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Hydraulic Fracturing and Energy Production in California

WE STERN STATES PETROLEUM ASSOCIATION. Hydraulic Fracturing and Energy Production in California. Catherine Reheis-Boyd Western States Petroleum Association July 9, 2013. Shale Oil Resources in the United States. Bakken 4 Billion Barrels 17% of US Shale Oil. Monterey

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Hydraulic Fracturing and Energy Production in California

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  1. WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California Catherine Reheis-Boyd Western States Petroleum Association July 9, 2013

  2. Shale Oil Resources in the United States Bakken 4 Billion Barrels 17% of US Shale Oil Monterey 15.4 Billion Barrels 63% of US Shale Oil Avalon/Bone Springs 2 Billion Barrels 8% of US Shale Oil Eagle Ford 3 Billion Barrels 12% of US Shale Oil 2

  3. An Extraordinary Opportunity • “The fossil fuel deposits in California are incredible. “ Governor Jerry Brown • “The potential is extraordinary, but between now and their development lies a lot of questions that need to be answered.” Governor Jerry Brown. 3

  4. A San Joaquin Valley California Opportunity • According to the EIA, 15.4 billion barrels of oil trapped in the pores of shale rocks in the San Joaquin Valley • Advanced-extraction oil technology: potential in CA • 1750 square mile area represents 2/3rds of U.S. shale resources • Hydraulic fracturing used extensively in other states and in California for 60 years without harm to the environment 4

  5. The Monterey Shale & California’s Economic Future • 512,000 Jobs by 2015 and 2.8 million by 2020 • 2.6% to 14.3% State GDP Increase • $40.6 billion to $222.3 billion personal income increase • $4.5 - $24.6 billion state and local tax revenues increase 5

  6. Shale Oil Benefits in Texas and North Dakota • Eagle Ford Shale Play (Texas)1 • $61 billion economic impact (2012) • 116,000 jobs supported (2012) • $89 billion forecasted economic impact (2022) • 127,000 forecasted jobs supported (2022) • Bakken Shale Oil Exploration (North Dakota)2 • 60,000 Jobs created (2011) • $30.4 billion in economic impact (2011) • $2.65 billion in government revenues (2011) 1: Economic Impact of the Eagle Ford Shale, Center for Community and Business Research-The University of Texas at San Antonio 2: North Dakota State University’s Department of Agribusiness and Applied Economics 6

  7. What is Hydraulic Fracturing 7 Source: FracFocus, Courtesy of Texas Oil and Gas Association

  8. WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing: How Much, Where • 568 wells fractured in 2012 according to FracFocus • 2,705 well permits issued in 2012 • 48,970 wells currently producing oil and/or gas in CA • 97 percent of hydraulic fracturing operations were in 2012 were in Kern County Source: WSPA survey of FracFocus website 2012 data 8

  9. A Well Completion Process • Permits are provided • Well is drilled • Well service company prepares well for completion • Pump trucks deliver pressurized water into well, 99.5 percent of which is water and sand • Fluid is collected and disposed of pursuant to permits • Entire process takes 3 to 5 days • Shale oil is produced 9

  10. Hydraulic Fracturing and Water Use • In 2012, the average amount of water used during hydraulic fracturing operations was 116,000 gallons of water • The average golf course requires 312,000 gallons per day • The total amount of water used in the 568 wells that were hydraulically fractured in 2012 was 202 acre feet • Farming in California 2012 uses approximately 34 million acre feet of water annually 10

  11. Addressing Hydraulic Fracturing Concerns • In October, 2012, an exhaustive year-long study at Inglewood Oil Field in Los Angeles looked at 14 environmental issues, including public health, groundwater, air quality, seismic, noise, vibration • All fractures separated from fresh water by at least 7,700 feet (1.5 miles) or more • No impacts to any of the 14 areas studies October 10, 2012 11

  12. Current Oversight • California Division of Oil, Gas & Geothermal Resources (DOGGR) proposed regulations • Draft regulations require: • Advance notice to DOGGR before a well is fractured • Enhanced testing and monitoring of fractured wells • Safe storage and handling requirements of fracturing fluids • Disclosure of chemicals • Provides protection of trade secrets 12

  13. Additional State and Local Oversight “The Water Boards’ existing statutory authorities and regulations are sufficient to minimize potential risks to water quality related to hydraulic fracturing activities.” February 6, 2013 letter from the State Water Resources Control Board to Senators Pavley and Rubio on regulating hydraulic fracturing. “While we are not aware of any hydraulic fracturing used in natural gas production well development in the San Joaquin valley, fracturing has been used for at least thirty years in oil production operations, without creating known air issues, beyond those associated with other production methods.” February 1, 2013 letter from the San Joaquin Valley Air Pollution Control District to Senators Pavley and Rubio on regulating hydraulic fracturing. 13

  14. U.S. on Hydraulic Fracturing • “In no case have we made a definitive determination that the fracking process has caused chemicals to enter groundwater.” U.S. Environmental Protection Agency Administrator Lisa Jackson, April 30, 2012 • “I’m not aware of any proven case where the fracking process itself has affected water.” U.S. Environmental Protection Agency Administrator Lisa Jackson, May 24, 2011 • “There’s a lot of hysteria that takes place now with respect to hydraulic fracking, and you see that happening in many of the states. … My point of view, based on my own study of hydraulic fracking, is that it can be done safely and has been done safely hundreds of thousands of times.” Former Secretary of the Interior Ken Salazar, February 15, 2012 14

  15. Legislation • Defeated • AB 1323 (Mitchell) required moratorium while hydraulic fracturing was studied • AB 288 (Levine) altered the state policy with regard to oil and gas wells • AB 669 (Stone) contained a piece-meal approach on regulating hydraulic fracturing activities relating to ground water and disposal monitoring • SB 395 (Jackson) required produced water to be handled as hazardous material, potentially impact all oil production in California • AB 982 (Williams) required an additional, unnecessary, permit from regional water boards • AB 649 (Nazarian) imposed immediate moratorium on hydraulic fracturing on any well located within a certain distance from an aquifer • AB 1301 (Bloom) imposed immediate moratorium on hydraulic fracturing until future regulations are enacted • SB 241 (Evans) imposed a 9.9% severance tax on all oil produced in California • AB 7 (Wieckowski) provides a comprehensive regulatory structure for hydraulic fracturing 15

  16. Legislation • Pending in Assembly Natural Resources Committee • SB 4 (Pavley) requires the state’s Natural Resources Agency to conduct a study of hydraulic fracturing and mandates regulation of that practice. Sen. Pavleyremoved moratorium language and indicated she would work with the oil industry to develop comprehensive bill to regulate hydraulic fracturing activities. 16

  17. Public Support for Regulated Hydraulic Fracturing • USC Dornsife/LA Times poll, June 7, 2013 • Californians support hydraulic fracturing if properly regulated • 41% of poll respondents said they supported hydraulic fracturing with additional regulations • 19% said hydraulic fracturing was already regulated enough • 30% opposed hydraulic fracturing under any circumstance 17

  18. We Support Comprehensive, Balanced Regulation • Legislature needs to take a measured and responsible approach to hydraulic fracturing • All parties have a responsibility to acknowledge that: • There are legitimate issues related to hydraulic fracturing that must be addressed by regulators and the Legislature • Production of petroleum energy is a vital and necessary part of the California economy • A comprehensive regulatory package will sufficiently ensure that our state’s environmental health and natural resources are protected while safely using hydraulic fracturing technologies for energy production in California 18

  19. WESTERN STATES PETROLEUM ASSOCIATION Follow Us on Twitter @WSPAPrez www.wspa.org 19

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