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Gold Rush, Take Two

news frackingIs California’s Central Coast prepared for a potential fracking boom?

It has only been in recent years that drilling techniques have been developed to tap the enormous gas reserves trapped in Marcellus Shale beneath the Appalachian Mountains. Now, the rolling hills are scattered with thousands of new wells that utilize high volume horizontal hydraulic fracturing—a method that injects water and chemicals into the surrounding rock to create fissures through which oil and gas can flow.  

Residents in Pennsylvania, Ohio and West Virginia call it “The Great Shale Rush.”  

A similar scene is now gaining momentum in Central California, and residents fear the boom will rival the gold rush and logging era. “Historically, there has been a lot of oil extracted in the region, and oil companies are trying to revitalize this,” says Jim Leap, of UC Santa Cruz’s Center for Agroecology and Sustainable Food Systems. “This may be the next boom zone.”

Leap recently watched from his neighbor’s property as a drilling rig was installed on a remote ranch in Santa Clara County. State records indicate that hydraulic fracturing, or fracking, has also occurred on site, although there is no way to verify the timespan or specific wells involved. “Oil exploration companies are coming into Santa Clara and San Benito counties and poking around—they are trying to rehabilitate older wells and sometimes drill new ones,” he says.  

Leap lives above Monterey Shale—one of the nation’s largest and most inaccessible shale oil reserves. As the easy-to-reach deposits have been accessed, fracking is used to tap new reserves and recover remaining resources from existing wells.

At least 750 California wells were fracked in 2009, according to a report published by the Oakland-based Environmental Working Group (EWG). The Denver, Colo.-based Venoco Inc. fracked 16 wells in Monterey Shale during the first quarter of 2008, and may have launched another 50 operations later that same year. Pinnacle Technologies—a Houston, Texas-based subsidiary of Halliburton—has used fracking to access Central California’s deposits, and in 2011 the Los Angeles-based Occidental Petroleum Corp. fracked wells in Kern and Ventura counties.

“Since fracking is not reported [to the state], it’s likely there are more operations than we know about,” says Bill Allayaud, California Director of Government Affairs at the EWG. Fracking remains largely unregulated in California, even despite its potential environmental impacts.

This is why the Division of Oil, Gas & Geothermal Resources hopes to begin a formal rule making process in February. Draft rules for hydrofracking were published in December, and public review and approval will now commence.  

Leap says the rules aren’t strong enough to protect farmland from exploitation and advocates for stronger water quality monitoring requirements. “With fracking, the number one concern is the potential for groundwater contamination,” he says.

In Central California, fracking often occurs five to eight thousand feet below ground, far beneath the water table. “As gas is pushed upward, there is a risk it will seep into groundwater,” says Leap. “The use of explosives during fracking also means that oil wells can fail and leach toxins directly into the aquifer.”  

Another major concern is what to do with contaminated frack water. To help facilitate fracturing and prevent microbial growth, carcinogens listed under California’s Proposition 65 are added to injected water. Diesel fuel is even used as an additive—between 2005 and 2009, nearly 27,000 gallons of diesel fuel were injected into California wells during hydraulic fracturing, according to a 2011 federal report published by the Committee on Energy and Commerce. Wells then pump millions of gallons of contaminated water back to the surface over time.

This is why Leap argues that the environmental review process for oil and gas drilling needs to specifically address fracking and its potential water quality impacts. “Before fracking can continue, each operation needs to meet water quality standards according to the California Enviornmental Quality Act (CEQA),” says Leap.

In October, the Environmental Working Group and other nonprofits sued the Division of Oil, Gas & Geothermal Resources for failing to consider the risks of fracking, as required by CEQA. Despite the suit, California’s new draft rules make no mention of water quality monitoring requirements. Oil companies are not asked to collect baseline measures of surrounding waters before fracking, or assess water quality impacts before and during operations.

Without these standards, it’s easy for the oil industry to dispute contamination, says Allayaud. The issue is gaining national attention thanks to the feature film Promised Land, which is currently in theaters. The problem also inspired the controversial film Gasland, in which a Colorado man lights his faucet water on fire—the result of methane leached from a local fracking operation.

“This isn’t happening in California, but it is a reality in other states where fracking for gas is commonplace,” says Allayaud. 

Communities now struggle to hold oil giants accountable.

