Petroleum Extraction in San Luis Obispo 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 San Luis Obispo County, including its changing business structure, economic impacts, technological advances, local social contexts, and governmental effects. We attempt a comprehensive view of what an industry represents as it operates in a given locale, documenting a wide variety of both direct and indirect consequences and relationships.

DESCRIPTION: Our methodology was diverse, tailored to the specific research issue and available data. We interviewed or consulted over 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 also address local support and opposition to the local industry as well as how political campaigns affecting the industry have been conducted and funded. We indicate the nature of the industry’s labor supply, including the wage levels of personnel. We analyzed the kind of regulations and local oversight faced by the industry and the way controversies, regulations, and permitting activities impacted local government and regional producers. Finally, we 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 San Luis Obispo 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 social context, the industry has been highly controversial, reflected in a regional distrust of ‘outsiders’: petroleum producers and the federal government being the primary target of this recreancy.

The county’s resistance to the industry’s attempts to develop offshore tracts has come to shadow even onshore production. This has impacted the industry through the intense attention that petroleum related issues have received from local media and a citizenry concerned over the potential for environmental degradation. Among the innovations that this concern has generated have been changes in regulatory rules as well as technological advances to meet pollution abatement demands (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 onshore in San Luis Obispo County has not, like the counties to the south been compensated for by an offshore component. 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, since generating $ 1.9 million in county revenues for 1985 the industry’s contribution has consistently declined, not exceeding $ 1 million thereafter.

The industry’s 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. In terms of current petroleum activity, the shift observed in California generally—major operators leaving the area, turning their investments over to smaller independents—has been mirrored with Torch/Nuevo Energy Company’s acquisition of Union Oil Company properties. With the exception of four contaminated properties that Torch/Nuevo and Unocal are obligated to clean up, Unocal’s nearly 100 years of oil production in San Luis Obispo County is largely over. Other oil-related firms diversified beyond petroleum operations, including a significant sector of environmental consulting which while particularly strong in the Santa Barbara South Coast region, also has a noticeable presence in San Luis Obispo.

Current proposals for additional oil activities involve one or two slant-drilling initiatives. Given the strong community resistance to anything related to oil development, the successful passages of "Measure A" (a referendum that requires a popular vote for oil development), as well as San Luis Obispo's recent history with a number of oil mishaps (spills in areas that might be considered for future slant drilling projects), it is doubtful that such operations would be developed on land on San Luis Obispo County’s South Coast.

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 R. 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.