14 states have all but banned or restricted fracking, awaiting the onset of safeguards and firm regulatory foundations. In sharp contrast with other energy-rich states, California has veritably no regulatory framework in place for hydraulic fracturing. And yet the state contains what may be the largest shale oil reserves in the U.S – the prized Monterey shale formation – which was host to 628 fracking operations in 2011 alone. That means that 1 out of of every 3 wells drilled statewide that year was fracked. Throughout this summer, California has been embroiled in legislative debates, lawsuits between environmental groups and the regulatory agency for oil & gas (DOGGR), and statewide opinion polls on the matter.
Industry records date the statewide use of fracking back to 1953, and yet California’s debates on regulating the practice have come late. Why? In part, the discussion has been delayed due to fracking’s nationwide noteriety as being strictly associated with the shale gas boom. We’ve grown accustomed to hearing about how fracking operations enhance natural gas recovery, but not often oil recovery. California’s 1,750 square miles of Monterey Shale reserves, however, is exclusively oil. Just as it’s useful for natural gas, hydraulic fracturing is equally propitious for extracting oil. Unfortunately, only independent organizations and scattered company reports indicate reliably the extent to which fracking has been used. DOGGR – or California’s Division of Oil, Gas, and Geothermal Recources – admitted in a letter to Senator Pavley that there are no regulatory or tracking parameters regarding the use of fracking across the state. Moreover, the agency’s 2009 statement on hydraulic fracturing asserted, in contradiction to industry reports, that fracking was an uncommon practice in California.
California has long witnessed a rush for its oil. In fact, companies have been commercially drilling and refining California’s massive onshore and offshore oil reserves since the 1850s. Onshore production reached its peak in the 1980s, but due to overproduction, lack of new discoveries, a worldwide collapse in oil prices, and the need for more expensive techniques to recover what was already lower-quality crude oil, California’s production dwindled substantially until a revival era began in the early 2000s. The use of newer recovery methods – such as hydraulic fracturing – increased by 62% in 2001. California’s large, southern agricultural valley extending to the coast is estimated to contain two-thirds of U.S shale oil reserves – or 15.4 billion barrels. An increase in alternative recovery methods may also occur in Northern California, where natural gas deposits have been discovered.
In statements released in the 1960s and 1970s, engineers working with Mobile Oil Corp and Tenneco frequently reference the use of hydro-fracturing in the Los Angeles Basin and the San Joaquin Valley, to the tune of hundreds of frack treatments – and 53 jobs in the fields along the Whittier faultline between 1953 and 1960 alone. Fracking was deemed necessary to tap old oil fields that had already been exploited by conventional techniques, old wells with known potential locked away in tighter rock foundations below. But apart from the information fetched from the Western States Petroleum Institute or a handful of disclosed operator’s reports, there are no public records of fracking because California doesn’t require notification to any state agency about when or where fracking occurs.
Now, it’s certain that fracking has taken place in 6 Californian counties, including Kern, Los Angeles, Monterey, Sacramento, Santa Barbara, and Venture, though it is unclear how many of the 52,186 oil wells and 1,639 gas wells have employed fracking treatments. The total number of fracked wells is likely over 1,000, considering that the Environmental Working Group (or EWG) did uncover about 600 wells fracked in Kern county alone in the mid 1990s. Since then, 50-60% of new wells drilled in the same county receive fracking treatments. Kern county, indeed, is the county to watch: 80% of fracked wells are located in their borders, whereas the northern shale formations, such as those in the Sacramento Valley, have seen very little fracking.
That said, data (to date) is still limited. This is problematic because experts and companies such as Venoco and Occidental Petroleum indicate that a sharp increase in hydo-fracking activity is likely to occur due to high global oil prices and speculation, but there is limited institutional capacity on behalf of state agencies such as DOGGR to track or regulate it. Though DOGGR received more than $3 million between 2010-2011 to expand its regulatory program, it has not yet passed any regulatory framework to date. Public outcry has prompted the agency to release a draft proposal of fracking regulations by the end of this summer.
For years, the state’s Public Resources Code has included strict requirements on oil and gas wells, mandates related to well integrity, cement casing, and protection of underground and surface water. Drillers must also apply for a permit from DOGGR before drilling new wells, reworking existing wells, or plugging old wells. The agency purports to keep record of the amount of oil and gas produced and the depths at which drilling occurs, but there is no unified long-term source to monitor any fracking operations within the state. Through FracFocus, oil and gas operators in California can voluntarily report fracking sites (as well as volumes, chemical composition of fracking fluid, etc) but reports are scant and include only wells drilled after 2010. FracFocus’ estimates may not be accurate or all-inclusive, citing only 459 wells drilled since 2011 (whereas EWG confirmed over 600 in 2011 alone). California’s Uniform Trade Secrets Act allows companies to withhold information about fracking fluid composition as a trade secret.
