California Fracking Investing

Brian Hicks

Written By Brian Hicks

Posted June 4, 2013

California has rejected a piece of legislation that would have forced drillers to stop using fracking techniques to exploit the state’s oil and natural gas from its shale beds. The controversial practice has taken great heat in California.

The proposed moratorium would have put a freeze on all operations until strict rules and guidelines could be implemented by state regulators.

The vote weighed 35-24 in favor to reject the bill.

oil drillingIt is among several measures introduced earlier in the year set against fracking practices in the state of California. The aim: to impose greater regulations on a process that forces millions of gallons of water, sand, and chemicals deep into rock formations to unveil heaps of oil and gas.

Environmentalists claim that water and air quality are threatened by this type of drilling.

One measure did pass the Senate that will increase the amount a company must post on a bond in an instance where a well is abandoned. There are also two broader bills that remain on the table this week.

But instead of putting a complete stop to the practice that environmental groups are pushing for, it looks like lawmakers are seeking greater regulations in its place. Newer, stricter requirements would encompass full disclosure about the types of chemicals being shot into the ground, water disposal would be monitored carefully, and the public would be notified of impending drilling operations.

Right now, none of this is taking place, which is why environmental groups like the Sierra Club are so hell bent on opposing the oil and gas industry in the state.

But with proper regulations, each side can bend to an amicable common ground.

Contention

The way things stand right now, it’s hard to blame environmentalists for taking such a forward stance against fracking in California. The safety of the method has always been in question, but other states have taken the necessary precautions to prevent any harm to the environment.

By failing to pass this bill, California is making a statement that it is ready to move forward with fracking, but it must be done the right way.

The skeptics are going to be there no matter what. Environmentalists will always put the environment ahead of the economy and what’s best for the people.

And now, since drilling technology has improved so dramatically in recent years, oil companies are expanding into more territory; even the farmer, who has always had a peaceful relationship with the oil man, is beginning to question his presence.

Groundwater, for example, is the backbone to a farmer’s success. As word spreads about fracking and groundwater pollution it fills the farmer’s head with fears and doubt.

As Tom Frantz, a fourth-generation farmer in Shafter, California, told The New York Times:

“As farmers, we’re very aware of the first 1,000 feet beneath us and the groundwater that is our lifeblood. We look to the future, and we really do want to keep our land and soil and water in good condition.”

In Shafter, a group that represents dozens of farmers called the Committee to Protect Farmland and Clean Water has been meeting with oil companies to discuss fracking and build lasting relationships.

The Monterey Shale

Shafter, California is so vital to the oil and gas industry because not only is it among the world’s most fertile regions, but it sits on top of the Monterey Shale – a deposit so large that if exploited, it could create the kind of boom that has already been seen in North Dakota and Texas.

If it’s every bit as big as experts claim, it could make California the nation’s largest oil producing state, with federal estimates right around 15.4 billion barrels of oil reserves.

Having that bill passed last week means that the Monterey can finally prove itself.

Even as overall oil production has declined in California since 2010, the North Shafter oil field and other wells in the areas have risen by more than 50 percent.

But geologically, the Monterey is much different from the Bakken in North Dakota or the Eagle Ford of Texas. Its formation is less conducive to natural gas and oil production because of its inconsistency. It can change drastically and rapidly, which proves hard to manage in a cost-effective way. And this is why many of the larger companies have stayed away until now and why it’s so much less developed than others.

But there are still a number of companies trying to crack the code, and there has been proven success. Several companies have already been making headway in the region, and it’s only a matter of time before they draw the big players in too.

It’s still too early to know for sure when others will be tempted to move in after this latest bill was rejected. But the door is definitely opening in California.

Lawmakers still want to see a complete and independent scientific study with a detailed assessment on fracking by January 1, 2015. All permits will be denied if that is found unsatisfactory, but barring that happening, California is amping up for what could be the biggest oil and gas boom the U.S. has seen yet.

 

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