Gov. Jerry Brown signed Senate Bill 4, by Sen. Fran Pavley, D-Agoura Hills. It imposes the most stringent regulations in the country on hydraulic fracturing and other oil and natural gas production.

“Oil companies will not be allowed to frack or acidize in California unless they test the groundwater, notify neighbors and list each and every chemical on the Internet,” Pavley said. “This is a first step toward greater transparency, accountability and protection of the public and the environment.”

Yet despite 10 amended versions, passage of SB4 isn’t what environmentalists wanted. They wanted a complete ban. “The only solution to the fracking threat is a complete ban,” MoveOn.org said.

What SB4 does

Bill analysis shows SB4 requires regulations to be created and adopted by the State Division of Oil, Gas and Geothermal, in consultation with the Department of Toxic Substances Control, the California Air Resources Board, the State Water Resources Control Board, the Department of Resources Recycling and Recovery and any local air districts and regional water quality control boards in areas where fracking may occur.

SB4 specifically establishes a “comprehensive regulatory program” for oil and gas well stimulation treatments. It includes, among many other requirements, a new study, the development of numerous regulations and a new permitting process, leaving oversight agencies ample opportunity to add regulations as they see fit.

In a petition demanding Pavley drop the bill, MoveOn.org said, “Continue to be the environmental hero we know you to be and withdraw your bill and fight for a ban on fracking.”

“Pavley’s intentions were good,” MoveOn.org said. “She thought regulations would help protect the environment and the public. But no amount of regulations can insure that fracking can be done safely.”

SB4 provides a variety of tools to state regulatory entities:

* Adds regional groundwater monitoring in the vicinity of oil and gas fields;

* Requires the State Water Resources Control Board to “develop model criteria with input from experts and stakeholders”;

* Requires the State Water Resources Control Board to perform the monitoring in “high priority areas”;

* Adds groundwater monitoring to the well stimulation treatment permit requirement;

* Requires the state to complete a statewide environmental impact report;

* Requires that the ingredient list of trade secret chemical additives used in hydraulic fracking be disclosed.

Although SB4 passed, the above regulations still must be implemented by state agencies. The following years will show whether the regulation is light, allowing for extensive energy development and higher tax revenues; or heavy, as environmentalists wish, keeping California off the bandwagon of the national energy boom.

The sides have been drawn up and the stakes for California are high.

No. 1

October 3, the day the federal government was shut down, a Wall Street Journal story announced, “US Rises to No. 1 Energy Producer.” And on the same day, an environmental group quietly released a report calling for a complete ban of fracking.

The goal to put more limitations on the oil-and-gas industry would result in the increase in America's dependence on foreign oil, according to analysts. This is perplexing, as environmentalist groups have been leading the cry for decades for the U.S. to decrease its dependence on foreign oil.

California is the fourth-largest oil producing state in the country, recently surpassed by North Dakota. Oil and gas production has been steadily declining in the state, falling by 50 percent since 1985.

California lawmakers have instead turned their attention to wind and solar, and other types of alternative energy, with a focus on implementing the Renewable Portfolio Standard, passed in 2011. The RPS requires the state to be using 33 percent renewable energy by 2020.

Sitting on a potential 21st century gold rush, California is home to the Monterey Shale Formation, a 1,700 square mile oil-bearing shale formation primarily in the San Joaquin Valley, that contains an estimated 15.4 billion barrels of oil. The U.S. Department of Energy estimates the shale formation holds more than 15 billion barrels of oil accessible through advanced oil extraction technologies, including horizontal drilling and hydraulic fracturing, also known as “fracking.”

Could fracking save the California economy?

“The U.S. shale-oil boom might roll back the clock to the 1960s, when a U.S. oil surplus (via the Texas Railroad Commission), put Washington, not Riyadh, as the world's swing producer,” said Amy Myers Jaffe, in a recent Wall Street Journal op-ed. Myers Jaffe is executive director of energy and sustainability at University of California at Davis Graduate School of Management, and is the former director of the Energy Forum at the James A. Baker III Institute for Public Policy at Rice University.

