Even with a change of administration in California and new energy plans that emphasize locally based energy supplies, one of the state’s more vocal independent oil/gas producers is skeptical that adequate incentives will be developed to unlock trillions of cubic feet of natural gas still lying under the state’s fossil-fuel rich central valley.
The environmental lobby, which frequently bends the ear of new Gov. Arnold Schwarzenegger, is trying to block attempts to increase drilling both onshore and offshore, said F. Lynn Blystone, CEO of publicly traded Tri-Valley Corp. in Bakersfield, CA. “The environmental wing will keep pounding [on the new governor] to do dramatic environmental things for political gain.”
Blystone said he intends to formally propose (in a series of letters) to the governor and his energy advisers that a string of what he calls “energy parks” be designated for stepped up exploration drilling and that a “wildcat tax credit” be offered as an incentive. The “parks” would be established and maintained in an environmentally sensitive way; the designated areas would have to be proved up or rejected on an accelerated basis, and those not worth pursuing would be returned to their pre-exploration natural state.
“Demand is going to continue to run past supply, and there isn’t anything out there [even liquefied natural gas (LNG) imports on an accelerated basis] that is going to change that,” said Blystone, citing Tri-Valley’s ongoing exploration of what he considers a 3 Tcf Sunrise-Mayel gas field north of Bakersfield near Delano, CA. Even if Tri-Valley Oil and Gas is able to get 40 wells drilled to produce the equivalent of 80 MMcf/d, he said, it would be “very respectable in California,” but would amount to about only 1% of the daily demand in the state, “and that demand is increasing.
“So how many Sunrises would you have to have to discover to make a serious impact into existing demand, much less the increasing demand? And how often do you find a 3 Tcf field on the West Coast. The last one was Rio Vista in 1936.”
According to Blystone, three separate independent engineering estimates from Texas, Colorado and California-based sources have estimated that Sunrise has 80 Bcf/160 acres in a field that totals 6,600 acres. He extrapolates this to mean it is a 3.3 Tcf field. However, Tri-Valley reported no commercial production in the third quarter and its Sunrise-Mayel No. 2H-R well that was fractured on July 7 did not result in any commercial production.
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