California increased its revenues last year by $8 billion a year, through passing the Proposition 30 and Proposition 39 tax increases.
Texas has added even more to its revenues, but did so a different way. The fracking boom added $28.6 billion in revenues to the Texas state budget during the last three years, or $9.3 billion a year.
Yet it’s a Los Angeles-based oil company, Occidental Petroleum, which owns 1.2 billion barrels of oil (or its equivalent) in Texas’ Permian Basin. Sixty percent of Oxy’s oil and gas extraction comes from carbon dioxide flooding, which is used when water injection and pumping no longer works.
Oxy has successfully used C02 hydraulic fracturing of rock — called fracking — in the Permian Basin in Texas since 2011, when the West Texas Intermediate benchmark crude oil price went over $100 per barrel. Currently, that price is $97 a barrel.
Monterey
But since 2011, Oxy has not enjoyed similar success back here in the Golden State with its development of the Monterey Shale Formation. Oxy has suffered tough permitting delays, environmental opposition, threats of a permanent fracking ban and a lengthy 10-month delay in passing the SB4 fracking law.
Oxy reports that its Monterey Shale production of a piddling 370 barrels of oil per day can’t compare to its 45,000 barrels per day from other shale oil fields in California.
A big boost to drilling in California is that many wells can be drilled vertically and stimulated with cheaper hydrofluoric acid, rather than by the horizontal drilling and hydraulic fracturing of rock. This is why SB4 specifically regulates hydrofluoric acid flushing. Technically, matrix hydrofluoric acid stimulation is not fracking, but fracture acidizing is. Occidental found that fracking was not economic in the Monterey Shale several years ago.
Both state and local politics aren’t the only impediments to Occidental and other oil producers in California. Those holding shallower deposits have lower costs and potentially higher profits, according to Mike Edwards of Venoco Oil.
