Californian oil

Press, 27 February 1980, Page 24

Californian oil

By;

JOHN HUTCHISON

in San Francisco

0.P.E.C., by continuing to boost the price of petroleum, may at last have unlocked a ■vast store of California’s treasure. It is the deposits of very heavy crude” which have until now been too costly to recover profitably. The term refers to oil so thick and sticky that it can only be driven from the earth with special processes. One of them is the injection of steam into the wells. On a scale at which 6■degree crude is thicker than fresh mortar and 40-degree crude has the consistency of cooking oil, much of the California inland product is rated at 12 to 14 degrees. Offshore are large deposits that measure about 18. The state has

been a major American source of lighter, readily merchantable oil for more than 100 years, and oil, is the state’s most valuable mineral resource. Some of the thousands of pumping wells lie in state land, and one large reserve, nationallyowned, is set aside as a strategic resource for military, emergency. The very heavy crude, however, remains untouched. One more price hike by the international oil cartel is about all that is needed to make the viscous stuff profitable. Exploitation of the heavy crude could produce state leasing and tax revenues of as much as $6OOO million in this decade, one state official estimates, although he admits

the unpredictability of the projected oil prices on which his appraisal is based. Politicians and administrators eye the envisioned bonanza eagerly. It could rescue many services and development programmes which have been curtailed by Proposition 13 and may be sacrificed in entirety by new voter assaults ort public spending. Fresh propositions to limit the state’s budget and to cut income taxes in half are being readied for the ballot and appear to have excellent chances of passage this year. First of the oil windfalls is imminent, from leases expected to be contracted this vear for rights to drill in tidelands. The governor’s current budget anticipates $270 million a year from this source alone.