Petroleum Extraction in Santa Barbara County, California:
An Industrial History

BACKGROUND: MMS requested researchers from the University of California, Santa Barbara to conduct an historic analysis of the petroleum extraction industry in San Luis Obispo, Santa Barbara and Ventura Counties from 1950 to 2015. The researchers developed separate, stand-alone reports on each of the three counties include an analysis of the oil industry’s evolution and projected future, its relationships with the surrounding communities, and its role in a complex economy. They also investigated the regulatory context in which oil does business, and to the kinds of innovations developed to operate in the Santa Barbara Channel’s natural and social environment. In addition to these reports, they produced an inventory of all firms operating in the tri-counties during these years, and which oil fields they operated (OCS Study MMS 98-0061).

This summary was developed by the researchers.

OBJECTIVES: Our goal is to provide an historical analysis of the evolution of the petroleum extraction industry in Santa Barbara County, including its changing business structure, economic impacts, technological advances, local social contexts, and governmental effects. We attempt to depict a comprehensive view of what an industry means as it operates in a given locale, documenting a wide variety of both direct and indirect consequences and relationships.

DESCRIPTION: Our methods are diverse, tailored to the specific research issue and available data. We interviewed or consulted approximately 100 persons with relevant views or information, drawn from a wide variety of business, government, and civic groups. We scrutinized government statistics from state, federal, and local agencies. We used multivariate regression analysis to determine economic effects; we examined tax documents to specify industry dollars contributed to the county tax base. Through interviews, phone inquiries, and document searches, we derived estimates of the industry’s local philanthropic contributions. We reconstruct, using state of California archives, a record of company activities in terms of which firms operated in which fields at which time points. We also provide information regarding oil firm adaptation and the special role of environmental consulting companies as part of the industry.

We provide information regarding local support and opposition to the industry and how political campaigns affecting the industry were conducted and funded. We indicate the nature of the industry’s labor supply, including the wage levels of personnel. We analyze the kind of regulations and local oversight faced by the industry and the way controversies, regulations, and permitting activities impacted local government operations. We also discuss technological advances stimulated by local drilling and production. Finally, we offer scenarios of potential future local operations.

SIGNIFICANT CONCLUSIONS: The petroleum industry’s long presence in Santa Barbara County has had important impacts both on the industry and the region, but not always of the expected kind. In economic terms, the effects have primarily been significant in terms of contributions to the county tax base (especially in certain earlier periods), as opposed to significantly stimulating growth in the private economy. In terms of business structure, the Santa Barbara County oil industry has consistently allowed room for small operators and independent producers, despite dominance by major companies. In terms of social context, the industry has been highly controversial, reflected in an on-going split between north and south county communities on the benefits and liabilities of the industry.

In part due to the county’s internal controversies over the industry, it has been highly regulated compared to its operations elsewhere, having consequences both for the industry’s ability to time its projects and the county’s administrative capacities. Among the innovations have been changes in regulatory rules as well as technological advances (stimulated as well by specific geologic conditions). Given current local and national attitudes toward the industry and offshore drilling in particular, any new initiatives will be carefully scrutinized by local government units.

STUDY RESULTS: The decline in volume of oil produced in Santa Barbara County onshore was compensated by offshore development, at least through the early 1980s. Based on our econometric analysis, it appears that although oil activity has been a steady part of the local economies over the period of our study, the region would have been equally as well off economically had there been no such activity. We could not find, using our regression analyses, any statistical pattern of positive impacts of the industry’s presence on the overall scale of economic activity. In terms of property tax payments, the industry generated $12.6 million in county revenues at its 1985 high point, a level it has recently approached again in 1996 after a decade of declining tax payments (falling as much as 33 percent in 1991).

The industry structure was remarkable in the degree that opportunities for new entrants continued over time, rather than the tendency toward monopolization often characteristic of industrial maturation. While major oil companies predominated until very recently, large independents and smaller operators have constantly been a significant part of the industry, keeping over 100 different producers in the fields of Santa Barbara County across the years. Turnover among producers (except, until recently, the major companies) has been a regular feature of the county’s industry, with successive waves of operators finding opportunity in the declining fields that no longer seemed as promising to previous producers. That is true of Outer Continental Shelf (OCS) activity, where a significant shift continues of major operators leaving the area, turning their investments over to smaller independents. Some oil-related firms diversified beyond petroleum operations, including a significant sector of environmental consulting which is particularly strong in the Santa Barbara South Coast region.

Santa Barbara County’s relatively stringent regulatory regime on all development issues has affected oil with particular force. Costly political campaigns have been waged, including elections at the local supervisorial level and county-wide initiatives affecting the industry. The North County region tends to support the industry’s expansion, both through the kinds of candidates it elects to office and voters’ positions on oil-related initiatives. Past pollution events, especially the 1969 oil spill and—to a lesser degree—the long-term and high-volume diluent spill at the county’s northern border, are significant to local discourse. In terms of innovations over the years, the most important local technological advances have come in the form of enhanced capacity to drill at great water depths. Regulatory innovations have also been strong, such as the SEMP program through which the industry pays offsets as its impacts are detected and measured rather than through fees set in advance of development.

Current proposals for additional oil activities (and likely scenarios for the near-term) involve one or two slant-drilling initiatives. Given the modest impacts of the industry’s current production regime, it is doubtful that such operations will have important aggregates impacts on the county’s economy, social make-up, or governmental structure (although site-specific impacts are potential).

STUDY PRODUCTS:

Adamson, Michael R. "Oil Exploration and Production in California’s Santa Barbara and Ventura Basins: The Structure of Industry, 1950-1995."

Adamson, Michael R. "Oil Exploration and Production in California’s Santa Barbara and Ventura Basins: The Persistence of Small Entrepreneurs in the Regional Oil Industry, 1950-1995."

Adamson, Michael and Randolph Bergstrom. Exploration and Production in Ventura, Santa Barbara, and San Luis Obispo Counties, California: Oil Well Operators, 1950-1997. OCS Study MMS 98-0061.

Beamish, Thomas D. Silent Spill. Ph.D. Dissertation. Department of Sociology. University of California-Santa Barbara.

Beamish, Thomas D. "Silent Spill: Responsible Party, Remedial Agency, and Community Responses to a Creeping Case of Contamination." A paper presented at the annual meeting of the American Sociological Association, San Francisco, August 1998.

Beamish, Thomas D, Harvey Molotch, Perry Shapiro and Randolph Bergstrom. Petroleum Extraction in San Luis Obispo County, California: An Industrial History. OCS Study MMS 98-0049

Beamish, Thomas D. and Krista Paulsen. "The Santa Barbara Channel Post-Petroleum Economy: Environmental Consulting Proliferates."

Nevarez, Leonard, Harvey Molotch, Perry Shapiro and Randolph Bergstrom. Petroleum Extraction in Santa Barbara County, California: An Industrial History. OCS Study MMS 98-0048.

Paulsen, Krista, Harvey Molotch, Perry Shapiro and Randolph Bergstrom. Petroleum Extraction in Ventura County, California: An Industrial History. OCS Study MMS 98-0047.

Romo, Jacqueline. Women on the Rigs: A Gender Accomplishment. Masters thesis. Department of Sociology. University of California-Santa Barbara.