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SACRAMENTO –Notices
to drill new natural gas wells in
Northern California are being received
at a pace not seen since the mid-1980s,
and the total for any single year in the
1990s will soon be surpassed.
As of August 31, the
Department of Conservation (DOC) records
show that its Division of Oil, Gas, and
Geothermal Resources' office in
Sacramento had issued 178 permits to
drill new wells in Butte, Colusa, Contra
Costa, Glenn, Solano, Sutter, Yolo, San
Joaquin, Sacramento and Tehama counties.
At the current rate, 267 notices will be
filed by the end of the year, compared
to 137 in 2000. Drilling activity in the
previous decade ranged from 187 permits
issued in 1990 to only 78 in 1995.
In March, 2001
Governor Davis directed Mary D. Nichols,
Secretary for Resources, to form and
chair the multi-agency Natural Gas
Working Group to closely monitor natural
gas supply, demand and price. The Group
also facilitates gas projects throughout
the State.
"I congratulate our
gas producers for their rapid response
to California's pressing energy needs,”
said Secretary Nichols. “The latest
figures on in-state natural gas drilling
show that California is making progress
to increase our native sources of energy
production."
Most of the new
activity is taking place in proven gas
fields, which contain about 900 active
wells. In some cases, such as the
Denverton Creek field in Solano
County,field boundaries are being
extended when the new well drilling
proves successful. In other cases, such
as the Willows-Beehive Bend field in
Glenn County and the Rio Vista field,
operators are drilling deeper within
existing field boundaries.
Last January, the
fair market price of gas, according to
the Natural Gas Intelligence Weekly Gas
Price Index, was $14.32 per thousand
cubic feet, and soared into the $50-$60
range in the spot market. Currently, gas
sells for about $3.40 per thousand cubic
feet, and the spot-market price has at
times dipped below $3. The price could
rise as winter approaches.
The pace of new
drilling notices has been relatively
consistent this year, peaking at 18 the
week of June 30. All of the new drilling
is unlikely to put much of a dent in the
amount of natural gas the state imports,
however. California produces about a
billion cubic feet per day -- ranking it
10th in the nation -- but uses more than
six times that amount, with most of the
gas coming from Texas, Wyoming and
Canada.
California natural
gas production dropped between the
mid-1980s and the early 1990s, falling
off sharply in 1992. Production has
risen slightly of late, led by Stream
Energy Inc. in the Todhunters Lake gas
field in Yolo County and Calpine Natural
Gas Co. in the Rio Vista field.
Most of the natural
gas produced in-state comes not from gas
wells, but as a byproduct of oil
production. The Elk Hills oil field in
Kern County accounts for 40 percent of
the state's natural gas production.
Situated within the
Resources Agency, DOC regulates oil,
natural gas and geothermal wells;
studies and maps earthquakes and other
geologic phenomena; maps and classifies
areas containing mineral deposits;
ensures reclamation of land used for
mining; administers agricultural and
open-space land conservation programs;
and promotes beverage container
recycling. DOC's Division of Oil, Gas,
and Geothermal Resources ensures the
safe exploration and development of
energy resources. It oversees the
construction, operation and closure of
oil, natural gas and geothermal wells,
an important step in guarding drinking
and agricultural waters against
pollution.
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