Sunday, February 25 , 2018, 6:20 am | Fair 39º


Letter to the Editor: Fracking — Where Do We Stand Now?

In November 2014, Santa Barbara County voters rejected a ballot measure that would have banned unconventional oil/gas drilling practices — hydraulic fracturing (fracking), cyclic steam injection and acidizing — in the county.

At the same time, our near-neighbors in Mendocino and San Benito counties voted to ban fracking and its associated methods, as did New York state in that year.

On Monday, the price of ICE Brent Crude oil stood at $64.69, down from a 52-week high of $115.70 and up from a 52-week low of $46.41. (These prices characteristically do their best between March and May.)

What significance, if any, does this have for those of us who vigorously opposed permitting these drilling practices in our community?

Earlier in this century, Dr. M. King Hubbert's theory, that world oil sources and production would within a few years peak and irreversibly decline, seemed to be on the brink of fulfillment. Alone among big oil CEOs of the time, BP's John Browne looked into the future, thought climate change had to be dealt with and sought to direct his company to begin developing renewable fuels.

Other giants in the field, however, concluded that $100+/barrel prices would never end because of projected increasing worldwide demand, and so would enable them to pursue more expensive “unconventional oil” drilling. So they dug deep into Arctic and Gulf of Mexico waters, into tar sands of Canada and into voluminous shale fields in the U.S. and elsewhere. In this atmosphere, BP's Browne was soon replaced by corporate captains who meant to get in on the fun, and did, rushing the exploration of a deep offshore field in the Gulf of Mexico, triggering the Deepwater Horizon blowout of April 2010 and the devastating oil spill of monumental proportions that followed.

It is significant now that the bets of these big boys have not panned out. Demand did not increase to the degree projected; even before the recent collapsing oil prices, their investment stones began rolling downhill.

“The oil price plunge has stoked worries over global growth, fueled fears about deflation and intensified scrutiny of capital spending across the energy sector, with companies set to slash their exploration and development budgets. Michele della Vigna of Goldman Sachs said: 'The industry simply has to completely reset, delaying almost all investments until costs become compatible with the lower oil prices. That process of adjustment will take some time ...'” (Oil, Jan. 14, 2014)

Some might believe current low oil prices will stimulate demand and so reverse the downward trend. But there are inhibiting factors: increasing attention to the demands of Climate Change adherents; escalating sales of vehicles having mandated higher miles-per-hour capability; a political accommodation with Iran that would permit that country to resume oil exportation and/or a resumption of Iraq's oil output, these latter further glutting the market, etc., etc.

There is plenty of evidence that oil/gas conglomerates are suspending further unconventional drilling in hopes that oil prices will resume a significant upward trend, thereby assuring their profits; they are certainly using the situation to pressure oil rig suppliers, whose lifeblood also depends on “drill baby drill,” to lower their charges.

However that may be, the glimmer of hope for fracking opponents in our community is that the implications of current oil prices seem to have halted, at least for now, the actual production of oil from unconventional wells in Santa Barbara County.

According to Kevin Drude (deputy director, Santa Barbara Planning and Development Department, Energy and Minerals Division), no discretionary drilling permits for hydraulic fracturing (fracking) operations in the county have been issued since approximately 2007, and none have been applied for.

As of April 14, “ ... we are processing applications for 326 steam injection wells. Over the past two years we permitted approximately 220 others. Some of these wells have been drilled, but none are producing.”

The county regards high-pressure acidizing as equivalent to fracking so the above permit/drilling statistics apply to this procedure.

Consequently, there is reason to believe current low oil prices have deterred any actual production from unconventional drilling in our county.

Some informed opinion has it that right now smaller oil/gas companies are the ones suspending unconventional operations; those who have borrowed heavily to sustain themselves may actually face bankruptcy; larger companies can live with low or no profit from more expensive unconventional drilling for awhile; but if low oil prices persist, even they must cut back to justify their behavior to investors.

The fracking underway in our coastal waters presents a different picture. Here only the federal government has sway. In December 2014, the Environmental Defense Center filed suit against the Bureau of Safety and Environmental Enforcement for “failure to provide for public or environmental review prior to approving 51 oil drilling permits authorizing the use of acid well stimulation (“acidizing”) and hydraulic fracturing (“fracking”) from offshore oil platforms located in the Santa Barbara Channel” (EDC). The consequences of this remain to be seen.

Conclusion: There are many unknowns as to the future of oil/gas prices in the US, but at this moment it seems reasonable to conclude that: (1) current low prices have deterred any actual new production from unconventional drilling on land in Santa Barbara County, and (2) persistent low prices will further eliminate, or at least minimize, unconventional oil production in our community.

William Smithers
Santa Barbara

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