In a recent editorial, the Wall Street Journal examined the effects that Texas' and California's very different policy environments have had on oil production in those states. Specifically, the news source looked at how Texas' pro-development stance has encouraged economic growth while California's heavy-handed regulatory posture has prevented the state from capitalizing on its abundant resource base.
Both states have a long history of being major oil producers. However, their fortunes have diverged considerably in recent years. While Texas has rapidly expanded its oil production and enjoyed considerable economic gains in recent years, California has seen its energy output decline as its restrictive policies have discouraged new exploration and production efforts.
Changes in energy production reflected by rates of economic growth
Data from the U.S. Energy Information Administration shows that while Texas' oil production has roughly doubled since 2005, California's output has steadily dropped, falling more than 20 percent since 2001. The employment picture in each of these states reinforces the idea that energy development is a key driver of economic growth.
While Texas has outpaced every other state in terms of job creation since the recession and now has an unemployment rate—6.4 percent—well below the national average, California's joblessness problem has persisted, with unemployment remaining mired above 9 percent.
The decline in the Golden State's production is not due to a lack of available resources. The Department of Energy estimates that California's Monterey shale could contain as much as 15 billion barrels of recoverable oil. However, the political environment in the state is extremely hostile to oil and gas development, with numerous regulatory hurdles confronting any company that is looking to develop new resources.
Technology continues to be a key factor in setting the pace of development
While companies looking to drill new wells in restrictive states like California will continue to face significant obstacles, established operators may be able to improve the recovery rates from their existing wells by implementing advanced production equipment such as the hydraulic jet pump. This powerful tool utilizes a streamlined design that allows well operators to quickly increase production from straight or horizontal wells without compromising the safety or efficiency of the site.
Retrieval for optimization is performed by manipulation of surface valves, which means that a company can improve the performance of a well without having to make use of a work over or wire line unit. And, because the jet pump has no downhole moving parts, maintenance needs are minimal.
This versatile solution can also be put to use by firms looking to develop new wells, regardless of their location. Jet pumps can be used to successfully complete drill stem testing and initiate production at new sites in a manner that is both fast and safe.