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Santa Maria Sun / Cover Story

The following article was posted on August 27th, 2014, in the Santa Maria Sun - Volume 15, Issue 25 [ Submit a Story ]
The following articles were printed from Santa Maria Sun [santamariasun.com] - Volume 15, Issue 25

Santa Barbara County debates the future of oil

BY CAMILLIA LANHAM

For most Santa Barbara County residents, it’s easy to pick a side on Measure P: Either oil is bad or oil is good.

In essence though, the measure is about more than oil; it’s about defining the future of the county. It’s about figuring out what’s most important to county residents—allowing the wave of oil projects coming down the pike to continue or preventing them from ever starting.

More info
Want to hear from both sides of the debate? Measure P proponents voice their opinions at sbcountywaterguardians.org. Opponents take P to task at noonmeasurep.com.

Opponents accuse one another of using scare tactics, exaggerating the truth, and outright telling lies to entice people onto either the “Yes” or “No” on Measure P bandwagon. Each side is convinced that the other is completely wrong and break a complex thing down to a simple argument: the environment versus the economy.

If it passes in November, the initiative to ban “high intensity” oil extraction techniques would change the way oil companies do business in the county’s planning world, and it could also put the county on the lawsuit docket several times over, according to County Counsel Michael Ghizzoni, because of takings claims and claims of vested rights—two legal terms that will be explained a little later.

It would ban future drilling projects from using practices such as hydraulic fracturing, cyclic steam injection, and acid matrix stimulation in the unincorporated areas of the county. Although it’s not an outright ban—it allows present operations to continue conducting business as usual and doesn’t outlaw conventional oil drilling practices—opponents say that eventually all oil drilling in the county will fall under the ordinance.

Of the county’s 1,200 or so active oil wells, approximately half are producing oil through cyclic steam injection. According to Kevin Drude, executive director of the Santa Barbara County Planning Department Energy Division, the other half produce oil conventionally—essentially, a hole in the ground with a horse-like pump-jack at the top of it. None of the wells were hydraulically fractured.

Cyclic steam injection is slightly different than fracking. Hydro fracking involves shooting a mix of chemicals, sand, and water into the ground at a high enough pressure to produce cracks in the rock. Oil then flows out of those fissures and up into the well bore. Fracking is used to get natural gas and oil out of deep shale formations, such as the Bakken Formation below North Dakota and the Monterey Shale below Central and Southern California, which is between 2,500 and 5,000 feet deep. Cyclic steaming is used in Santa Barbara County to coax oil out of the diatomite formation, which is between 800 and 1,000 feet below ground level.

Diatomite is a porous rock, but the oil held within the formation is so thick that it doesn’t flow without a little heated help. Steam injection is a process that uses natural gas to heat water up until it becomes steam, which is then pumped into the wells. The steam mixes with the oil, heating it up enough to loosen it from the diatomite and enable it to flow up to the surface.

Drude said none of the county’s currently active wells would be affected, at least not right away, if county voters opted to pass Measure P.

“The big projects we have coming into the county right now are all cyclically steamed,” Drude said. “Those are the projects that will be affected.”

At the moment, there are two big projects on the planning department’s radar: ERG Resources is in the process of applying to steam 233 new wells in Cat Canyon, and PCEC, Pacific Coast Energy Company, is looking to drill 96 new steamed wells into Orcutt Hill. According to Measure P proponents such as Katie Davis of the Water Guardians, these drilling projects are just the beginning of a ramp up in oil exploration and production that started when the county approved the drilling of 136 cyclically steamed wells for Santa Maria Energy in Orcutt.

“There’s a price to pay for that kind of production,” Davis said. “And we can see that happening in other places where oil production has ramped up.”

 

Other places

Canada, Oklahoma, and Pennsylvania are a few of many hotspots in North America where oil and natural gas production have boomed within the last decade. Environmental issues have made headlines in each of those areas—oil leaks contaminating lakes and wilderness in Canada, an increase in the frequency of earthquakes in Oklahoma, and contaminated groundwater in Pennsylvania.

These are problems that Davis and her fellow Water Guardians, the group that wrote the initiative and gathered enough signatures to get it placed on the ballot, don’t want to see in Santa Barbara County. She said new state regulations that will go into effect in 2015 because of Senate Bill 4 are not good enough. The bill tightens California’s hydraulic-fracturing leash by doing things like requiring oil producers to notify neighbors of hydraulic fracturing, to publicize the chemicals used, and routinely test groundwater supplies.

