| MONTEREY, Calif./BAKERSFIELD, Calif.
MONTEREY, Calif./BAKERSFIELD, Calif. May 28 As
California sets the ground rules for drilling in the Monterey
oil formation, a hard-to-reach shale reserve that is the largest
in the United States, some environmentalists worry that
politicians, regulators and fellow activists are fighting the
The state regulator is hammering out rules for hydraulic
fracturing, while the legislature is debating 10 bills on the
practice. The drilling technique known as "fracking" has caused
so much concern about environmental problems that it is the
subject of a Hollywood movie. But most Monterey drillers employ
another technique using acid, and only one bill under
consideration would regulate that method.
"All this anti-fracking language misses the target and I am
very concerned it is a diversion," said Steve Shimek, of
environmental group Monterey Coastkeeper.
The Monterey shale holds an estimated 15 billion barrels of
oil, more than most estimates for Alaska's Arctic National
Wildlife Refuge and twice the reserves of North Dakota's Bakken
shale oil deposit, which has transformed that state and moved
the country a bit closer to energy independence.
California's focus on fracking, which uses water and
chemicals to shatter rock formations and release oil or gas,
threatens to divert attention from what some environmentalists
are starting to see as the real threat: acid jobs.
It is an old well completion method that involves pumping
chemicals such as hydrofluoric acid into wells to melt rocks and
other impediments to oil flow, and companies are not required to
report when they do it.
"These are super-hazardous, poisonous chemicals and we have
no idea what they are doing out there with it - how deep it is
going, the volumes - nothing," said Bill Allayaud of the
Environmental Working Group. "Why shouldn't our state agency be
regulating it as we hope they'll be regulating hydraulic
Occidental Petroleum Corp, which is leading the way
on Monterey development, said in 2011 it was mainly using acid
jobs to get at the shale, and Occidental said this month that
only a sixth of its California wells were fracked.
Venoco, a company well known for running California offshore
operations near Santa Barbara and a driller of many onshore
wells, estimated a few years ago that more than eight out of 10
Monterey wells could be completed with acid jobs alone.
"A typical completion in the Monterey is acid to clean out
the drilling fluid that plugged the fractures," said Mike
Kobler, CEO of Underground Energy. He drilled a well in
a naturally fractured part of the Monterey before running out of
money, and is seeking a partner for his bankrupt company.
Certainly, drillers say fracking is a key tool for "cracking
the code" of any shale basin, and the potential has attracted
major players such as Aera Energy, a joint venture between Royal
Dutch Shell Plc and Exxon Mobil Corp.
"You can complete the well without fracking it, but it
changes the economics pretty drastically," said Dan Eberhart,
head of wellhead specialist Canary LLC, which bought a
Bakersfield company last year to target the Monterey.
As for safety concerns, Eberhart echoed many in the industry
by saying that exactly what went into a well mattered less than
the integrity of the well.
RULES TO TAKE MONTHS, MAYBE YEARS
California already ranks fourth among U.S. states for oil
output. Oil service operations sprout between orchards in the
middle of the state near Bakersfield, and thousands of "nodding
donkey" pumps dot the barren, dusty landscape of century-old
oilfields near Highway 33, known as the Petroleum Highway.
But these oil resources are different from those in the rest
of the country, thanks to the same churning geology that causes
earthquakes, and the Monterey itself can vary widely across its
vast expanse from Los Angeles to south of San Francisco.
"It's not that we necessarily decided that (fracking) was
the most important issue, but we heard from a very concerned
public and a very concerned legislature that this is the most
important issue," Jason Marshall, chief deputy director for the
body which oversees the state's Division of Oil, Gas, and
Geothermal Resources, said at a hearing in the city of Monterey.
Fracking regulation will take up to 16 months to write, said
State Oil and Gas Supervisor Tim Kustic. Rules on acid jobs
could take even longer.
There is little chance of acid migrating from a well site if
the well meets strict state construction standards, and there
have been no reports of damage caused, even if there is a risk
from how chemicals are handled above ground, Kustic said.
Kassie Siegel, an attorney with the Center for Biological
Diversity, said it's a "scandal" how little the public knows
about the use of acid in the state's oil recovery operations.
"Taking hydrofluoric acid and injecting it into the ground
and changing the geology down there is a big concern," she said,
especially if the acid was to migrate underground. "We should
not have this activity going on until we know those risks."
Oil drillers, meanwhile, think the regulations will work out
all right, thanks in part to support from Democratic Governor
Brown, considered among the nation's greenest governors for
his renewable energy policies, surprised many of his supporters
earlier this year when he voiced support for more production
from the Monterey.
As long as car-loving Californians are driving
gasoline-powered vehicles, it is better to produce crude oil
locally than to import it from other states and countries, he
But many in the legislature disagree, and talk of fracking
bans may only deepen California's reputation for dysfunction.
Underground Energy's Kobler said the Oklahoma company that
sold him leases viewed the state as a "cesspool of regulations."
"Have this conversation in Houston and they'll tell you
you're crazy to come to California to look for oil," he said.