London - Both supporters and critics of horizontal drilling
and hydraulic fracturing (together usually known as "fracking")
usually portray the technique as novel, with unknown but potentially large
risks, and certainly disruptive for surface communities.
It might be possible in far-away places like the north
plains of the Dakotas and Montana, they say, but is not appropriate in
populated areas, especially ones with sensitive geology and prone to
earthquakes.
Strong anti-fracking campaigns in New York state, in Sussex
on the south coast of England, and recently in South Africa against exploration
in the Karoo have focused on risks from triggering earth tremors to
contaminating ground water and disruption such as heavy traffic near urban
areas.
Critics assume it is radically new and in some ill-defined
way more dangerous. But how many realise that almost 50 million barrels of oil
a year, and hundreds of millions of barrels of waste water, are already
produced from "conventional" oil wells directly under Los Angeles,
the second-largest city in the United States?
Beverly Hills high
Right at the heart of one of the most affluent and exclusive
communities in the country, oil producer Venoco extracted almost 114 000
barrels of crude and 103 million cubic feet of natural gas, as well as 807 000
barrels of waste water, from 19 conventional wells on the campus of the famous
Beverly Hills High School last year, according to state records.
Across Beverly Hills, 95 wells are currently producing from
two pools, which lie entirely beneath a heavily built up area, stretching along
Pico, Olympic and Santa Monica Boulevards. The wells have been drilled from
four clusters (of which the High School is one), and are hidden in windowless
buildings, but are otherwise part of the normal urban streetscape.
The field as a whole produced 805 000 barrels of crude oil
in 2011, 1 million cubic feet of natural gas and 8.8 million barrels of waste
water. The Nileguide blog gives some idea of how the wells have been blended
into the urban scene:
http://www.nileguide.com/destination/blog/los-angeles/2010/06/26/urban-oil-wells-in-los-angeles/.
Royalties from oil and gas earn hundreds of thousands of
dollars each year for the school’s general fund. But the wells have also been
at the centre of celebrated environmental litigation.
Erin Brockovich loses
Between 2003 and 2006, six lawsuits were brought against
Venoco, the school district and others on behalf of approximately 1 000 former
students, alleging that pollution in the air, water and soil as a result of the
wells had caused illnesses, including Hodgkin’s lymphoma, a form of cancer.
Some of the claims were brought by campaigning lawyer Erin
Brockovich - famous for securing $333m from Pacific Gas and Electric in
an earlier pollution case, and immortalised by actress Julia Roberts in an
Oscar-winning performance in the film of the same name (“Erin Brockovich fights
again”, The Economist, June 12, 2003).
But in a setback for the toxic-tort lawyer, twelve test
cases were dismissed in 2006. The judge ruled the claimants had failed to prove
any medical link between their illnesses and the alleged emissions. In July
2012, Venoco and other defendants entered into a settlement agreement by which
all pending cases will be dismissed, according to the company’s latest
quarterly filing with the Securities and Exchange Commission (SEC).
Lessons for fracking
California’s ageing, exhausted oilfields, many under the
modern city of Los Angeles, with their heavy, viscous crude that needs to be
steamed from the rocks, are about as different as possible from the prized
light oils being fracked from North Dakota’s Bakken formation and other fields
in the United States.
But they offer lessons for the oil industry and
environmentalists. On the positive side, production from Beverly Hills and
dozens of other fields under Los Angeles shows it is possible to extract oil
and gas even in highly urbanised areas.
Some commentators have suggested fracking will be impossible
in the urbanised north-eastern United States and Europe.
Experience with the
Los Angeles oil fields suggests oil and gas production can be compatible even
with heavily developed urban environments, if it is done carefully and
sensitively.
On the negative side, the Beverly Hills litigation
highlights the intense suspicion between petroleum producers and green groups.
As oil and gas production moves into more sensitive areas, the biggest problems
are not engineering and safety but dispelling misunderstandings, dealing with
environmental and legal challenges, and persuading local communities that oil
and gas producers can be good neighbours.
An exhausted giant
The Los Angeles Basin is one of the most important oil-producing
areas in the United States. Until it was overtaken by North Dakota earlier this
year, California was the third-largest oil-producing state in the country after
Texas and Alaska.
In 2011, the state produced 197 million barrels of oil,
mostly from onshore fields, according to preliminary estimates from the
California Department of Conservation. Statewide output accounted for about 11
days of annual US consumption.
Three quarters of the state’s production comes from the
sparsely populated areas west of Los Angeles at the southern end of the Central
Valley around Bakersfield in Kern County. The area is home to all the biggest
fields, including Midway-Sunset (31 million barrels in 2011), Belridge (28
million barrels), Kern River (27 million) and Elk Hills (14 million).
But most of the rest comes from underneath heavily urbanised
areas in and around greater Los Angeles, including the counties of Los Angeles
(24 million barrels), Ventura (8 million barrels), Santa Barbara (3.5 million)
and Orange (4.4 million).
Well stimulation
Unlike the light crude oils found in the Bakken, which
typically have an API gravity of 36-42 degrees, oil from Beverly Hills is much
heavier, around 24 degrees, and crude from Midway-Sunset and Kern River is very
heavy, at 11-13 degrees. Kern River crude will only just float on water.
Oil from Beverly Hills will flow naturally, but Kern is
exceptionally sticky. In both cases the oil needs help to flow and improve
recovery rates.
California’s oil fields are also old. Some of Venoco’s wells
at the High School date from the early 1980s. Many of the Kern wells are even
older.
The natural reservoir pressure which drove oil up the wells
has long since been exhausted so operators have resorted to waterflooding
(secondary recovery) and steam flooding (tertiary recovery) to maintain
pressure and help the heavy oil flow.
In 2009, the state produced 230 million barrels of oil, but
164 million relied on some form of additional recovery assisted by steam (118
million barrels), waterflooding (40.5 million) or gas injection (5.5 million
barrels).
In fact the biggest item flowing into and out from
California’s wells is not oil but water. In 2009, the state’s oil producers
injected 1.381 billion barrels of water, and another 368 million barrels of
steam, to stimulate the oil fields (“2009 Annual Report of the State Oil and
Gas Supervisor”).
Much of the water flows back to the surface and must be
safely disposed of or re-injected to maintain pressure. Wells in Kern River
produced 250 million barrels of water alongside 29 million barrels of oil, a
water-to-oil ratio of 9:1. In July 2012, well number 2A at Beverly Hills High
produced 2,137 barrels of waste water and 233 barrels of oil (a ratio of 10
:1).
California’s Conservation Department has recently finished
hosting a series of seminars to gather public input before developing
regulations to govern fracturing.
Like any industrial process, there have been accidents and occasional spills at the existing conventional fields. But risks have been low.
Fracking itself is not intrinsically more dangerous than
other forms of oil extraction.
Many residents will object to any form of oil and gas
production in their local area. But the use of fracking does not, in itself,
make the development more dangerous.
Fracking should therefore be assessed on similar safety,
environmental and impact criteria to other oil and gas projects.
- Reuters
*John Kemp is a Reuters market analyst. The views expressed are his own.