The Two Faces of California

How the greenest state in the country copes with an oil and gas boom.

A kitesurfer sails through the surf near an oil tanker off the coast of Seal Beach.
National Journal
Amy Harder
Oct. 14, 2013, 4:52 p.m.

HER­MOSA BEACH, Cal­if. — Loc­als call the board­walk along the beach the “Strand.” In this small Los Angeles sub­urb 15 miles south of the fam­ous Santa Mon­ica pier, it’s easy to run in­to someone you know, and you can walk just about every­where. But this is still South­ern Cali­for­nia. Most people have cars, too.

The city’s 20,000 res­id­ents, whose av­er­age in­come is roughly $100,000 (al­most double the na­tion­al av­er­age), also have noble sus­tain­ab­il­ity com­mit­ments. The city has banned Styro­foam cups, in­stalled elec­tric-car char­ging sta­tions down­town, and in 2010, the may­or pledged to make Her­mosa Beach car­bon-neut­ral.

“The clean-tech, clean-en­ergy, green-jobs eco­nomy is com­ing and com­ing fast,” then-May­or Mi­chael Di­Vir­gilio wrote in an op-ed. “We share a vis­ion for our city’s fu­ture as a fer­tile home for new green ideas, busi­nesses, tech­no­lo­gies, and prac­tices.” Her­mosa Beach res­id­ent and former may­or George Schmeltzer is fight­ing a pro­pos­al to drill for oil in this wealthy, beach town. (Amy Harder)

But even idyll­ic Her­mosa Beach — so fas­ti­di­ous it does not al­low wed­dings on the beach — can­not es­cape the na­tion’s oil and nat­ur­al-gas boom. Four blocks up from the Strand, E&B Nat­ur­al Re­sources, an in­de­pend­ent oil com­pany based in Bakersfield, Cal­if., is seek­ing to drill as many as 35 wells to re­cov­er up to 35 mil­lion bar­rels of oil on a site that’s just 1.3 acres. New dir­ec­tion­al-drilling tech­no­logy would al­low E&B to drill un­der­neath the beach and out in­to the ocean floor.

Her­mosa Beach’s struggle re­flects a broad­er battle tak­ing place in Cali­for­nia: The green­est state in the uni­on, with a fierce reg­u­lat­ory re­gime com­bat­ing pol­lu­tion and fos­ter­ing en­vir­on­ment­al­ism on al­most every level, is hav­ing to sim­ul­tan­eously cope with an en­ergy boom along its oil-rich shoreline.

Cali­for­nia has al­ways had a lot of oil. Fif­teen of the coun­try’s 100 largest oil fields are there, ac­cord­ing to 2009 data from the fed­er­al En­ergy In­form­a­tion Ad­min­is­tra­tion. After dec­ades of de­clin­ing oil pro­duc­tion, the one-two com­bin­a­tion of stable, high oil prices and new drilling tech­no­logy, in­clud­ing dir­ec­tion­al drilling and hy­draul­ic frac­tur­ing, more com­monly known as “frack­ing,” is prompt­ing com­pan­ies to ramp up pro­duc­tion, both in Cali­for­nia’s rur­al Cent­ral Val­ley near Bakersfield and in urb­an Los Angeles.

The Monterey Shale form­a­tion in the San Joa­quin Val­ley is es­tim­ated to hold two-thirds of the coun­try’s on­shore oil-shale de­pos­its. If pro­du­cers can de­vel­op the tech­no­logy to tap in­to this rock — a big if — Cali­for­nia is poised for an even big­ger oil comeback than an­ti­cip­ated.

“With the like­li­hood of oil stay­ing at $100 a bar­rel or more, we will likely see an in­crease in both the re­search and de­vel­op­ment and the pro­duc­tion side,” said Mark Necho­dom, dir­ect­or of Cali­for­nia’s Con­ser­va­tion De­part­ment, the agency tasked with reg­u­lat­ing the oil and nat­ur­al-gas in­dustry. “People don’t even real­ize that Cali­for­nia is an oil pro­du­cer, let alone that it’s the fourth-largest oil and gas pro­du­cer in the coun­try.”

Most people do real­ize, though, that the Golden State is a glob­al lead­er in com­bat­ing cli­mate change and de­vel­op­ing re­new­able en­ergy. In 2006, then-Gov. Arnold Schwar­zeneg­ger signed a bill in­to law that at­temp­ted to slash green­house-gas emis­sions from all corners of the Cali­for­nia eco­nomy.

On top of a cap-and-trade sys­tem for emis­sions in all sec­tors of its eco­nomy, Cali­for­nia also im­poses a low-car­bon stand­ard for trans­port­a­tion fuels and one of the most am­bi­tious re­new­able-elec­tri­city stand­ards in the coun­try, man­dat­ing that 33 per­cent of the state’s elec­tri­city come from re­new­able sources by 2020.

In­deed, Cali­for­nia is the coun­try’s re­new­able-en­ergy lead­er. It has in­stalled al­most five times more sol­ar power in the first quarter of this year than the second-closest state, Ari­zona, ac­cord­ing to the latest data from the Sol­ar En­ergy In­dus­tries As­so­ci­ation. Early next year, the largest sol­ar pro­ject in the world is slated to be­gin gen­er­at­ing elec­tri­city for up to 140,000 homes from the Mo­jave Desert.

The state trails only Texas in in­stalled wind ca­pa­city and is first in geo­therm­al pro­duc­tion.

But everything is re­l­at­ive. Necho­dom points out that, des­pite the im­press­ive lead­er­ship on re­new­able en­ergy, Cali­for­nia’s eco­nomy — the eighth largest in the en­tire world — is still 96 per­cent re­li­ant upon oil and nat­ur­al gas. Cali­for­nia drivers use 14 bil­lion gal­lons of gas­ol­ine every year, ac­cord­ing to the Air Re­sources Board, the state’s clean-air reg­u­lat­ory agency.