If a similar scenario occurs in California, the agricultural industry will be devastated, says Santa Cruz’s congressional representative, Sam Farr. “A lot of agricultural water comes from the ground, and we need to make sure no one jeopardizes our clean agricultural water—this is much more valuable as an economic factor than oil and gas,” says Farr.  

During the gold rush, it was the agriculture industry that rallied against hydraulic mining, and the fishing industry similarly spoke out when logging operations polluted streams with sediment. Now fracking may once again pit two valuable state industries against one another.

“Ground zero is the Monterey Shale—this is the headwaters of the Salinas Valley River System, and it’s where the lease sales [for fracking] are going on,” says Farr. “This is why [fracking] may not prove cost effective … if we have leakage we are going to kill the goose that lays the golden egg.”

news frackingsThe question at hand is one of jurisdiction. Mineral rights are auctioned separately from property rights, and farmers have little recourse when companies try to frack on their land. Representatives from the oil industry now argue that county jurisdiction is limited to aboveground activities.

This week, the San Benito County Planning Department proposed a draft ordinance that requires fracking to undergo CEQA review. In response, the Board of Supervisors received dozens of letters from oil companies contesting county jurisdiction, including 1,000 pages from the industry-backed Conservation Committee of California Oil and Gas Producers.  

In San Louis Obispo, the Board of Supervisors voted to halt drilling projects proposed by the local oil company Excelaron LLC after an environmental report identified fire safety and noise pollution concerns. Exceleron sued for $6 billion in December 2012, claiming the county has no jurisdiction and can not prevent industry from accessing mineral rights. The case may determine whether mineral rights exempt oil companies from county-level environmental regulations.

This puts the spotlight on the California Division of Oil, Gas & Geothermal Resources, which remains the preeminent entity charged with regulating oil and gas production. The Division claims its draft rules protect against groundwater contamination by requiring well monitoring during fracking. In an email sent to GT, a spokesperson for the Division wrote, “These standards ensure against environmental harm.”

Yet the proposed rules offer no hearing, permitting or approval process to halt or delay fracking when it poses a risk. Instead, the first draft primarily outlines reporting criteria—if approved, fracking operations will be required to disclose activities on FracFocus.org and give 24-hour notice of activities so that witnesses can observe. Safety demonstrations must be reported 10 days prior to a fracking operation—a time frame that is too short for community members to respond, says Allayaud.

This is why some say the proposed fracking rules may not be strong enough to prevent catastrophic environmental damage should California’s shale rush rival past gold, logging and fishing booms.

“Ultimately the market will determine whether there is a boom cycle,” says Farr, “but before people say, ‘drill, baby, drill’ or ‘gut, baby, gut,’ we need to review our technical capabilities so we don’t repeat past mistakes.” 

PHOTOS BY CHARLES ROWLEY.

Comments (4)Add Comment
Executive Director, Monterey Bay Conservancy, Santa Cruz
written by Douglas Deitch, January 27, 2013
Is there not a possibility that fracking might contaminate our ground water commons here in the Monterey Bay with toxics which also lay proximate below the ground to our water, though now safely contained and isolated from it and that these same ground waters, already permanently fouled w/ nitrates and seawater from our prior miscalculations and misdeeds, is our $5 billion agbiz', tourists, and our residents' sole supply?
How much do we expect to make in oil? It's a simple choice...
...
written by Kara Zambricki, January 24, 2013
Lisa,
Horizontal hydraulic fracturing is new compared to what vertical drilling, which I am assuming you are referring to. I'm not sure how the increasing cost of oil has anything to do with this since the amount of gas produced wouldn't supply the US long enough to produce an economic surplus. While it is true that the 2005 energy policy opened the Haliburton Loophole, it is truly recent legislation, such as public utility status, that has allowed the boom in PA to happen . Thank you.
Just FYI
written by Lisa Stephens, January 24, 2013
As an FYI Fracking is not a 'new' thing and has not recently boomed because of new scientific drilling techniques as stated in your article. It's been around for decades and the recent boom has mostly been based on changes in policy (see 2005 Energy Act and intellectual property rights law) and increasing cost of oil and other international trade pressures.
TAX Oil
written by greg in Santa Cruz, January 23, 2013
The state should tax oil $10 a barrel. Other states do it. We don't. We're losers.

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