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

Range cuts 2015 capital budget to $870 million

01/15/2015 Range Resources Corp., Ft. Worth., has reduced its capital budget for 2015 to $870 million from the previously reported $1.3 billion, which already...

Conoco’s Lance calls for repeal of US crude oil export ban

01/15/2015 The US crude export ban that was imposed in 1975 should be repealed 40 years later to ensure the US oil and gas renaissance continues, ConocoPhilli...

NPD provides Norwegian continental shelf summary for 2014

01/15/2015 The Norwegian Petroleum Directorate reported that oil production from the Norwegian continental shelf increased 3% in 2014, the first increase sinc...

Total starts production from West Franklin Phase 2 in UK North Sea

01/15/2015 Total SA has started natural gas and condensate production from its West Franklin Phase 2 project in the Central Graben area of the UK North Sea. T...

White House orders steps to curb oil and gas methane emissions

01/15/2015 The Obama administration set a new goal to cut methane emissions from the oil and gas sector from 2012 levels by 40–45% by 2025, and a set of actio...

Statoil lets FSU contract for Mariner field

01/14/2015 Statoil ASA has let a contract to OSM Offshore Aberdeen Ltd., a subsidiary of OSM Offshore AS, to operate the Mariner floating storage unit (FSU) i...

Suncor cuts capital budget by $1 billion (Can.) and 1,000 jobs

01/14/2015 Suncor Energy Inc., Calgary, is cutting $1 billion (Can.) from its 2015 capital spending program and reducing its workforce by 1,000 because of low...

EIA: Continued global oil stock build to keep pressure on oil prices

01/13/2015 In its most recent monthly Short-Term Energy Outlook (STEO), the US Energy Information Administration reported it expects global oil inventories to...

OGUK: Major tax changes urgently needed

01/13/2015

Oil & Gas UK said falling oil prices are creating an urgent need for fundamental changes to the tax regime.

White Papers

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...

Accurate Thermo-Fluid Simulation in Real Time Environments

The crux of any task undertaken in System Level Thermo-Fluid Analysis is striking a balance between ti...

6 ways for Energy, Chemical and Oil and Gas Companies to Avert the Impending Workforce Crisis

As many as half of the skilled workers in energy, chemical and oil & gas industries are quickly he...
Sponsored by

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Available Webcasts



The Future of US Refining

When Fri, Feb 6, 2015

Oil & Gas Journal’s Feb. 6, 2015, webcast will focus on the future of US refining as various forces this year conspire to pull the industry in different directions. Lower oil prices generally reduce feedstock costs, but they have also lowered refiners’ returns, as 2015 begins with refined products priced at lows not seen in years. If lower per-barrel crude prices dampen production of lighter crudes among shale plays, what will happen to refiners’ plans to export more barrels of lighter crudes? And as always, refiners will be affected by government regulations, particularly those that suppress demand, increase costs, or limit access to markets or supply.

register:WEBCAST


Oil & Gas Journal’s Forecast & Review/Worldwide Pipeline Construction 2015

When Fri, Jan 30, 2015

The  Forecast & Review/Worldwide Pipeline Construction 2015 Webcast will address Oil & Gas Journal’s outlooks for the oil market and pipeline construction in a year of turbulence. Based on two annual special reports, the webcast will be presented by OGJ Editor Bob Tippee and OGJ Managing Editor-Technology Chris Smith.
The Forecast & Review portion of the webcast will identify forces underlying the collapse in crude oil prices and assess prospects for changes essential to recovery—all in the context of geopolitical pressures buffeting the market.

register:WEBCAST



On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.

register:WEBCAST


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.

register:WEBCAST


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