“If you test your water and you find out your water supply has been contaminated, what can you do?” Davis said. “There’s no way to mitigate these risks.”

In Canada, cyclic steaming is used to loosen deposits in what’s known as the oil sands. In August 2013, the New York Times reported on an oil spill that started in June 2013 on a Canada Natural Resources oil operation site.

The company had yet to find the source of the problem when the article was published. The site had already leaked a little more than 260,000 gallons of oil and was continuing to leak. In the same piece, the Times said that a study was released in January 2013 by Alberta’s previous energy regulator—a new regulatory agency was formed in 2013. The study covered a 2009 oil spill on the same site and attributed the leak to high-pressure steam that “likely breached” the rock formation between the oil sands and the surface, adding that steam and pressure may have created weaknesses in the surface rock layer.

The U.S. Geological Survey released a study in January 2014 that was conducted because of a dramatic increase in the number of earthquakes within the central and eastern United States. One of the areas the USGS studied was Oklahoma City, where the agency assessed and evaluated possible links between earthquakes and wastewater injection. Whereas central Oklahoma experienced one to three earthquakes between 1975 and 2008 that were at least a 3.0 magnitude, the yearly average grew to around 40 earthquakes from 2009 to 2013.

“USGS scientists have found that at some locations, the increase in seismicity coincides with the injection of wastewater in deep disposal wells,” a USGS article about the study said. “Much of this wastewater is a byproduct of oil and gas production and is routinely disposed of by injection into wells specifically designed for this purpose.”

Wastewater is also known as produced water in the oil industry. It’s what’s left over after oil is separated from the briny and/or chemical-filled water it comes out of the ground with.

That water is often cleaned and injected back into the ground.

The Associated Press reported that Pennsylvania received 398 complaints in 2013 alleging that oil or natural gas drilling affected private water wells, compared with 499 complaints in 2012. Those allegations include short-term diminished water flow, as well as pollution from stray gas or other substances. More than 100 cases of pollution were confirmed over the past five years.

Pennsylvania is a state where hydraulic fracturing is used to free natural gas from its shale deposits.

While those problems are hard to ignore, No on P proponents say Santa Barbara County isn’t those other places. They say that regulations in California and the county itself are enough to keep water safe from pollution and oil leaks from damaging natural resources.

“You can’t link what’s going on in other areas, because this county is the most regulated in the country,” Jim Byrne, spokesperson for No on P, said. “Let the county regulators do their work. … We’re all about healthy air and water.”

 

Nitty gritty

Aside from disliking the initiative itself, folks who want oil to stick around in Santa Barbara County say that the way Measure P is written won’t allow it, even though proponents say the measure will keep existing operations running and allow new conventional oil drilling projects to take place. The measure’s opponents also maintain that P will cut into the county’s revenue stream and affect families dependent on income associated with the oil industry.

The oil industry produced $16.4 million in property taxes for the county in 2013, more than $10 million of that went to schools. Hundreds of people are directly employed by the oil industry, and a thousand or more are indirectly impacted through jobs associated with the industry.

“These are well-paying jobs, jobs that are much needed in the county. This measure will be devastating if it passes,” Byrne said. “It will shut down the industry. Permits will be needed to continue existing operations, and they won’t be allowed.”

He added that the exemptions outlined in Section 5 of the initiative—the ones’ that Measure P backers say will enable existing operators to continue producing oil—aren’t clear enough. He said there is no express exemption for “existing operations.” Drude, from the planning department’s energy division, agrees.

“The challenge is that there is no language that says in the initiative, anywhere, that existing operations are exempt,” Drude said.

There are three ways to determine if a project is exempt from the measure’s ban: One is if someone can prove a vested right; another is if a property owner can show there’s been a taking; and the third is if the ban violates someone’s Constitutional rights. These are things that are defined by case law, and can’t be applied as a blanket exemption, Drude said.

“You can’t go to the book and say, ‘This is vested; this one’s not.’ It’s case-by-case,” he explained. “It’ll be discretionary. It’ll be decided by the [Planning Department] director or by the Board of Supervisors.”

Helen Slottje, a lawyer with the Community Environmental Defense Council out of New York, explained a takings claim is something the U.S. Supreme Court described as a “morass.”

“It’s difficult to figure out,” Slottje said.

