Inside a nondescript building in Sacramento, an auctioneer prepared to lease thousands of acres of public land that could ultimately reap billions of dollars in profits for the winning bidders. The December auction at the federal Bureau of Land Management building also was met with a formal protest lodged by the San Francisco-based Center for Biological Diversity. The environmental group contended that the bureau hadn't completed thorough environmental assessments prior to leasing the land. Protesters had gathered outside as well. One burst into the auction, yelling, "Mother Earth isn't for sale!" The outburst elicited a few chuckles from the group of assembled bidders; the auctioneer then moved on.
During the bureau's previous quarterly auction, many parcels went unsold. The interest shown by the oil and gas industry had been lukewarm. But things were different at this auction. The bureau offered up a total of 17,832 acres for lease, and all of the land was bid on and sold. In fact, all the parcels drew multiple bidders during the auction, which generated a total of $104,099 in revenue for the federal government. Going forward, busy auctions like this one likely will become the norm.
At the heart of the expected land-rush in California is the Monterey Shale, a huge underground geologic formation that stretches from San Francisco to San Luis Obispo and contains a rich deposit of fossil fuel. The formation snakes through eleven counties, but unlike the shale formations in the Northeast and Rocky Mountains, the Monterey Shale is not coveted for its natural gas, but for the oil it contains. No one knows exactly how much oil is in there, but upper-limit estimates from IHS Cambridge Energy Research Associates predict that there are 400 billion barrels of oil — an estimated 15.5 billion barrels of which are recoverable using current technology.
Extracting much of that oil won't be as simple as drilling some wells, however. Nestled in rock formations thousands of feet below ground, the oil can only be retrieved through hydraulic fracturing — a controversial process better known as fracking. Over the past few years, fracking has exploded around the country, spurring a natural gas boom. Fracking allows gas and oil companies to access fossil fuels that were once thought to be unrecoverable, thus fueling a belief that the nation could someday become energy independent.
But fracking also has sparked a heated backlash from environmentalists. The process involves injecting millions of gallons of water and chemical solvents under high pressure deep into the earth to break apart the shale and release the trapped gas or oil. The freed fossil fuel then travels back up a well, encased in cement. But fracking also poses numerous health and environmental risks.
Oil and gas industry officials are quick to downplay these threats — and are eager to capitalize on the country's vast underground resources. "Fracking has been used for more than sixty years — more than 1.2 million times in this country — with no proven cases of water contamination," said Dave Quast, the California field director for Energy in Depth, an industry-sponsored trade group. "Suddenly there's a focus on hydraulic fracturing because of a completely irresponsible documentary called Gasland. What we need is more domestic energy production — we're the fourth-largest energy-producing state, and we want to continue that. We don't see any of these problems, and we're looking at tens of thousands of jobs, billions in economic activity."
Despite industry claims, however, there have been numerous documented cases of environmental contamination associated with fracking. In 2009, a jury awarded $8.5 million in damages to Starrh and Starrh Cotton Growers of Kern County after finding that improperly stored fracking wastewater by Aera Energy LLC had contaminated the groundwater and killed an entire orchard of almond trees.
A 2011 EPA study found carcinogens commonly associated with hydraulic fracturing in two test wells in Wisconsin, including a toxic solvent called 2-Butoxyethanol. A later study revealed that the leaks in the test wells were not caused by cement casing failure, which is common to hydraulic fracturing, but by upward migration through rock fissures, which the industry had long claimed was impossible. In March 2012, a Cornell University study confirmed devastating impacts on pets and livestock in lands surrounding fracking outfits, including stillbirths, sterility, and death.
Drinking-water sources in Fresno, Bakersfield, Coalinga, Avenal, McKittrick, San Luis Obispo, San Benito, Monterey, Ventura, and Santa Barbara, and Orange County stand in the potential fracking zone, and are at risk of contamination by methane, benzene, and other carcinogens.
The amount of water consumed by fracking also presents a serious environmental challenge in a state with a water-shortage problem. A June 2012 report published by the Oakland-based Pacific Institute detailed the extreme water usage associated with fracking. Though the industry often reports usage at 1 to 2 million gallons per well, the study found that the average water usage in the Marcellus Shale region (Northwestern United States) was 4.5 million gallons per well. Some wells in Texas were found to have required 13 million gallons of water each. This extreme consumption of water, very little of which is recoverable, will likely pit Big Oil against agriculture, consumers, and the environmental community.
For the most part, the California land rush has operated under the radar, however. A poll released in August by the Public Policy Institute of California showed that 46 percent of Californians have never heard of fracking. Though attention is growing, the energy industry has learned valuable lessons from the fracking fight in the Northeast, and with a potential windfall in the hundreds of billions of dollars, big players like Occidental Petroleum, Chevron, Venoco, and Exxon-Mobil aren't likely to pack it up and go home in the face of protest. They have ample resources at their disposal.