Oil, gas producers share thoughts with California lawmakers

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http://www.bakersfield.com/business/Story/401540p-401146c.html Oil, gas producers share thoughts with lawmakers Filed: 03/04/2001

Some 40 or so independent oil and gas producers and representatives visited about 100 or so of our 120 Sacramento legislators recently to try to be a part of the solutions for California's electrical and natural gas crisis.

The Capitol appears to be focused on the energy issues, both the electrical shortage and related high natural gas prices. Legislators are becoming quickly educated on the relationship of short supply of both of the electrical and gas commodities and the problem of adding new electrical generation plants that must run on a short supply of natural gas.

CIPA (California Independent Petroleum Association) members represented on this visit to the Capitol have oil and gas production in Kern County as well as Los Angeles, Ventura, Santa Maria and other coastal basins and some offshore California. There was also a contingency of natural gas producers from the Sacramento Dry Gas Basin area.

The California independent oil and gas producers are mostly small family operations or private corporations making their profits from the sale of oil and gas produced in the oil and gas fields of California. This is opposed to the major oil companies who are "Integrated Business" -- meaning that they refine the oil and gas into products and have products sales income.

In the Sacramento Dry Gas Basin, several dozen mostly small operators drill wells for natural gas and usually sell the gas through pipelines connected to PG&E or a number of other smaller buyers.

And in Kern County and other "oil" basins the independent operators sell their crude oil to either local refineries or major oil company buyers. The crude oil is then shipped by truck or pipeline to various refineries within the state for the making of gasoline and other products.

California produces less than one half of the crude oil that it uses, or about 840,000 barrels per day of the 2 million that it uses -- the rest comes in mostly by tanker ships. California natural gas producers furnish about 15 percent of the state's natural gas and the rest is brought in by pipeline from the southwestern U.S., Gulf Coast or Canada.

What CIPA members said in their visits to the California assemblymen and senators was that they can help, to some degree, with the natural gas and electrical shortage -- if you will help them by passing some legislation that facilitates or "fast tracks" the hooking up of newly drilled natural gas wells and help to get excess electricity they can generate in the oil fields into the electrical grid system.

Another bill that has already been introduced would prioritize oil and gas producers' electrical curtailment in stage three emergencies -- so that they are considered critical suppliers of energy and might therefore be shut in less than some other business.

I was told by one operator that when their production was shut in due to electrical shortage the grid gained enough electricity for 5,000 homes but lost the energy (gas) for 50,000 homes!

I believe that the government in Sacramento is seriously trying to find solutions for our energy crisis-but. As one legislator we visited said, we don't want to pass some quick and fast rules or legislation that we will later regret. And in order to make the decisions needed, they are trying to pass legislation that allows the governor and his staff to find some solutions that don't have to be slugged out in the Assembly or Senate in a long-term way.

From what I heard in the Capitol on this trip and in the past, there were signs of an impending electrical shortage for several years and no one acted. I think we need some long-term planning on the electrical issue for the state that would allow more diversity in electrical generation from many sources, including renewable sources, in order to avoid this crisis in the future.

The consensus in Sacramento seems to be that the electrical shortage may take at least two more years to solve.

Phil Ryall's energy column appears on Sundays. He can be reached at (661) 832-5997 or by e-mail at ryall@lightspeed.net

-- Drew Kolosky (Kolosky@Prodigy.net), March 04, 2001


there were signs of an impending electrical
shortage for several years

Yeah, like this prediction from Dick Mills in 1999.

Power engineer and Y2K analyst Dick Mills
makes the following predictions regarding the
availability in the United States of electrical
power in the year 2000:

  1. Prepare for blackouts in the first days of January
    2000, lasting up to 72 hours.
  2. Prepare for shortages of power in the warm summer
    months of 2000.

Mills predicts that carefully regulated power
shortages eventually affecting most U.S electricity
customers is much more likely in the year 2000 than
uncontrolled localized power blackouts.
odds of power shortages are particularly high during
the summer of 2000, especially if the summer is hot
in most areas of the United States. Power shortages
result when power generation "margins" dip below
0%. Margins of 15-30% are standard for the industry
in the United States, meaning that generation capacity
is usually 15-30% larger than demand.

-- spider (spider0@usa.net), March 04, 2001.

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