Policy Documents

Research & Commentary: Hydraulic Fracturing in California

June 17, 2013

The California Assembly recently defeated a proposed moratorium on hydraulic fracturing, a technology requiring water mixed with trace amounts of sand and chemical additives to be injected under pressure to fracture underground shale formations and stimulate the flow of oil and natural gas for collection. Advances in hydraulic fracturing and horizontal drilling technologies have led to a boom in domestic oil and natural gas production, presenting enormous economic potential for state and local economies.

One bill remains in play to regulate hydraulic fracturing in the state. It would set up a permitting system, require energy companies to share more information with the state and with property owners, and direct the California Natural Resources Agency to commission a study on the environmental repercussions of hydraulic fracturing.

Below California’s Central Valley lies the Monterey Shale formation, estimated to contain 15.4 million barrels of oil, significantly more than North Dakota’s Bakken shale, which has four billion barrels of oil. California’s unique geology has prevented the oil and gas industry from finding an economic way to extract the crude oil, as there has been in North Dakota, where oil production has soared and the unemployment rate has fallen to 3.3 percent.

Opponents of hydraulic fracturing, or “fracking,” claim the technology endangers public health through contamination of underground water tables used for drinking water supplies. Now that the proposed moratorium has been defeated, opponents are expected to continue efforts to inhibit hydraulic fracturing operations through lawsuits or regulatory fiat.

Data from the Interstate Oil & Gas Compact Commission, a multistate government agency, shows more than 15,000 wells have been “fracked” in California since the 1970s and no harm to groundwater has ever been recorded. Other state and federal regulators have stated they know of no case where hydraulic fracturing has contaminated groundwater.

A report from the Massachusetts Institute of Technology explains why: “The shallow layers are protected from injected fluid by a number of layers of casing and cement—and as a practical matter fracturing operations cannot proceed if these layers of protection are not fully functional. Good oil-field practice and existing legislation should be sufficient to manage this risk.”

A study conducted by University of Southern California scientists and economists estimated hydraulic fracturing could create 500,000 to 2.8 million jobs over the next several years. California’s current official unemployment rate is 9 percent; when you count those who have given up looking or are settling for part-time work when they need full-time, California’s unemployment is closer to 18%.

Overaggressive regulatory efforts that hurt the development of energy extraction technology aimed at tapping into California’s Monterey Shale would cost jobs and government revenue.

The following documents provide additional information about the safety and benefits of hydraulic fracturing.

 

Ten Principles of Energy Policy
http://heartland.org/policy-documents/ten-principles-energy-policy
Heartland Institute President Joseph Bast outlines the ten most important principles for policymakers confronting energy issues, providing guidance to help deal with ongoing changes in markets, technology, and policies adopted in other states, supported by a thorough bibliography.

Natural Gas Development and Hydraulic Fracturing: A Policymaker’s Guide
http://www.ncsl.org/issues-research/energyhome/natural-gas-development-and-hydraulic-fracturing.aspx
Jacquelyn Pless, a policy associate with the National Conference of State Legislatures, offers a primer on hydraulic fracturing, how it is applied, and what policymakers need to know.

State Regulators on Hydraulic Fracturing
http://heartland.org/policy-documents/regulatory-statements-hydraulic-fracturing
These statements submitted by state regulators for government records related to hydraulic fracturing verify that no case of groundwater contamination due to the fracturing process has occurred in their states.

California State Progress—Hydraulic Fracturing
http://groundwork.iogcc.org/topics-index/hydraulic-fracturing/state-progress
Statistics collected from the Interstate Oil & Gas Compact Commission, a multistate government agency, show despite more than 15,000 wells “fracked” over a span of more than 60 years in California, there has never been any recorded harm to groundwater.

The Future of Natural Gas
http://heartland.org/policy-documents/future-natural-gas
An interdisciplinary report published by the Massachusetts Institute of Technology examines the role of natural gas in meeting future demand in a carbon-constrained economy. The report comments on hydraulic fracturing as a means of extracting energy from shale, and it states groundwater contamination from fracking is impossible due to the deep layers of impermeable rock and multiple vertical layers of steel casing and cement.

America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy
http://heartland.org/policy-documents/americas-new-energy-future-unconventional-oil-and-gas-revolution-and-us-economy
The energy and engineering consulting firm IHS, Inc. highlights the state economic contributions of unconventional oil and gas development.

Powering California: The Monterey Shale & California’s Economic Future
http://heartland.org/policy-documents/powering-california-monterey-shale-californias-economic-future
A study conducted by the scientists and economists at the University of Southern California finds “the prudent development of the Monterey Shale could add hundreds of thousands of new jobs to California over the next decade while stimulating economic growth and generating significant new state and local tax revenues.”

Fracturing in California
http://online.wsj.com/article/SB10001424127887324767004578488821344316236.html?mod=rss_opinion_main
In this edition of Review & Outlook, the Wall Street Journal editorial board examines political and economic implications of hydraulic fracturing in California. The Journal opines that if the USC study’s estimates are even close to accurate, oil production could provide “financial salvation” for a state with steep financial obligations.

The Realities about Fracking in California
http://www.pennenergy.com/wirenews/oilgasnews/2013/06/09/dave-quast-the-realities-about-fracking-in-california.html
Dave Quast, California director of Energy in Depth, an education and outreach program of the California Independent Petroleum Association and the Independent Petroleum Association of America, gives both an industry and California-resident perspective on hydraulic fracturing in California in an editorial originally published in the Ventura County Star.

 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Environment & Climate News Web site at http://news.heartland.org/energy-and-environment, The Heartland Institute’s Web site at http://www.heartland.org, and PolicyBot, Heartland’s free online research database, at www.policybot.org.

If you have any questions about this issue or The Heartland Institute, contact Heartland Institute Policy Analyst Taylor Smith at tsmith@heartland.org or 312/377-4000.