Fresno County crude oil production modest, but rising

For most Fresno residents, the closest they come to the oil and gas industry is when they pull into a gas station for a fill-up.

Plenty in the central San Joaquin Valley know that Bakersfield and Kern County are the epicenter of oil production in California. But fewer realize that tucked among the hills to the west near Coalinga — and scattered across farmland closer to Fresno — are subterranean pools of liquified and gasified remains of plants and animals that thrived millions of years ago. Now, thousands of wells tap those pools, producing millions of barrels of crude oil and billions of cubic feet of gas each year. They fuel an industry that directly contributed almost $380 million to the county’s economy through payroll and purchases in 2013 and produced more than $370 million worth of goods and services.

Of California’s 58 counties, Fresno ranked sixth in crude oil production and 16th in gas production in 2013, according to the last full year for which final county-by-county figures are available from the state’s Division of Oil, Gas and Geothermal Resources. That year, wells here produced more than 5.9 million barrels of oil and 509.4 billion cubic feet of gas.

The bulk of the oil produced in Fresno County comes from the Coalinga oilfield, the single largest field in the county and 76th among the top 100 producing oil fields in the U.S. based on 2013 production. As of April, the oilfield near the Alcalde Hills and Big Blue Hills was dotted with nearly 1,800 active wells and another 1,200 wells that were inactive at the time. The U.S. Energy Information Administration reports that the Coalinga field, first discovered in 1887, produced more than 5.6 million barrels of oil in 2013.

In a new report issued last month with preliminary production estimates for 2014, the state Department of Conservation estimates that the Coalinga field production rose to 6.1 million barrels in 2014, along with 252 trillion cubic feet of gas. Total oil production in 2014 from fields in Fresno County grew to more than 6.5 million barrels.

A barrel of crude oil equals 42 gallons.

Not all of the black gold is in “them thar hills,” however. Fresno County’s second-, fourth- and fifth- biggest producing fields are on the Valley floor only a few dozen miles southwest of Fresno, near the communities of Raisin City, Riverdale and Helm. Those three fields combined to produce more than a quarter million barrels of oil in 2014, according state records.

While the production volume of these smaller fields pales in comparison to their larger cousins in western Fresno County and Kern County, it was enough to entice a new Louisiana-based oil company, White Knight Production LLC, to acquire the Raisin City, Riverdale and Helm fields, according to state records. The company declined to identify the fields when it announced the acquisition in June, but acknowledged that they have produced more than 120 million barrels of oil since they were first tapped in the 1940s.

According to state oil and gas reports, White Knight had 44 active wells operating in April, along with 124 wells that were inactive that month. The operating wells produced about 468 barrels of oil a day in April.

White Knight said it hopes to use improved technology to increase production from its wells. “To try to say absolutely how much oil is left down there is anybody’s guess,” White Knight chief financial officer Dave Knox said from Houston when the oilfield acquisitions were announced. “Oil and gas is a risk business. … But (the fields) are currently producing and making money.”

Economic effects

The oil and gas industry is estimated to directly employ more than 1,900 workers in Fresno County along the entire supply chain, from oil and gas extraction and well-support operations to pipeline construction to fuel wholesalers, fuel dealers and gasoline stations. According to an industry analysis produced last year by the Los Angeles County Economic Development Corporation, those jobs added up in 2012 to a total payroll of almost $125 million. The industry spent another $252.4 million with vendors for supplies and services. The value of the industry’s production and its goods and services in Fresno County amounted to $371.1 million.

That report, produced for the Western States Petroleum Association, noted that statewide, “the (oil and gas industry’s) primary economic contribution to California’s economy is the expenditure of hundreds of millions of dollars toward goods and services from regional vendors.” Those vendors, in turn, circulate the money through the economy in the payroll of their employees and with their own purchases of goods and services. “The recirculation of the original expenditures multiplies the initial spending through these indirect and induced effects,” the Los Angeles EDC report states.

By the time those multiplier effects spread through the economy, Fresno County realized nearly 3,000 jobs with payroll and benefits totaling $170.5 million. The effects grow to more than $1.4 billion a year when the ripples of employment, spending and output are joined by more than $400 million paid in sales, property, income and corporate taxes.

One aspect of the industry that’s not represented in Fresno County is refining. “All of the oil that’s produced in California remains in California,” said Tupper Hull, vice president of communications for the Western States Petroleum Association. But aside from two relatively small refineries in the Bakersfield area, all of California’s oil is refined in the Bay Area and in Los Angeles.

And while the state’s wells pumped a total of 205.2 million barrels of oil in 2014, that only represents about 38% of California’s oil demand. Another 14% of comes from Alaska, “and about half is foreign oil,” Hull said. The three biggest sources of foreign oil are Saudi Arabia, Iraq and Ecuador, he added.

Fresno State economics professors Antonio Avalos and David Vera said that oil and gas production statewide and the Valley has declined since peaking in 1985. That could change, however, if the Monterey Shale Formation — a 1,750-square-mile geologic formation of oil-rich shale on the Valley’s west side — can be profitably exploited through hydraulic fracturing, or “fracking.”

“The Monterey Shale Formation … creates the opportunity of a new era for California and the Valley in terms of energy generation as oil and gas production could significantly increase again,” Avalos and Vera wrote in a 2013 analysis. Depending on future production output from the formation, the pair estimated that Fresno County could realize a gain of between 519 and 8,327 jobs across the entire economy; if an oil boom were to occur, the increase in jobs could be as much as 47,251.

This story was originally published July 31, 2015 at 9:00 AM with the headline "Fresno County crude oil production modest, but rising."