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California Fracking Boom

Brian Hicks

Written By Brian Hicks

Posted March 15, 2013

Jerry Brown, California’s Governor, is noted for his environmental work and support for clean initiatives. Yet he has gone on record saying that his state ought to consider fracking and try to develop extant reserves of shale deposits, thereby cutting its dependence on oil imports.

The Chicago Tribune reports:

“We want to get the greenhouse gas emissions down, but we also want to keep our economy going. That’s that balance that’s required,” he said at an event to announce the approval of three new renewable energy projects.

According to the U.S. Energy Department, California’s Monterey shale could hold more than 15 billion barrels of oil, or about 64 percent of the entire country’s shale oil reserves. However, the Monterey shale is notoriously difficult to exploit, situated far beneath ground level, as the Chicago Tribune elaborates.

Monterey shale sidebar croppedEnvironmental groups, of course, have called for outright bans on fracking in California, and state lawmakers have in fact issued bills that variously try to regulate fracking practices. The major concerns are the usual ones associated with fracking—possible contamination of drinking water aquifers, pollution from runoff, etc.

Brown’s position appears to desire a balance between the two poles; he’d like the state to seriously consider doing something to exploit all the riches stuck beneath ground (and to be fair, the Californian economy could use such a shot in the arm), while relying on strict safety protocols and informed decisions.

It is expected the Monterey shale could give up nearly 600,000 barrels of oil per day, which would not only double California’s present production rate, but also make it oil-independent for the next five decades, the Chicago Tribune reports.

What’s standing in the way, once environmental concerns are assuaged, is the difficult geology of the Monterey shale.

The L.A. Times reports that a recent study, undertaken by the University of Southern California and LA-based think tank th Communications Institute, asserts that if the Shale were put to use, we could see California gain around 500,000 jobs by 2015, and 2.8 million by 2020.

Those are dramatic numbers. However, if fracking is implemented appropriately, California really could experience the sort of economic boom that North Dakota and Texas have been enjoying of late. The Bakken Shale in North Dakota, for example, has contributed to bringing the state’s unemployment rate down to 3.2 percent, which is currently the lowest in the country.

Moreover, the study indicates that oil-related tax revenue could amount to as much as $4.5 billion in 2015 and nearly $24.6 billion by 2020. That’s a boost of nearly 14.3 percent, overall.

Bloomberg quotes from the study:

“Based on the experience of other states, not only would state unemployment fall, but significant migration of properly skilled workers into California would occur,” according to the study. “More job gains can be captured by Californians with appropriate education and training.”

However, the Sierra Club and the Center for Biological Diversity have both insisted upon strict oversight of any potential fracking operations. And other environmental activists and groups have sounded even stronger concerns.

From Bloomberg:

“A ban on fracking is necessary,” said David Hobstetter, a San Francisco-based lawyer for the environmental diversity group based in Tucson, Arizona. “There are some very serious harms from it and we don’t think it can be controlled.”

In fact, that organization sued the state of California just last year, demanding that fracking be banned until the state introduces legislative oversight.

In opposition, supporters like Occidental Petroleum Corp. (NYSE: OXY) and Chevron Corp. (NYSE: CVX) have pointed to the economic benefits of fracking, particularly in recent years, and have insisted upon its safety.

Bloomberg reports:

“These methods have been used safely and effectively for over 60 years,” Susie Geiger, a Bakersfield-based Occidental spokeswoman, said at the meeting. “Unreasonable burdens could deprive more Californians of opportunities to create jobs.”

Thus far, California’s Conservation Department has released what it calls a “discussion draft” that outlines possible fracking regulations, including oversight of fracking fluids, well monitoring after fracking is complete, and waste-water management. However, environmentalists’ concerns emanate from the lack of actual implementation of such measures.

It may be worth noting that the USC study was, in part, funded by a grant from the Western States Petroleum Association, although the actual research was conducted by “an independent USC research team.” 


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