop as many as 89 oil wells in C...

Murkowski, Warner want US ready to use energy abundance strategically

07/30/2015 The US should better prepare itself to use its new energy abundance as a geopolitical tool by jettisoning obsolete policies and broadening access f...
White Papers

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by
Available Webcasts

On Demand

OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.

register:WEBCAST


Predictive Analytics in your digital oilfield - Optimize Production Yield and Reduce Operational Costs

Tue, Jul 7, 2015

Putting predictive analytics to work in your oilfield can help you anticipate failures, plan and schedule work in advance, eliminate emergency work and catastrophic failures, and at the same time you can optimize working capital and improve resource utilization.  When you apply analytic capabilities to critical production assets it is possible to reduce non-productive time and increase your yield.

Learn how IBM's analytics capabilities can be applied to critical production assets with the goal of reducing non-productive time, increasing yield and reducing operations costs.

register:WEBCAST


Cognitive Solutions for Upstream Oil and Gas

Fri, Jun 12, 2015

The oil & gas sector is under pressure on all sides. Reserves are limited and it’s becoming increasingly expensive to find and extract new resources. Margins are already being squeezed in an industry where one wrong decision can cost millions. Analyzing data used in energy exploration can save millions of dollars as we develop ways to predict where and how to extract the world’s massive energy reserves.

This session with IBM Subject Matter Experts will discuss how IBM Cognitive Solutions contribute to the oil and gas industry using predictive analytics and cognitive computing, as well as real time streaming for exploration and drilling.

register:WEBCAST


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST


Emerson Micro Motion Videos

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