Specific Legislative Solutions to Address These Challenges Include

Encouraging Natural Gas Production in California
California natural gas producers provide 15% of the total gas consumed in California. Last year, California produced 376.5 billion cubic feet in natural gas. This gas was produced, sold, and consumed entirely by and for California consumers. According to the California Division of Oil, Gas, and Geothermal Resources, California is estimated to have as much 3.8 trillion cubic feet of natural gas in on-shore reserves, and as much as 21 trillion cubic feet in offshore reserves.

Despite the presence of such large reserves, California's producers face multiple financial, regulatory, and situational hurdles that work to limit their ability to substantially increase in-state natural gas production. To help address these challenges, CIPA recommends strengthening the California Natural Gas Policy Act by encouraging and incentivizing local jurisdictions, state agencies, and the state's utilities to fast track permitting, pipeline construction and hook-ups of in-state natural gas production.

Specific legislative solutions to address these challenges include:

w Create new tax incentives for utilities based on the amount of in-state production they accept. Examples include creating a facilities connection tax credit and creating an accelerated depreciation schedule for new capital involved in hooking up new wells to delivery lines.

w Require utilities to respond to requests for new well hook-ups within a legislatively mandated timeframe. Create new financial disincentives for utilities that refuse to hook up new wells capable of providing new sources of natural gas.

w Require counties to process new drilling applications within four weeks of receiving the application if both the mineral and landowner's signatures are provided.

w Enact categorical CEQA exemptions for exploratory oil and gas wells being sited on agricultural lands.

w Create a task force with the Division of Oil and Gas to supply the Legislature with suggestions on how to increase natural gas production within the state.

w Create new tax credits to encourage exploratory drilling and extend the manufacturers investment tax credit to oil production to free up producer resources to engage in more drilling opportunities.
For additional information, please contact CIPA's Director of Public Affairs, John Martini, at (916) 449-6848, or CIPA's legislative advocate Theo Pahos at (916) 441-0838.

(1/31/01)