There's a quiet economic boom simmering in the South Valley and its about to bubble to the surface. It's oil. More specifically, oil from hydraulic fracturing known as fracking.
We recently traveled to Kern County to see for ourselves, the potential benefits and the risks that fracking could bring to the Valley. We'll also reveal some of the coming regulations designed to manage what could be the biggest oil find in the United States.
It's called the Monterey Shale and it's big. It runs roughly from Bakersfield to Monterey.
The Monterey Shale formation is one of the biggest oil finds in U.S. history and it is an untapped resource. It's massive... runs deep across much of California and good chunk of it starts near Kern County.
When you think of oil, you probably picture oil derricks... but your perception will soon change. Even without widespread fracking, Kern County already accounts for 80% of the oil and gas production in California. California is only third behind Texas and North Dakota for oil production in the United States... we've actually surpassed Alaska.
So what is hydraulic fracking and why is it controversial? "These wells are much shallower than on wells that are being hydraulically fracked," said Gabe Garcia with the Bureau of Land Management. Traditional wells are shallow, only about 1,000 feet or so. That oil is collect from soft deposits, but fracking goes much, much deeper, more than 10,000 feet in some cases and into dense, heavy rock. Using high pressure, operators pump water, chemicals and sand into the ground. The pressure cracks or fractures the rock freeing up the trapped oil, which is then pumped to the surface.
So is using high pressure and chemicals safe? "It is safe process... if it's done properly," said Randy Adams, former District Deputy for the Bakersfield Division of Oil, Gas and Geothermal Resources. Believe it or not, they've been safely fracking in Kern County for decades. Water is heated and mixed with sand and chemicals and then injected underground. The water, which was undrinkable to begin with, is recycled in a closed loop system.
Supporters of fracking say that unlike some cases back East, there's never been any ground water contamination in California from fracking. Critics of that comment say, "You know you haven't been looking."
Jason Marshall is the Chief Deputy Director with the State Department of Conservation. He is helping to draft legislation designed to insure that future fracking operations remain safe for the environment. "We're looking at adopting some regulations that very specifically address the practice of hydraulic fracturing," said Marshall.
Kern County wants more transparency from oil companies. In exchange, they're working to simplify the process for oil permits, zoning clearances and environmental impact reports. The stakes are big for both the operators and the state. Think about it... 15 billion barrels of oil trapped in the Monterey Shale, covering about 2,000 square miles. That's five times bigger than the Bakken Shale in North Dakota and the Marcellus Shale back East. And because it's so large, the leases are mixed between private and federal.
Like the oil companies, California could be on the verge of an economic windfall. If Monterey Shale pumps $1 trillion dollars into state's economy, like some predict it will, the state could collect hundreds of billions in taxes. Not to mention the 12.5% in royalties that the Bureau of Land Managements shares with the state on anything produced on federal land. It has huge upside potential both economically and for the state's unemployment.
But there's just one problem... For all the drilling that has already been done, no one has really tapped into the mother load of the Monterey Shale yet.
As the exploration continues, some worry about more aggressive horizontal drilling that could potentially overlap into rural areas near ag land. Randy Adams says future fracking legislation will build on current safeguards and oil companies may have to disclose more.
In the years to come, California residents can expect more laws on fracking... but they can also expect more drilling too.
Some of the wells have been in Kern County for 80 years and oil is already the number one tax base revenue for the county.
#1 Oil - $28.5 billion in property taxes
#2 Renewable Energy $7 billion
#3 Ag - $5.8 billion
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