Monterey County Frac’ing & the Salinas Aquifer

Below, I have reproduced an article about fracking in Monterey County in the current issue of the Oil & Gas Journal that a member of HOLD sent out. I also have a map of the Salinas Valley Aquifer that a concerned bigsurkate reader sent me. Should we be worried? Should all those who eat from the Salad Bowl of the World be worried? I think so.

Here is an article in the current issue of Gas & Oil Journal, which can be found online here: Oil & Gas Journal

“Jan 24, 2011

Alan Petzet
Chief Editor-Exploration

The under explored Miocene Monterey formation is easily the largest
shale oil play in the US with more than 3 billion bbl proved so far,
said Timothy Marquez, chairman and chief executive officer, Venoco
Inc., Denver.

Venoco doesn’t expect the Miocene to be as good onshore as it has been
offshore in the Santa Barbara Channel South Ellwood field, for
example, where estimated ultimate recoveries range as high as 12
million bbl/well and average 5 million bbl/well. About 11,000 wells
have tested the Monterey onshore in the last 50 years, Marquez said.

The undeserved reputation of California as a difficult place to do
business may have kept many exploration and production companies from
entering the state, but that appears to be changing, Marquez said.
Most drilling has been to shallower zones, more than 200,000 wells
have been drilled, and major oil companies control 78% of the
production in California, he added.

Characteristics of the naturally fractured Monterey formation compare
favorably with those of most other US shale plays, he noted. Even in
North Shafter field in the San Joaquin basin, where Monterey quality
isn’t as good, Venoco drew encouragement because numerous wells have
cumulative production of 400,000 bbl of oil 20 years after completion
with older technology.

Venoco drilled 11 Monterey wells last year. It plans to drill 22
development and 11 evaluation wells in 2011, focusing on the San
Joaquin and Santa Maria basins and the Salinas Valley, and 50 wells in
2012.

Venoco and Occidental Petroleum Corp. should receive final data in the
third quarter of 2011 from a 520,000-acre 3D seismic survey shot last
year in the San Joaquin basin, the state’s largest 3D shoot ever. The
data will help in planning horizontal wells, Marquez said.

The company has drilled its first two Monterey horizontal wells in the
Santa Maria basin and awaits four-stage fracs expected in a few weeks
to test that technology vs. acid treatments that have worked well in
the Monterey elsewhere. It is also drilling a horizontal Monterey well
in the Salinas Valley. Most of the company’s leases have 10-year
primary terms.

Marquez urged the industry to focus on EURs rather than initial
potential flow rates in reporting Monterey results.

Venoco, without an announcement, sold its small interest in Cat Canyon
field in the Santa Maria basin in the 2010 fourth quarter as being
fairly depleted in the Monterey, Marquez said.”

And here is the link for the aquifer map and discussion about the geological properties of the Salinas Valley: Salinas Valley Aquifer

Finally, here is the position of the BLM on the drilling on their land, courtesy of Steve Craig of the Ventana Trust:

“BLM appears not to be in the position to take responsibility for any
hydraulic fracking decsion-making at all. Their discretion is
superficial only, quite literally. The issue moves to the Division of
Gas and Geothermal Resources (DOGGR). DOGGR is a state agency
(website: http://www.conservation.ca.gov/dog/Pages/index.aspx). We will see how the state and federal regs are interpreted. Fracking may in essence be unregulated as to water and air quality impacts if a
federal pre-emption of state rules is invoked by the drillers.

DOGGR only works a few days a week due to furlough requirements, soon to be increased, and I think we will find they cannot enforce Clean Water Act, Safe Water Drinking Act, and Clean Air Act due to
exemptions in the Bush-Cheney-Halliburton 2005 energy bill. I should have an answer on that issue within a week.
Steve [Craig, Ventana Trust]

From the BLM:

Steve,

As noted earlier, I’m not the minerals specialist, but it is my job to help the public understand how oil and gas is regulated by BLM and the State of California.

Of course, the many layers of government can be confusing, but generally BLM is only responsible for the effects of energy development on the surface; whereas the State of California Department of Conservation’s Division of Oil and Gas is responsible for regulating all the activities that take place underground (i.e. subsurface).

In other words, the California Division of Oil and Gas (CDOG) has strict regulations for oil and gas drilling in California (including the use of hydraulic fracturing technology) that are not within the jurisdiction of BLM, so we can only analyze the associated issues/concerns (i.e. water quality) based on information that’s available at the leasing stage.

Anyway, here’s a link to the CDOG website that describes rules and
regulations for oil and gas drilling in California (which happen to be much more strict than the federal standards!):

Department of Oil & Gas regulations

regards,

Sky Painter Murphy
BLM Hollister Field Office

And there you have it – or at least some of it. I will continue to keep all of us as informed and aware as I can, but contributions always appreciated. Don’t forget the meeting on Feb. 5th. I will post a reminder closer to the date.