Two environmental groups in California have sued the federal Bureau of Land Management (BLM) to prevent the use of hydraulic fracturing (fracking) in the Monterey Shale play in north-central parts of the state.
In the crosshairs of the lawsuit filed by the Center for Biological Diversity and Sierra Club are three entities that auctioned acreage in September from BLM: Austin, TX-based Vinton Exploration; Long Tree Energy & Associates, a Colorado-based broker for an undisclosed oil/gas exploration company; and Occidental Petroleum Corp.'s (Oxy) Vintage Production California LLC. At that time the federal agency leased 2,500 acres in Monterey and Fresno counties.
The biological center and Sierra attorneys are alleging that BLM leased the acreage without doing "a thorough analysis" of fracking's potential environmental impacts.
The Monterey Shale in California is an extension of an old oil play that some analysts are predicting will experience a rebirth (see Shale Daily, Sept. 13). Estimates earlier this year from the Energy Information Administration (EIA) placed Monterey's long-term potential at more than 15 billion bbl, which would make it bigger than the highly touted Bakken and Eagle Ford fields in North Dakota and Texas, respectively. Industry and academic sources indicated in September to NGI's Shale Daily that the EIA estimates may be debatable, but it is clear that after decades of tepid interest, particularly among independents, Monterey is drawing a lot of new exploration and production (E&P) attention.
The environmental lawsuit cites a number of problems with fracking and water contamination that have yet to be decisively substantiated. The plaintiffs said they seek to overturn "BLM's illegal and unwise lease sale and ensure that California's sensitive wildlife and water resources are properly protected, and that any oil and gas leasing and subsequent development be allowed to occur, if at all, following a thorough environmental review that reveals to the public and decision makers the full impacts of such action."
The lawsuits allegation is that fracking is "a highly controversial and dangerous drilling method" that can result in hazardous chemicals getting into drinking water. Plaintiffs cite more than "1,000 documented cases" of groundwater contamination from fracking.
"In particular, the storage of the hydraulic fracturing fluid in surface pits can be a source of water pollution," the lawsuit states. "For instance, New Mexico data, summarized by the Oil and Gas Accountability Project, shows 743 instances of ground water contamination, almost all of it occurring over the last three decades; 398 of those incidents are linked to faulty pits."
They state repeatedly in the 19-page filing that adverse impacts to water quality and other resources will result from hydraulic fracturing and call it "a likely method of oil and gas extraction that could be applied to the leased areas." Nevertheless oil and gas industry sources have told NGI's Shale Daily that "the jury is still out" on whether fracking will result in economic recoveries from the Monterey Shale.
BLM officials have said they won't publicly comment on the lawsuit.
Earlier this year officials at the largest independent already involved in the Monterey Shale, Denver-based Venoco Inc., said they think the bullish EIA estimates are too low. Venoco CEO Timothy Marquez said last summer that the EIA estimates are "greatly understated." But he also has said Venoco's first attempts at horizontal exploratory drilling in the Monterey were unsuccessful. For now the company is only drilling conventional, vertical wells.
Although some Wall Street analysts continue to view Venoco as under-achieving in the Monterey, Marquez quoted Oxy as estimating its acreage alone holds up to 10 billion bbl of reserves, and he considers Oxy's share of the overall Monterey Shale play relatively small. He said Monterey has a "huge amount of potential."