Shale has quickly grown a paradox complex: For industry, it's
a newly tapped crude and gas bonanza that has already begun to
reverse the nation's oil fortunes. For part of the the public,
it's a mysterious new source of hydrocarbons with a method of
extraction -- fracking -- that possesses more dangers than
benefits.
Belatedly, the government is being sought as an arbiter of
sorts, to dispel misinformation and to ensure safe extraction.
At the federal level, the EPA is in the process of hammering out
rules that govern fracking. But at the state and county level,
the rules of the game remain a little less certain. Such was the
case recently in California, which has the unusual position of
being one of the most environmentally-regulated states in the
country, but also very much a big oil producer.
The battle has been in Monterey County, along California's
central coast, where county planning officials were likely to
have shot down a request for drilling permits had US independent
Venoco not withdrawn it at last week's commission hearing.
That fracing was likely to be involved -- near the county's main
river, at that -- caused sufficient concern among county
planners and the local community to warrant the rejection, said
Taven Kinison Brown, a senior planner with the county.
"[Venoco's proposal] was eye opening...so questions have been
raised," he said in a phone interview.
Among the questions: which, if any, of the 535 producing wells currently active within the county employ fracking. Kinison Brown turned to the state for answers.
"Rumors continue to fly -- and the County of Monterey needs to know where these fracks have occurred -- or not," Kinison Brown wrote in a letter to the state's Division of Oil, Gas & Geothermal Resources. "Your response is critical."
Turns out the state doesn't know either. "The Division is unable to identify where and how often hydraulic fracturing occurs within the state," Pat Able, a district deputy with the state agency, replied in a letter to the county. In short, California doesn't require companies to divulge whether fracing is used in drilling, and thus the state wouldn't have records on such activity.
Kinison Brown said his "confidence eroded" upon receiving that response. "That just doesn't work for a planner trying to do [an environmental report.]"
Monterey County is perhaps better known for the dramatic cliffs of Big Sur and scenic golf links at Pebble Beach, but it is also a significant oil producing region. It's the state's fourth largest crude producing county, out of 32, churning out 6.21 million barrels of heavy crude in 2010. That's a little more than 17,000 b/d. And it also lies on the northern tip of the Monterey Shale play, a massive patch with 15.42 billion barrels of technically recoverable oil. Given the geology of the play, fracing is likely to be a common method of extracting that crude.
Yet the lack of regulations tailored specifically for fracing is hardly problematic, says Rock Zierman, CEO of the California Independent Petroleum Association. Drilling itself is a highly regulated activity in California, and fracing occurs during the last phase of a rules-based drilling program, he said. "Given that you're injecting water into a highly regulated well, it's disingenuous to say [fracing] is not regulated," he said from his Sacramento office.
Still, proposed legislation that specifically regulates fracing activities should "establish greater confidence," he said. That legislation hangs in limbo, however. A.B. 591 would, among other things, require companies to divulge the chemicals they use in their fracking operations, while protecting the concentrations. The bill has spent the last few months languishing in the state's Senate appropriations committee, but it will finally get a hearing in January.
Venoco pulled the request simply because the initial studies of the wells weren't delivering the desired results, said Mike Edwards, a company vice president. He said the county's resistance was not a factor. So Venoco will conduct 3-D surveys, improve the understanding of the geological makeup, and likely resubmit permit requests later.
That said, Venoco is going to ease its focus from that shale play, the company said in an earnings report this week. "With all the bigger players we've seen coming in over the last three months ... we're going to sit back," CFO Timothy Ficker said. "We feel like we've carried our share of the load; let some of these other guys come in and prove out more acreage."
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