California fracking lawsuits
On February 16, 2011, the supervisor…acknowledged that Department of Oil, Gas, and Geothermic Resources had not reliable information on the extent of hydraulic fracturing activities and has imposed no reporting or permitting requirements on the practice despite the clear regulatory authority to do so. DOGGR does not have data on the safety, efficacy, and necessity of hydraulic fracturing as currently employed in California. (Senate Committee on Natural Resources and Water)
Two lawsuits that began late last year and early this spring have stirred the fracking regulatory debate in California.
1) In October 2012, the Center for Biological Diversity, Earthworks, Environmental Working Group, and the Sierra Club sued DOGGR over what they deemed an illegal, haphazard permitting and approval process for oil and gas drilling leases. Specifically, the environmental organizations claim that DOGGR issued a number of permits without conducting a mandatory environmental review first, a process required by CEQA (California Environmental Quality Act).
2) In April of this year, the Bureau of Land Management (BLM) was also sued in Californian courts by the same environmental groups. A federal judge has temporarily stalled exploratory drilling activities on 2,700 acres of federal land after he ruled that an environmental review (mandated under NEPA) had not been conducted before the land had been leased. Following the ruling, the Northern District of California court stated that the BLM land auctions for oil & gas leases relied on outdated environmental impact analyses that fail to take into account the effect of fracking on water and agricultural sources in the Fresno and Monterey counties.
A total of 9 bills have since been introduced in the California State Legislature regarding fracking, which address issues related to pre-drilling and post-drilling water testing, advance notice, and trade secrets. In late May, an effort to ban fracking was voted down; Holly Mitchell’s Assembly Bill 1323 would have placed a statewide moratorium on fracking until a review of the risks it posed to the environment and public health was released. One promising bill that has a greater chance of receiving favor was drafted in early June by Senator Fran Pavley – a “comprehensive regulatory bill” called SB4 – which would:
- Require oil companies to give a full list of chemicals used in fracking and the concentration of each chemical used
- Require companies to disclose how much water is used in each fracking treatment and how the treated water/fluid is disposed afterwards
- Require a scientific study on fracking to be conducted and reviewd by 2015
- Allow government to randomly inspect any fracking facilities within the state
- Work in conjunction with local boards and relevant agencies to employ further rules for implementation in early 2015
- Ensure citizens’ right to request the Regional Water Quality Control Board to test their well water pre- and post-fracking
Future of fracked oil in California
A state-wide poll found that 70% of Californians who responded favor a ban for shale oil drilling or expressed need for more state regulations. But the level of support was found to increase if voters were given certainty that fracking would reduce gasoline prices for U.S consumers. Oddly enough, though fracking operations have supposedly increased since the 1990s, California’s oil production rates have decreased from 200.5 billion barrels in 2008 to 184.3 billion barrels in 2012. It is unclear how new techniques are (as of yet) increasing production.
Citizens should keep track of SB4 as well as DOGGR’s website, where a draft of California’s fracking regulations will be posted within the next few months. Additionally, citizens living in the counties with active fracking operations (listed above) should take heed of how local authorities are passing rules on fracking and whether or not nearby land may be owned separately by the federal government. Other concerns are eminent: 1) California suffers from drought and water shortages, so fracking would put more pressure on limited water resources; 2) the Monterey shale oil formation is expected to produce 15 billion barrels of oil, but the bulk of the shale deposit is also located beneath a major agricultural belt, where most American produce is grown. Farmers already find water expensive, exhausting local aquifers or having to pipe water in from the Sierra Nevada mountains. Thus we may expect relations between the oil and agricultural industry to grow tense, as California is a split-estate state and many farmers do not own their mineral rights. For instance, nearly 400 gallons of fracking fluids were recently found to be leaking in an open, unlined pit near a large almond orchard.
Hydrofluoric acid treatment
Older well completion methods may be riskier than hydraulic fracturing. Moreover, in California, there is evidence that these alternate methods are employed more than fracking. Meet hydraulic fracturing’s evil cousin: hydrofluoric acid treatment, a well stimulation method designed to melt rocks and other obstacles to allow oil to better flow through the wellbore.Venoco, a major player in the Monterey shale, estimates that 80% of its wells can extract oil without fracking and instead uses the chemical injection treatment. Yet another company, Occidental Petroleum Corp, likewise announced that most of its shale gas projects employ acid treatments, too. Acid treatment is equally unregulated, and regulations for both treatments may take well over a year to write.
Fracking and acid job regulations may take well over a year to write. No damage reports have been filed yet, assuming developers comply with California’s strict construction standards.