California passes new fracking rules that leave everyone unsatisfied

California passes new fracking rules that leave everyone unsatisfied

In a move that is apt to stun the California-critics among Legal Insurrection readers, our state legislature passed a pro-fracking measure:

Oil and gas drillers that use a technique known as fracking would face new rules in California under legislation that was sent to governor Wednesday.

The measure includes a requirement that drillers disclose the chemicals they use in the process of hydraulic fracturing, which involves injecting water, sand and chemicals into deep rock formations to release oil or natural gas.

Now, will Governor Jerry Brown sign it?  All indications are that he will, especially since earlier versions of the bill were supported by the state’s powerful environmental lobby.  However, some of this support has gone rather tepid:

The measure had widespread support from most environmental groups, but some of them withdrew their endorsement just before the Assembly vote Wednesday. They argued that the proposal was too weak and did not force drillers to disclose all needed information about chemicals injected in wells.

Oil companies opposed the bill, arguing it would make it harder for them to exploit the estimated 15 billion barrels of oil in the Monterey Shale Formation in the southern San Joaquin Valley.

The Monterey Shale Formation  is a “vast source rock” that contains potentially billions of barrels of oil.   Oil industry experts point out that unique features of that formation make it more complex to develop, and the regulatory proposals don’t really address the technical issues in a practical manner:

Concern about matrix acidizing – commonly known as acid jobs – has risen among California environmental groups in recent months. In May, several energy companies told Reuters that acidizing is a key part of drilling in the Monterey Shale, which is much more fractured and difficult to access than the other major shale formations that are fueling the country’s recent domestic oil and gas boom.

… “We recognize that our members will be operating in a much more tightly regulated environment in regards to hydraulic fracturing,” said Western States Petroleum Association spokesman Tupper Hull. “They’re prepared to do that,” he said, but warned “to pull in a bunch of other issues that really are unrelated from a technical point of view makes the likelihood of achieving those balanced, comprehensive regulations much more slimmer.”

One of the reasons cited for our legislature promulgating the new rules is that “fracking is unregulated”.  Jason Marshall, the chief deputy director of the state agency that regulates oil and gas drilling, notes that this charge is false. From KQED:

The idea that fracking and acidizing are completely unregulated in California is popular but false. The Department of Conservation’s oil and gas division treats them as one aspect of the broader drilling process, which it permits and regulates. The state enforces standards regulating the thickness and quality of the pipes and cement that keep oil, gas, fracking fluid and any other substance inside a well, and out of the ground.

The same rules apply to fracking and acidizing as any other aspect of the drilling process,  said Marshall. “You don’t get to break your well, and if you break your well you have to fix it.”

California environmental policies are already impacting energy costs substantially…in addition to further burdening the “evil oil industry”.  They have caused our energy costs to have spiked skyward:

Wholesale electricity market prices spiked about 70 percent over last year.  So reports the Independent System Operator that manages California’s electric transmission and distribution line grids.  The reasons given by the ISO are:

• Natural gas prices rose about 50 percent over the unusually low gas prices of 2012.
• Most of the remainder of the increase in electricity market prices was attributed by the ISO to the implementation of the state’s greenhouse gas cap-and-trade program.
• A decline of about 25 percent in hydroelectric generation also modestly increased electricity prices.

With the recent heat-wave we have experienced, many Californians are going to be in for sticker shock when they get the next energy bill. That shock will not be wearing off before the 2014 elections, either.

Furthermore, unemployment in the San Joaquin Valley is well above the national average, and is currently above 12 percent.  If the shale remains undeveloped, this number probably won’t improve.  The region’s voters will probably not forget that, either, come 2014.

In summary, it will be interesting to see how the oil companies respond to the new requirements and if our shale formation will become a source of energy, wealth and jobs for the Golden State. Here’s to hoping.

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