Could California's fracking industry be the answer to the state's high unemployment, high gas prices, perpetual budget deficits and growing dependence on foreign oil? According to a recent study by economists at the University of Southern California, development of the Monterey Shale between 2015 and 2030 could:

* Create as many as 2.8 million new jobs;

* Grow personal income by an average of up to 10 percent;

* Generate up to $24.6 billion in new tax revenues for state and local government services.

North Dakota and Texas have developed hydraulic fracturing for oil production. Both states have seen significant drops in unemployment, as well as enormous increases in tax and income revenues.

Prosperity produced by the shale boom has been so abundant that people are earning six-figure incomes with little or no experience working in the oil fields.  In some parts of North Dakota, unemployment has gone below 1 percent, and a town in Canada called Fort McMurray was nicknamed “Fort McMoney” because of the wealth of good jobs available.

Misinformation on fracking

But according to MoveOn.org, fracking is dangerous to the environment. “Five percent of well casings leak immediately and 50 percent within the first 20 years,” MoveOn.org said on a petition to stop SB4. “Toxic chemicals will get into the ground water. It is happening everywhere. And there are leaks and spills of toxic frack fluids and wastewater happening everywhere.”

“However, even if fracking could be done safely, it still uses too much water in a state experiencing chronic drought,” MoveOn.org added. “Injecting the wastewater back into the ground has caused earthquakes in states not even known for earthquakes. Fracking could destroy the food and wine industries, which are more important economically to the state than oil.”

Statements like MoveOn.org's are incorrect, according to a University of Michigan report on hydraulic fracturing. “Fracking is limited to the process of injecting fluids into a well — just a few days of a multi-month operation (not counting leasing and permitting).

“This widespread misunderstanding explains why the repeated lies have taken hold. One of the most rampant lies about fracking made by the environmentalists is about water.”

Environmentalists against fracking

Food and Water Watch, Center for Biological Diversity, Physicians for Social Responsibility, and the Sierra Club warn oil development in California could negatively impact endangered species, including the San Joaquin kit fox, the California condor, the blunt-nosed leopard lizard, South Central Coast steelhead and native oak woodlands.

These fracking opponents said one of their main objections to SB4 is a provision in the bill to protect the “trade secrets” of the oil companies, and make it a crime to disclose them. “While the bill requires the disclosure of some of the chemicals used in fracking, the bill still allows the companies to claim trade secret protections on others,” MoveOn.org said.

“Fran Pavley, withdraw your bad fracking bill,” the MoveOn.org petition said.

But Pavely did not, and instead, SB4 was passed by the Legislature and signed by the governor.

By Katy Grimes

SACRAMENTO — After sitting through several recent marathon sessions in the Assembly, it was shocking to witness the powerful California environmental lobby lose its attempt to ban oil and gas hydraulic fracturing.

For this, Californians can be thankful.

That got me thinking. What if California’s powerful environmental lobby had been as powerful during the 1849 Gold Rush as it is today? Back then, they would have harassed gold pioneer James Marshall so much he would have quit. California never would have become the Golden State.

Hydrolic fracking for oil and gas has the potential to become the next Gold Rush — this time of black gold, Texas tea. But will the environmentalists stop it? Not yet — but maybe in the future.

A University of Southern California study, “Powering California: The Monterey Shale & California’s Economic Future,” looked at the development of the vast energy resource beneath the San Joaquin Valley known as the Monterey Shale. It found that hydraulic fracturing could create 512,000 to 2.8 million new jobs, personal income growth of $40.6 billion to $222.3 billion, additional local and state government revenues from $4.5 billion to $24.6 billion, and an increase in state GDP by 2.6 percent to 14.3 percent on a per-person basis.

There’s gold in them-thar hills

In 1848, while building a saw mill for John Sutter, contractor James Marshall found several gold nuggets. Shortly after Marshall’s discovery, gold was discovered in Feather River and Trinity River. Quartz and gold mining began in Mariposa County, Kern County and Grass Valley.

