Brown to Consider Hydraulic Fracturing Regulations, No Severance Tax
Monday Morning Report, March 26, 2012
Governor Jerry Brown said he is open to the use of hydraulic fracturing in California, fourth among oil-producing states, to increase natural gas and oil production. Brown plans to travel to Kern County to meet with CIPA members to learn more about the issue.
A form of the technique has long been used in the oil rich San Joaquin Valley, Brown said. He would likely favor more widespread fracturing if environmental consequences can be minimized. “I’m an optimist,” Brown said last week at a conference near Santa Barbara. “I’m going to look at it. California is the fourth-largest oil-producing state, and we want to continue that.”
Hydraulic fracturing frees trapped oil and gas by injecting water, sand and chemicals underground at high pressure. Several states including Ohio, Pennsylvania and North Dakota are weighing how to regulate and tax the products of hydraulic fracturing.
With an estimated 15 billion barrels of crude, the Monterey and Santos shale formations running from Los Angeles through the San Joaquin Valley are the richest U.S. oil shale prospects, according to the Energy Department in Washington, D.C. California shale holds almost two-thirds of all the shale oil in the continental U.S., the department said in a 2011 report. That amount of crude would be enough to supply every refinery on the West Coast for 17 years, based on Energy Department figures.
California, with 12 percent of the U.S. population, consumed 8.5 percent of the nation’s energy in 2009, or 47th among states per person, according to Energy Department statistics. The state’s comparatively mild weather, strict energy efficiency measures and reduction in energy intensive manufacturing have all contributed to the state's small per person energy use.
Brown told reporters he wasn’t considering new taxes on oil production. The state may benefit from income taxes on people employed in the extraction industry and on corporate income, he said.