Basically, she said that establishing a takings claim requires proof that the government has regulated or taken substantially all of a person’s property without giving them adequate compensation. Slottje has worked on at least 175 hydraulic fracturing and natural gas exploration bans in New York and helped the lawyers who crafted Measure P.

“There’s never been a case where a community has passed a law to protect health, community, and welfare that has constituted a taking,” she said.

Vested rights as it applies to planning code would mean that a business or person has an approved permit in hand, and has invested money into the physical project as it applies to the permit.

“In those cases, basically those projects get to proceed even if a law’s passed that makes it illegal,” she said.

The process to get an exemption determination isn’t expressed in the initiative, so Drude and company are working on an amendment to the zoning code that would get enacted if the measure passes in November. That amendment goes before the Board of Supervisors for approval in October.

“The way I look at it, I’m going to see the same applications, it’s just going to have another layer on it,” Drude said. “People who are just normally operating, chugging along, they don’t have to come in and get a piece of paper.”

If those operators already producing oil need to make a change that requires a permit, that’s when they’ll bump up against the measure. Byrne with No on P said oil operators believe they’ll smack into the measure when they need to do routine things like maintenance, which often requires acid to be pushed into the well bore.

Yes on P backers say the initiative doesn’t apply to routine maintenance on existing wells; Drude said he’s not sure how that will work yet. At the moment, operators don’t need the county’s permission to perform well maintenance. He added that the intent behind the initiative doesn’t factor into how it gets interpreted. The county Planning Department is required to interpret the measure as written.

Future lawsuits?

If you’ve watched or attended any county meeting that had to do with Measure P, you’ve heard the s-word bandied about. Several individuals and entities have threatened to sue should the measure make it into county planning code.

“The county is aware of the magnitude of the potential liability threat that could ensue if this initiative passes,” Byrne said. “The taxpayers are exposed.”

Slottje, the lawyer from New York, said those same threats were leveled against the towns in New York, and out of the 175 to 200 towns that passed bans, only four were actually sued. None of those lawsuits were successful.

“It’s a very scary threat because no one wants to be sued,” she said. “Who wants to be sued, even if you’re going to win?”

County lawsuit-threateners are saying the suits would be over takings and vested rights claims that aren’t granted exemptions. The same people add that if the county does grant exemptions that environmentalists don’t like, environmentalists are going to sue the county.

So basically, the county is screwed. Or at least, that’s what No on P supporters such as Ed Hazard, who’s the president of the California chapter of the National Association of Royalty Owners (NARO), are saying.

Hazard’s family owns mineral rights on a parcel of land northeast of Santa Maria, and the wells on the property have been capped since 1990, when Texaco pulled out of town. He said a project known as the North Garey Oil and Gas Production Plan, which wants to reopen 12 wells on the Hazard property as part of the project, took 3 1/2 years to go through the county’s permitting process.

The project was approved in March 2014, but isn’t up and running yet. He’s worried that Measure P will get passed before the wells get going again, and then the project will be subject to the ban’s exemption process.

“I get depressed talking about this. It has us very scared, very angry, and very motivated,” said Hazard, who calls mineral rights owners “little guys” in all this. “The good oil companies are already pulling out. I contend there’s already been a taking, maybe not legally, but still … our minerals are worth less now than they were three or four years ago.”

He said the California chapter of NARO is coming up with a contingency plan in case Measure P passes. Before last October, California didn’t have a chapter of NARO.

“We’re just getting started; it’s a shame. I wish someone had started this three or four years ago, because then we’d be better prepared to deal with this onslaught,” Hazard said.

His county isn’t the only one in California facing some sort of ban on oil drilling.

Santa Barbara County is one of two counties that will have “high intesity” oil extraction bans on November’s ballot. San Benito County is the other, but the initiative there—Measure J—gradually phases out all the existing operations that use practices like cyclic steam injection while leaving conventional oil operations alone.

The city of Los Angeles is working on amending its planning code to make it very, very difficult for hydraulic fracturing to continue in the city, according to District 8 City Council member Bernard Parks. He said his district suffers from smells, toxic plumes, and structural damage because of a Stocker Oil Fields project, which is hydraulically fracturing underneath his district from wells horizontally drilled from outside city limits.

“We’re not calling it a moratorium; we’re basically saying, ‘If you want to frack within the city of LA, you have to go through a certain process, that ends ultimatley at the City Council,’” Bernard said. “Doing it based on zoning will allow us to control our own destiny, so to speak.”

 

Contact Managing Editor Camillia Lanham 
at clanham@santamariasun.com.