But if gold was discovered today, the Ocupational Safety and Health Administration would shut down Marshall’s gold mining operation for failing to put in hand rails on the work site walkways.

Marshall’s workers would be limited to eight-hour workdays, with two 10-minute breaks and a lunch hour. And they’d only be able to work five days a week.

The California Air Resources Board would penalize Marshall $10,000 a day for not having a catalytic converter on his sluice, and eventually shut him down when they decided his operation was contributing to global warming — unless, of course, he agreed to CARB’s mandatory participation in the cap-and-trade carbon auctions.

Traveling miners would be stopped and arrested for open carry of guns.

CalEPA would put Marshall through the CEQA ringer when he tried to open up another mining operation up river.

Sutter’s Fort in Sacramento wouldn’t be built. Between the building permits, penalties and labor violations, it would be red-tagged.

Even Levi Straus’s famous blue jean dye would be deemed toxic by the Department of Toxic Substances Control.

Free market facilitates business success

Environmentalists and others continue to argue that California would have been better off if gold had never been discovered. “Habitats were destroyed; entire species depleted; hillsides, streams, rivers, and watersheds destroyed,” claims Dr. Gayle Olson-Raymer at CSU Humbolt, in her class curriculum.

“Given its other natural advantages, it might have become just a populous and prosperous — but such prosperity would have been more gradual, orderly, and civilized,” Olson-Raymer said.

But the free market worked beautifully during the gold rush. It wasn’t just some gold miners who made fortunes. More fortunes were made by enterprising merchants than by miners and prospectors.

Likewise, it wouldn’t just be only the oil and gas companies enjoying the riches of the fracking boom; thousands, even millions of Californians would also create businesses because of the Monterey Shale fracking.

Gold Rush 2013

Today, California sits on one of the largest known deposits of recoverable oil and gas. California is sitting on top of the Monterey Shale, a 1,700 square mile oil-bearing shale formation primarily in the San Joaquin Valley that contains an estimated 15 billion barrels of oil.

The Monterey Shale formation is estimated to be several times bigger than the Bakken Shale formation, currently delivering a record economic boom to North Dakota.

But even as the fourth-largest oil producing state in the country, oil and gas production has been steadily declining here. Instead, California lawmakers turned their attention to wind and solar, and other types of alternative energy. The state has been implementing the Renewable Portfolio Standard, passed in 2011, which requires the state to be using 33 percent renewable energy by 2020.

Common sense in the Legislature?

While many thought the Democratic Supermajority in the California Legislature would be able to easily pass several bills to ban or heavily restrict hydraulic fracking, this has not happened in the Legislature so far this year. The bills all died or were killed.

In a surprising turn of events, there appear to be some lawmakers quite tuned in to the economic realities of hydraulic fracking for oil and gas, and how it may impact their districts.

All of the anti-fracking bills were either killed or pulled back by the end of June, despite the extraordinary efforts of California’s many eco-lobbyists.

AB 1323, by Assemblywoman Holly Mitchell, D-Los Angeles, was defeated, 24-37, with 18 Assembly members not even voting. It would have required drillers to file with state regulators “a written notice of intention to commence drilling.”

Sen. Fran Pavley, D-Agoura Hills, authored SB 4, which would have required a scientific study on the environmental effects of fracking, testing of nearby groundwater before and after drilling, and the creation of a state website for compiling data on fracking chemicals.

Pavley also called for halting fracking if the scientific study was not completed by January 2015. (UPDATE: Pavely’s SB 4 was passed in the Assembly Natural Resources Committee Monday, 6-3) 

Divided Democrats

AB 7, by Assemblyman Bob Wieckowski, D-Fremont, was amended to include provisions from Pavley’s bill. But even in the Democratic-controlled Assembly, Wieckowski could not pass AB 7.

Of the 80 members of the Assembly, only 40 even voted. The final vote, after three attempted roll calls, was 25-15.

Assemblyman Steve Fox, D-Palmdale, and Assemblyman Mike Gatto, D-Los Angeles, were the only two Democrats to vote “no.”

