A top California regulator recently told stakeholders that hydraulic fracturing in the state is significantly less threatening to the environment and public health than in the eastern part of the country, adding that environmental groups have exaggerated its risks in the Golden State.
But regulators are nevertheless developing new fracking rules in part because companies are expected to ramp up fracking operations to extract oil from the vast Monterey shale formation in California, which stretches for hundreds of miles and is believed to contain 15 billion barrels of recoverable oil, the official said.
California's development of fracking regulations is being closely watched by numerous industry groups, government officials and environmental activists around the country because it could provide a policy model, and because it may have significant implications on the state's clean-energy and environmental protection policies.
Tim Kustic, the state oil and gas supervisor of California’s Division of Oil, Gas & Geothermal Resources (DOGGR), gave an overview of fracking operations in the state and outlined plans by the division to develop first-time fracking regulations during a June 7 presentation to a natural gas stakeholder work group overseen by the California Energy Commission (CEC).
Kustic's presentation comes as the state is under pressure from environmentalists to require oil and gas companies to provide regulators and the public with many more details of fracking procedures, based in part on fears that the process may cause air pollution and contaminate groundwater supplies.
During the presentation, Kustic said that environmental groups have in general overblown the potential risks of fracking, noting that the process has been utilized by drilling companies for decades in California and there is not one known incidence of groundwater contamination.
Much of the concern about fracking has been triggered by environmental contamination caused by natural gas shale fracking operations in the eastern part of the United States that involve horizontal drilling, Kustic explained. This type of fracking for “dry” shale gas also involves high volumes of water and is more intense than the type of fracking performed in California, he said, which mainly consists of vertical drilling to extract additional oil from fields rather than natural gas.
However, DOGGR has been directed by the Brown administration to develop first-time fracking rules, he said. The California legislature has also approved new budget legislation directing the division to develop fracking rules.
Kustic said the rules are necessary in part because drilling companies are utilizing new technologies -- such as horizontal drilling -- that enable them to extract much more oil and gas from ground formations that were previously inaccessible. “With the application of technology, it's clear that fracking will more than likely increase in California,” he said. “So we want to get ahead of the curve and have a robust regulation . . .”
Much more fracking is likely to occur in the Monterey shale formation that runs down the center of the state and extends to coastal areas, Kustic said.
According to the U.S. Energy Information Administration (EIA), California may have more than four times the recoverable shale oil than the Bakken Oil Field in North Dakota. “The largest shale oil formation is the Monterey/Santos play in southern California, which is estimated to hold 15.4 billion barrels or 64 percent of the total shale oil resources” in the United States, according to a July 2011 EIA report. “The next largest shale oil plays are the Bakken and Eagle Ford [in Texas], which are assessed to hold approximately 3.6 billion barrels and 3.4 billion barrels of oil, respectively.”
Kustic said the forthcoming fracking regulations will probably require “pre-fracking testing,” including a pressure test for certain parts of the well. While companies usually perform pre-testing and monitoring, those tasks would be “memorialized” in the regulation,” he said. After fracturing, companies will likely be required to perform an inspection on the well to ensure there are no problems with certain casing areas that might lead to any fluid leaks, Kustic said.
In addition, the rules are likely to cover fluid content management, fracture modeling, notification and reporting requirements, he said. The division likely will not finalize the regulations until sometime in 2013 he added.
There are several bills pending in the state legislature requiring companies to report fracking-related activities, including notification to regulators of all chemicals being used in the operations.
