Will California frack? Not without water.(Read article summary)
California sits atop the largest tight oil formation in the US, Cunningham writes, but the state's water crisis threatens to hamper oil and gas production and put an end to a Bakken-like bonanza.
Drilling forÂ oilÂ in California dates back to the late 19th Century, allowing it to become the countryâ€™s top producer by the beginning of the 20th. One hundred years later, California still ranks third, but its aging fields have been in decline for decades.
Yet the state is sitting atop the largest tightÂ oilÂ formation in the United States. The Bakken in North Dakota and the Eagle Ford in Texas may be leading the resurgence in U.S.Â oilÂ production, but the reserves sitting in Californiaâ€™s Monterey Shale dwarf those of its more notable counterparts. The interest in the Monterey Shale is heating up, with the legislature passing a controversial law last year to put in place the stateâ€™s first regulations over hydraulic fracturing. The Director of the California Department of ConservationÂ claimsÂ the â€śregulations include the strongest and most comprehensive public protections of anyÂ oil- and gas- producing state,â€ť while still allowing the industry to move forward with drilling. (Related article:Â Total Prepares for $50m Investment in British Shale)
The Monterey Shale holds an estimatedÂ 13.7 billion barrelsÂ of unproven technically recoverableÂ oilÂ resources â€“ about three times the reserves believed to be in the Bakken formation in North Dakota. Despite these prodigious resources, safely tapping them will be incredibly difficult. Deborah Gordon at the Carnegie Endowment for International Peace outlines in an importantÂ new reportÂ several significant obstacles that may prevent a Bakken-like bonanza in California.Â
Chief among them is water scarcity. California suffered itsÂ driest year ever in 2013, with recordkeeping dating back to 1895. 2014 will mark theÂ third consecutive yearÂ of severe drought. Hydraulic fracturing requires a lot of water, and as Californiaâ€™s water crisis worsens, a dearth of water along with state-mandated water restrictions will hamperÂ oilÂ and gas production.
To make matters worse, much of theÂ oilÂ and gas reserves in the Monterey Shale are situated in the Central Valley, a huge agricultural region that grows much of the nationâ€™s fruits and vegetables. Farmers are already feeling the bite of water limits, and the state is no stranger to fights over water between farmers, landowners, industry, and even neighboring states. A rise inÂ oilÂ and gas drilling will only exacerbate this conflict. Much will hinge on the confusing and overlapping authorities on water governance in California, as Gordon points out. (Related article:Â They're Studying This No-GoÂ OilÂ Zone)
Another problem is the Monterey Shaleâ€™s location along several fault lines. Wastewater reinjection wells can contribute to seismic activity, which in turn could contaminate aquifers. The industry could expect some serious blowback should drilling activity be linked to a California earthquake.
Still, despite the laundry list of problems outlined by Gordon, the most important is probably the tough geology that could makeÂ oiland gas recovery difficult even for the most technically-proficient drillers. Throughout the formation, the structure varies, with folds that make the geology much more complex than that of North Dakota or Texas. Add to that the fact thatÂ oilÂ and gas production rates in the Monterey Shale may actually beÂ vastly overstated, and there are many reasons to believe that California is no North Dakota.