The 32 “not-voting” Democrats were: Alejo, Ammiano, Bloom, Blumenfield, Bonta, Bradford, Brown, Buchanan, Chau, Dickinson, Eggman, Fong, Gonzalez, Hall, Roger Hernández, Holden, Levine, Lowenthal, Mitchell, Mullin, Muratsuchi, Pan, V. Manuel Pérez, Quirk, Rendon, Salas, Skinner, Ting, Weber and Yamada.

The “yes” votes were just as interesting: Achadjian, Atkins, Bocanegra, Bonilla, Ian Calderon, Campos, Chesbro, Cooley, Daly, Frazier, Garcia, Gomez, Gordon, Gray, Jones-Sawyer, Medina, Melendez, Nazarian, Perea, Quirk-Silva, Stone, Wieckowski, Williams and John A. Pérez.

The self-aware, “greener” Assembly members representing wealthier districts had no problem with killing the opportunities for oil and gas fracking in poorer regions.

Two others anti-fracking bills have been held back in the Appropriations Committee until next year. AB 1301 by Assemblyman Richard Bloom, D-Santa Monica, and AB 649 by Assemblyman Adrin Nazarian, D-Sherman Oaks, call for further studies of the environmental impact and potential threats associated with fracking.

By WAYNE LUSVARDI

Back on Dec. 21, 2011, Gov. Jerry Brown said at a Jewish Menorah-lighting ceremony, “Today’s miracle is not to find more oil, but to utilize the sun.”  Brown was touting solar energy projects.

But the solution to Brown’s structural $20 billion annual state budget deficit may not be in the sky but under his feet.  Particularly if Brown is standing any place where the Monterey Shale Formation is underneath.  That would include the counties of Kern, Ventura, Santa Barbara, Fresno, Monterey, Tulare, San Luis Obispo, Kings, Madera, Merced, Stanislaus and San Benito.

The reason is that there may be a resurgence of the historic oil patches in California. This is the result of updated estimates of the recoverable barrels of shale oil due to new extraction technologies.

The Monterey Shale Formation in California is estimated to have 64 percent — repeat 64 percent — of the recoverable shale oil reserves in the lower 48 states.

Below is a recapitulated table from the U.S. Energy Information Administration report, “Review of Emerging Resources: U.S. Shale Gas and Shale Oil Plays — July 2011”:

Recapitulated Table of U.S. Technically Recoverable Shale Oil Resources

Source: U.S. Energy Information Administration .pdf, July 2011

Abundant Shale Oil

California may have more than four times the recoverable shale oil than the Bakken Oil Field in North Dakota, which currently is bringing vast prosperity to that state.  It has more than 4.5 times the reserves of the Eagle Ford Formation in Texas.  And it has nearly 10 times the shale oil reserves in the Avalon and Bone Springs Formations in New Mexico and Texas.

This is how the U.S. Energy Information Administration describes it:

“The largest shale oil formation is the Monterey/Santos play in southern California, which is estimated to hold 15.4 billion barrels or 64 percent of the total shale oil resources shown in Table 1. The Monterey shale play is the primary source rock for the conventional oil reservoirs found in the Santa Maria and San Joaquin Basins in southern California. The next largest shale oil plays are the Bakken and Eagle Ford, which are assessed to hold approximately 3.6 billion barrels and 3.4 billion barrels of oil, respectively.” 

Remember the days when the Southern California economy was built on oil and movies?  The birthplace of the oil industry may have been Pennsylvania, but it quickly spread to Long Beach, Ventura, Huntington Beach and San Luis Obispo County.

Will oil derricks and rigs return to Santa Barbara County and off the coastline? It is unlikely and not necessary with new horizontal drilling techniques.

California continues to try to erect an energy embargo around California with its Cap and Trade regulations and AB 32 mandates to plug its structural $20 billion annual budget deficit.

But ironically, California is sitting on a potential second resurgence of its oil patch that might be able to patch up the state budget deficit and sharply cut unemployment.

The state budget deficits are not solely due to a prolonged economic downturn.  They are a choice.