“The real­ity is, civil­iz­a­tion is about the con­cen­tra­tion of en­ergy, and right now hy­dro­car­bons are our most abund­ant and eco­nom­ic re­sources,” said Necho­dom, whose ca­reer in­cludes stints work­ing on cli­mate change at the fed­er­al Ag­ri­cul­ture De­part­ment and in the bio­mass in­dustry. “But if we are not in the longer term work­ing on the trans­ition to a lower car­bon in­tens­ity, what are we do­ing? I’ve had that po­s­i­tion for years, and that’s why I’ve worked act­ively on the fed­er­al cli­mate bill. We need to move to some oth­er way of power­ing our eco­nomy.”

That fight is tak­ing place now at al­most every level of gov­ern­ment, from reg­u­la­tions in Wash­ing­ton to fights like the one in Her­mosa Beach. As the res­ult of a con­vo­luted leg­al battle dat­ing back to 1985, Her­mosa res­id­ents will vote next year on wheth­er to al­low E&B’s pro­ject. If the com­pany wins, it would be the first oil drilling here in more than 80 years. If it loses, the city owes the com­pany $17.5 mil­lion.

“Our com­pany has a few pro­jects in Cali­for­nia where we have a lot of re­serves, and those re­serves have be­come eco­nom­ic be­cause of high oil prices,” said Mike Finch, a vice pres­id­ent at E&B. He cited high oil prices and new tech­no­logy as key reas­ons the com­pany is pur­su­ing drilling in Her­mosa. “But the main thing is, we’re very con­fid­ent in the fact that there is oil here in Her­mosa Beach and there is a lot of it,” Finch said.

The unique cir­cum­stances are trig­ger­ing a small-town de­bate about oil drilling, its po­ten­tial be­ne­fits and draw­backs for the city, cli­mate change, and the U.S. ad­dic­tion to oil. Her­mosa is try­ing to do its part, with its car­bon-neut­ral goal, but there’s no deny­ing that oil drilling will make that goal tough­er to meet.

Her­mosa res­id­ents Sta­cey Armato and George Schmeltzer are among the lead­ers in the fight against drilling, re­cently form­ing a polit­ic­al ac­tion com­mit­tee, Stop Her­mosa Beach Drilling, to cam­paign against E&B’s pro­ject. They’re wor­ried about a whole host of things, in­clud­ing that the com­pany might frack to tap the oil (both the com­pany and city of­fi­cials say no frack­ing will oc­cur). Most of all, they just don’t want drilling in their back­yards.

“We think it’s in­her­ently not something that goes in­to an urb­an en­vir­on­ment,” said Schmeltzer, a former may­or of Her­mosa. “I don’t have a prob­lem with oil as long as it’s part of a pro­cess that looks to a fu­ture that elim­in­ates it.”

But for now, oil is very much part of the present, even in the green­est state in the U.S.

What We're Following See More »
Everyone’s Taking Their Best Shots at Philly
50 minutes ago

Not since Eagles fans booed Santa Claus have this many people been dismayed at Philadelphia. Traffic gridlock, poor logistics, and the inevitable summer heat and thunderstorms are drawing the ire of convention goers, as "peeved" delegates complained about "Homerian odysseys" to get from place to place. "On Twitter, out-of-town media complained about the logistics of the convention, spread out between the sports complex in South Philadelphia, media tents a hike away, and the daytime events at the Convention Center in Center City."

France Wakes Up to More Terrorism
1 hours ago

"Two attackers killed a priest with a blade and seriously wounded another hostage in a church in northern France on Tuesday before being shot dead by French police. The attack took place during morning mass at the Saint-Etienne parish church, south of Rouen in Normandy. Five people were initially taken hostage." The case has been referred to anti-terrorism officials in Paris.

Roll Call Sets the Stage for More Drama
1 hours ago

"Sometimes, unity is procedural. Mr. Sanders’s delegates will get the chance to back him in a roll-call vote from the convention floor on Tuesday, a largely symbolic gesture intended to recognize the breadth of Mr. Sanders’s support as the former rival campaigns negotiate an awkward peace." Around 6 p.m., they'll begin calling the states to vote. Sanders won't be in a generous mood—at least at the beginning. Last night from the stage, he said, "I look forward to your votes during the roll call tomorrow night." Indeed, in 2008, Clinton herself insisted on a roll call, before halting it "midway through, asking that Mr. Obama be approved by acclamation."

Bernie Sanders Seeks to Unite the Party
11 hours ago

Instead of his usual stump speech, Bernie Sanders tonight threw his support behind Hillary Clinton, providing a clear contrast between Clinton and GOP nominee Donald Trump on the many issues he used to discuss in his campaign stump speeches. Sanders spoke glowingly about the presumptive Democratic nominee, lauding her work as first lady and as a strong advocate for women and the poor. “We need leadership in this country which will improve the lives of working families, the children, the elderly, the sick and the poor,” he said. “Hillary Clinton will make a great president, and I am proud to stand with her tonight."

Elizabeth Warren Goes After Donald Trump
11 hours ago

In a stark contrast from Michelle Obama's uplifting speech, Massachusetts Senator Elizabeth Warren spoke about the rigged system plaguing Americans before launching into a full-throated rebuke of GOP nominee Donald Trump. Trump is "a man who has never sacrificed anything for anyone," she claimed, before saying he "must never be president of the United States." She called him divisive and selfish, and said the American people won't accept his "hate-filled America." In addition to Trump, Warren went after the Republican Party as a whole. "To Republicans in Congress who said no, this November the American people are coming for you," she said.