Who Is Fracking With California?

California is the newest battleground state in the fracking fight that continues in states like Pennsylvania and New York. Why?

The short answer is the Monterey Shale. It’s a massive oil deposit that is trapped in the shale formations underneath Los Angeles and most of California’s Central Coast and Central Valley regions (as well as all of the drinking water sources for the people living in those regions). It was once considered too difficult to reach — at least in a profitable sense — until fracking technology came along.

The rush to exploit the Monterey Shale’s reserves has spurred three bills moving through the California state legislature that would halt all fracking in the Golden State until its impacts can be studied more fully, not unlike what has happened in New York and New Jersey. Unlike New Jersey’s ban, which expired in January, the California legislation would require further legislative action to lift. It also stipulates that fracking cannot be done in proximity to valuable water sources, and that all chemicals used in the process must be disclosed.

Environmentalists oppose fracking because of the many dangers, known and unknown, that it poses to the environment and human health. Contamination of water supplies is the major concern, as is the amount of fresh water required by fracking operations, and the fact that injecting water and chemicals to fracture the ground perhaps is not the greatest idea in earthquake-prone California.

Current regulations in California around fracking are very much on the weak side, according to Clean Water Action. The agency responsible for overseeing fracking does not require a permit before a company can frack, and doesn’t even know where all the fracking wells in the state are, let alone what went into them and what dangers they may pose to surrounding communities.

Oil companies would like it to stay that way. They’re eager to frack in the Monterey Shale, which the U.S. Department of Energy has estimated may contain “upward of 15 billion barrels of oil.” As Politico says: “The stakes for industry are big: California is home to the oil-rich Monterey Shale, which by some estimates may hold enough oil to displace five years of petroleum imports to the U.S.”

It’s no surprise that oil companies would want to frack California at will — the Monterey Shale is a very difficult oil field to get to and fracking may be the only method capable of making it cost-effective. But it is somewhat surprising that Jerry Brown, California’s green governor, says he’s willing to listen, especially since it seems he’s mostly saying he’s willing to listen to the oil industry.

"I called up one of our lead oil companies and said, 'What’s the story with fracking?'” Brown said when announcing he was open to the idea of fracking. “They said, 'It’s not as bad as the environmentalists say, it’s not as safe as the oil companies say.'"

But Jerry Brown is a politician, and it’s very political for him to take a measured approach. Plus, he’s the governor — it’s his job to balance things like job creation and a strong economy with preserving clean air and water. He says he’s primarily interested in fracking as a strategy to keep California the fourth largest oil producing state in the union.

He might have also read this in Politico: “A recent study by the University of Southern California and the Los Angeles think tank Communications Institute concluded that developing the Monterey Shale could create 500,000 jobs in the next two years and 2.8 million by 2020. The development could net California $4.5 billion in tax revenue over the next two years and $24.6 billion by 2020.”

But you know who helped fund that study? The Western States Petroleum Association, whose member list is pretty much a roll call of the Big Oil inner circle: ExxonMobil, Chevron, BP, ConocoPhillips, Shell, Occidental, Valero, etc. Which really drives home the need for further studies — studies without even a hint of industry bias.

Clean Water Action has the scoop on which companies have the biggest stakes in the Monterey Shale:

Occidental Corporation (Oxy) is the largest holder of land/mineral rights in California, holding rights to drill over 1.6 million acres of land in the Monterey Shale. In a presentation to shareholders in 2010, Oxy officials stated that “in 10 years, California shale could become Oxy’s largest business unit.”

Venoco Inc. has one of the largest stakes in the Monterey Shale with rights to drill in over 300,000 acres. There are more than 10 billion barrels of oil available for extraction at its current sites. In its 2011 report to shareholders, the company stated that it continues to expand its onshore Monterey acreage lease holdings across three basins: Santa Maria, Salinas Valley, and San Joaquin (which includes the Sevier discovery).

Apparently, oil and gas industry officials feel optimistic that regulatory agencies won’t present an obstacle to plans to develop their oil and gas leases in California. Tim Marquez, founder, Chairman and Chief Executive of Venoco, said in 2011, "[w]e are shoring up our development plans for the Sevier discovery and have been in contact with the agencies to ensure we have a clear path forward to develop this discovery. We currently expect to drill 30 to 40 wells there next year.”

No one who has been paying any attention would expect an oil company like Occidental or Chevron to sit around and do nothing while the California state legislature considers banning a practice that it needs to exploit the last of Earth’s dwindling oil reserves.

So now the race is on. Can Cali pass a ban before Big Oil buys enough support? Stay tuned.

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