While energy-hungry easterners worry about making it through the coming winter, the talk here in southern California is centering on an unexpected, unprecedented boom in the local oil industry.
Beneath this vast state, from the ocean floor off Santa Barbara to the dry, tumbleweed-covered countryside of the San Joaquin Valley, lie some of the nation's largest oil reserves, perhaps as many as 20 billion barrels of untapped crude.
"The mood among the oil people here is that there will be a boom type of thing coming," said Fred Hallmark, division reservoir engineer for California's Department of Conservation. "You hear a lot of rumors around. There's already a backlog of work here. In all the oil company offices people are planning like crazy."
While the extent of California's oil riches have long been known, it was President Carter's decision last week to remove price controls from some forms of "heavy" crude oil that sparked the recent optimism in the state's oil industry. Perhaps as much as half of California's recoverable oil supplies, according to industry estimates, is of this heavy, jelly-like variety, as opposed to the lighter crude common in such places as Texas and Saudi Arbia.
Most of California's heavy crude comes from the region around Bakersfield, a largely agricultural area 100 miles north of Los Angeles. Until recently, producing this oil was considered too expensive, because of the cost of injecting steam into the wells to make the fuel liquid enough to extract.
But with decontrol of the price on certain grades of heavy oil, the price for this crude has risen in some cases in the past week from$6 a barrel to more than $15, leading some energy industry executives to begin plans for extracting vast amounts of the oil. State officials believe California's oil production, now slightly under a million barrels a day, could double if heavy oil is fully exploited.
"Heavy oil is the short term is one of the very few improvements we can make in our energy picture," said E. H. Shuler, vice president and general manager of Getty Oil Corp.'s western exploration and production division. "It can be brought on line a lot sooner than synthetic fuels, shale oil or solar. In the next three to five years heavy oil has to be the answer."
Shuler's enthusiasm for heavy crude is not surprising, because his company is the nation's largest producer of heavy oil and owns the majority of land at the Kern River field in the Bakersfield suburb of Oildale. Getty officials say the Kern River field is the nation's largest known reserve of heavy oil.
Kern River, which stretches over 9,400 acres of semi-arid scrubland, is criss-crossed by thousands of oil wells and hundreds of steam-spewing generators owned by more than 20 oil companies and independent drillers. Getty engineers believe there are about a billion barrels of heavy oil in the Kern River field.
Despite their mounting enthusiasm, Shuler and other California oil industry figures are proceeding cautiously with their expansion plans, keeping a wary eye on the Department of Energy and the state government, whose regulations, they charge, consistently have hampered the full exploitation of their oil reserves.
Much of the criticism is directed against President Carter's decontrol decision, which affects only those heavy crudes with a gravity of less than 16 degrees, excluding much of the state's heavy oil reserves. Traditionally, heavy oil has been defined as crude with a gravity of less than 20 degrees, as compared to the 34 degrees of the industry's standard, Saudi Arabian light.
"We could produce an additional 200,000 barrels a day by springtime" if the definition included crudes up to a gravity of 20 degrees, said Jim Woods, executive vice president of the California Independent Producers Association. "Right now we'll only be able to give him [Carter] another 50,000 barrels by April."
The Department of Energy has scheduled hearings Sept. 6 and 7 in Long Beach, Calif., on the advisability of extending the president's decontrol order on heavy crude. Substantial pressure for such action is expected to come from oil executives and officials of the California State Lands Commission, a government agency that last year grossed more than $200 million on oil produced from state-owned land in California, much of it with a gravity between 16 and 20 degrees.
Bill Northrup, executive director of the commission, believes Washington "missed the boat" when it issued its limited decontrol order. He and others involved in California's oil wonder if the White House fully appreciates the state's energy-producing potential.
"The White House is short-sighted. They think if it doesn't exist in Mississippi or Texas, it doesn't exist," Northrup said. "I don't understand it, [heavy crude] is a helluva lot cheaper than synfuel."
Oil industry leaders also contend that government environmental regulations could undermine production of the decontrolled crude. Last December, for instance, when Getty's steam generators produced an excessive amount of air pollution in the often yellowish skies above Kern River, the Environmental Protection Agency ordered the company to shut down 62 generators, decreasing production by about 10,000 barrels a day.
Today, as Getty and other heavy oil producers prepare to increase their pumping, the EPA and California's Air Resources Board are trying to work out an agreement under which the company would purchase scrubbers for their generators, at an estimated cost of $750,000 each.
Getty has asked for permission to turn on the 62 generators now in exchange for a promise to install the scrubbers within the next 18 months. Normally the agencies involved might balk at such a request, but given the current energy situation and the president's desire for increased domestic oil production, normal environmental requirements might be waived, according to federal and state officials.
"Sure those people out there would be breathing air that's hazardous," said Lloyd Kostow, chief of the air section at EPA's western headquarters in San Francisco. "Public health should be the top priority, but if the administration wants us to make another ruling, well, I guess that's another thing."
With such impediments as price control and strict pollution regulations out of their way, California oil executives believe it will be only a matter of time until what was once virtually worthless petroleum becomes a key part of the nation's energy future.
"For years this oil was the bottom of the barrel and no one wanted it," said Duane Bland, a Getty oil company vice president. "Now everybody is beginning to realize how badly they need this oil. Suddenly we find everyone's very excited about what we're doing out there in those fields."