Fracking: Pro, Con and (possible) Compromise for CA

The Wall Street Journal is excited about the possibilities of fracking for California:

California has Saudi Arabia-scale oil resources, notably in its largely untapped Monterey shale field, which stretches northeast for more than 200 miles from Bakersfield in central California. New technologies, especially smart, horizontal drilling and hydrofracturing, aka "fracking," make that oil accessible, and cleanly. The U.S. Energy Information Administration estimates that the Monterey shale field alone holds 15.4 billion barrels of oil, rivaling America's total conventional reserves.

California collects about $15 billion in tax revenues for every billion barrels of state oil production, according to research conducted last year by the University of Wyoming's Timothy Considine and Edward Manderson. If that is accurate, then simply by opening up Monterey oil development—no incentives, grants or state funds required—tax receipts could total $250 billion over the coming two decades. Economists Robert Hahn and Peter Passell, at the American Enterprise and Milken Institutes respectively, point to another $30 billion to $80 billion in broad economic and social benefits that ripple through an economy for every billion barrels of oil production.

This might sound like over-the-top boosterism, but yes, the US Energy Information Administration has confirmed the vast reserves in the Monterey Shale formation, estimated to be 3/5ths the size of Prudhoe Bay in Alaska, which was for decades this nation's biggest producing oil field. 

But as so often has proved to be the case with the oil industry, the price of the potential economic good news will be paid by the environment. Or so the EPA warns. In a recent report on emissions from industrial sources, the agency revealed that the second biggest producer of greenhouse gas (equivalent) emissions is the oil and gas industry. (This I learned from Breanna Norton, of Food and Water Watch.) 

Which is true, but when I went to the EPA, I learned it's not the whole story. Here's a bar graph from the EPA, that shows how big power plants dominate emissions. Power plant emissions add up to nearly 60% of the total, about 10x as much as the total emissions from oil and natural gas extraction. [2,221 million tons of CO2 equivalent emissions for power plants, vs. 225 million for oil and natural gas extraction]


Hence the importance of cleaning up power plants, which is what the newly appointed head of the EPA, Gina McCarthy, is (from all accounts) set to do. If the EPA can reduce power plant emissions by ten percent, that savings could offset the existing contribution of refineries, for example.  

But meanwhile, in the words of Center for Effective Government (formerly OMB Watch) fracking continues to dominate exploration, and change the industry, for better or worse.

While the oil and natural gas sector includes a wide range of exploration and production activities, fracking has become the primary method companies use to extract natural gas. Traditional drilling for oil and gas has declined as reservoirs of easy-to-access oil and gas have been depleted. The top oil and natural gas sources also indicate the large contribution fracking activities are making to the industry sector’s greenhouse gas emissions. The data was not collected on individual wells but instead aggregated emissions from large production areas or basins. The highest emissions came from New Mexico’s San Juan Basin and Texas’ Permian Basin, where advances in horizontal drilling and fracking have led to a boom in shale gas and shale oil production. Emissions from onshore production (which includes fracking) were primarily methane. Methane is a greenhouse gas that is 21 times more powerful than carbon dioxide.

In recent years, scientists and environmentalists have emphasized the polluting nature of fracking, despite the repeated claims by industry about "clean natural gas." A Cornell University study showed that fracking produces more greenhouse gas emissions over time than traditional methods of oil drilling or coal mining, due to hauling in large quantities of water by truck and the methane released from fracking wells. Since the EPA greenhouse gas data does not include emissions from transportation, the total amount of emissions contributed by the oil and gas sector is likely underreported. Greenhouse gas emissions are not the only concern involved in fracking; the drilling method has been linked to a growing number of cases of water and land contamination.

It's not just about the climate, in other words, which explains why Food and Water Watch is tracking fracking. But the invaluable Timm Herdt of the Ventura County Star, who has been reporting for the paper from Sacramento for decades, reveals in an op-ed the inside story: 

Environmentalists advocating strict regulation of fracking cited a Monterey Shale oil-drilling boom as a certain prospect, while oil industry representatives downplayed the speculation, noting that results from test wells so far have not been promising.

The oil reserves may exist, they said, but they may not be recoverable, at least not with current technology.

Both sides had self-interested reasons for taking those views.

Environmental advocates are alarmed that fracking has been taking place for so long in California without being subjected to any regulations beyond those that apply to all drilling operations. The Department of Conservation is just now circulating a “discussion draft” of fracking rules it may put in place, rules that environmentalists have criticized as too lenient.

The industry, which notes there has not been one reported instance of environmental damage caused by fracking in California, seems resigned that an age of regulation has arrived, but wants standards that are not overly intrusive or expensive with which to comply.

In other words, Herdt hints, a compromise could be in the offing for the state. 

There may yet be some way, however, to differentiate between requirements that will be placed on traditional operations at conventional California oil wells, which tap into underground reservoirs beneath a layer of impermeable cap rock, and regulations targeted at emerging oil development that will use different technologies in areas with different geologic features.

One such differentiation being discussed behind the scenes by some in Sacramento is a variation on an old and controversial idea — the establishment of an oil severance tax, but one that would apply only to new wells.

An oil severance tax, in California, such as is paid by oil companies in radical leftist states such as Alaska, Texas, and Louisiana? That would at least repay the state, if not the state's environment?

As the irresistible Wallace Shawn said in The Princess Bride: Inconceivable

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  1. Jim Reed

    “radical leftist states such as Alaska, Texas and Lousiana”.

    Was that a joke or are you simply nuts?

    September 3, 2014