California could edge out Texas in oil production

An pumpjack in Los Angles (AFP/Getty Images)

It may be the biggest insult since salsa made in New York City. Texas, long the nation’s oil capital, could get upstaged by California.

That’s right, California. Enron’s prey-ground. Cap-and-trade fantasyland. Home of fossil-fuel-hating, electric-car-driving, green-dreamers.

Last week, the  U.S. Bureau of Land Management sold 15 leases for about 18,000 acres in California’s Monterey Shale, which stretches 200 miles south from San Francisco. The U.S. Energy Information Administration estimates the shale formation could hold 15.4 billion barrels of oil, which would be double the combined reserves of the Bakken formation in North Dakota and the Eagle Ford shale of South Texas, Bloomberg News reports.

Los Angeles-based Occidental Petroleum snapped up most of the leases sold at the auction, and California lawmakers have drafted new rules to deal with a boom in hydraulic fracturing.

So far, Texas still has the edge in terms of jobs. A recent report by IHS Global found almost half of the country’s nearly 1.3 million energy industry jobs were in Texas, and predicts the number will continue to rise.  Oil and natural gas activity in Texas is expected to generate $22 billion in federal, state and local revenue this year.

Those numbers aren’t lost on California, a state battered by budget shortfalls, underfunded public pensions and an unemployment rate of more than 10 percent, the nation’s highest.

Increased production from California will add to U.S. oil output that is already growing a record, hitting its highest level in 15 years, according to a report by the U.S. Department of Energy . Domestic production will top 6.4 million barrels a day this year, a 14 percent increase from last year and the biggest annual gain since the first commercial well was drilled in western Pennsylvania in 1859.

All of which is good for the country and good for the oil industry, as long as they don’t start calling it California Tea.