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WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd Western States Petroleum Association July 9, 2013

WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

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Page 1: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

Hydraulic Fracturing and Energy Production in California

WESTERN STATES PETROLEUM ASSOCIATION

Catherine Reheis-Boyd

Western States Petroleum Association

July 9, 2013

Page 2: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

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Monterey15.4 Billion

Barrels63% of US Shale Oil

Bakken4 Billion Barrels

17% of US Shale Oil

Eagle Ford3 Billion Barrels

12% of US Shale Oil

Avalon/Bone Springs

2 Billion Barrels8% of US Shale

Oil

Shale Oil Resources in the United States

Page 3: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

An Extraordinary Opportunity

“The fossil fuel deposits in California are incredible. “ Governor Jerry Brown

• “The potential is extraordinary, but between now and their development lies a lot of questions that need to be answered.” Governor Jerry Brown.

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Page 4: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

A San Joaquin Valley California Opportunity According to the EIA, 15.4 billion

barrels of oil trapped in the pores of shale rocks in the San Joaquin Valley

Advanced-extraction oil technology: potential in CA

1750 square mile area represents 2/3rds of U.S. shale resources

Hydraulic fracturing used extensively in other states and in California for 60 years without harm to the environment4

Page 5: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

The Monterey Shale & California’s Economic Future

512,000 Jobs by 2015 and 2.8 million by 2020

2.6% to 14.3% State GDP Increase

$40.6 billion to $222.3 billion personal income increase

$4.5 - $24.6 billion state and local tax revenues increase

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Page 6: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

Shale Oil Benefits in Texas and North Dakota

Eagle Ford Shale Play (Texas)1 $61 billion economic

impact (2012) 116,000 jobs supported

(2012) $89 billion forecasted

economic impact (2022) 127,000 forecasted jobs

supported (2022)

Bakken Shale Oil Exploration (North Dakota)2

60,000 Jobs created (2011) $30.4 billion in economic

impact (2011) $2.65 billion in government

revenues (2011)

1: Economic Impact of the Eagle Ford Shale, Center for Community and Business Research-The University of Texas at San Antonio

2: North Dakota State University’s Department of Agribusiness and Applied Economics6

Page 7: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

What is Hydraulic Fracturing

Source: FracFocus, Courtesy of Texas Oil and Gas Association

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Page 8: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATIONWESTERN STATES PETROLEUM ASSOCIATION

Hydraulic Fracturing: How Much, Where

568 wells fractured in 2012 according to FracFocus

2,705 well permits issued in 2012

48,970 wells currently producing oil and/or gas in CA

97 percent of hydraulic fracturing operations were in 2012 were in Kern County

Source: WSPA survey of FracFocus website 2012 data8

Page 9: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

A Well Completion Process

Permits are provided Well is drilled Well service company prepares well

for completion Pump trucks deliver pressurized

water into well, 99.5 percent of which is water and sand

Fluid is collected and disposed of pursuant to permits

Entire process takes 3 to 5 days Shale oil is produced

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Page 10: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

Hydraulic Fracturing and Water Use

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In 2012, the average amount of water used during hydraulic fracturing operations was 116,000 gallons of water

The average golf course requires 312,000 gallons per day

The total amount of water used in the 568 wells that were hydraulically fractured in 2012 was 202 acre feet

Farming in California 2012 uses approximately 34 million acre feet of water annually

Page 11: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

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In October, 2012, an exhaustive year-long study at Inglewood Oil Field in Los Angeles looked at 14 environmental issues, including public health, groundwater, air quality, seismic, noise, vibration

All fractures separated from fresh water by at least 7,700 feet (1.5 miles) or more

No impacts to any of the 14 areas studies

October 10, 2012

Addressing Hydraulic Fracturing Concerns

Page 12: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

Current Oversight

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California Division of Oil, Gas & Geothermal Resources (DOGGR) proposed regulations

Draft regulations require:Advance notice to DOGGR before a well is fracturedEnhanced testing and monitoring of fractured wellsSafe storage and handling requirements of fracturing fluidsDisclosure of chemicals

Provides protection of trade secrets

Page 13: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

Additional State and Local Oversight

“The Water Boards’ existing statutory authorities and regulations are sufficient to minimize potential risks to water quality related to hydraulic fracturing activities.”

February 6, 2013 letter from the State Water Resources Control Board to Senators Pavley and Rubio on regulating hydraulic fracturing.

“While we are not aware of any hydraulic fracturing used in natural gas production well development in the San Joaquin valley, fracturing has been used for at least thirty years in oil production operations, without creating known air issues, beyond those associated with other production methods.”

February 1, 2013 letter from the San Joaquin Valley Air Pollution Control District to Senators

Pavley and Rubio on regulating hydraulic fracturing.

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Page 14: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

U.S. on Hydraulic Fracturing “In no case have we made a definitive determination that the fracking

process has caused chemicals to enter groundwater.”

U.S. Environmental Protection Agency Administrator Lisa Jackson, April 30, 2012

“I’m not aware of any proven case where the fracking process itself has affected water.”

U.S. Environmental Protection Agency Administrator Lisa Jackson, May 24, 2011

“There’s a lot of hysteria that takes place now with respect to hydraulic fracking, and you see that happening in many of the states. … My point of view, based on my own study of hydraulic fracking, is that it can be done safely and has been done safely hundreds of thousands of times.”

Former Secretary of the Interior Ken Salazar, February 15, 2012

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Page 15: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

LegislationDefeated

AB 1323 (Mitchell) required moratorium while hydraulic fracturing was studied

AB 288 (Levine) altered the state policy with regard to oil and gas wells

AB 669 (Stone) contained a piece-meal approach on regulating hydraulic fracturing activities relating to ground water and disposal monitoring

SB 395 (Jackson) required produced water to be handled as hazardous material, potentially impact all oil production in California

AB 982 (Williams) required an additional, unnecessary, permit from regional water boards

AB 649 (Nazarian) imposed immediate moratorium on hydraulic fracturing on any well located within a certain distance from an aquifer

AB 1301 (Bloom) imposed immediate moratorium on hydraulic fracturing until future regulations are enacted

SB 241 (Evans) imposed a 9.9% severance tax on all oil produced in California

AB 7 (Wieckowski) provides a comprehensive regulatory structure for hydraulic fracturing15

Page 16: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

Legislation

Pending in Assembly Natural Resources Committee

SB 4 (Pavley) requires the state’s Natural Resources Agency to conduct a study of hydraulic fracturing and mandates regulation of that practice. Sen. Pavley removed moratorium language and indicated she would work with the oil industry to develop comprehensive bill to regulate hydraulic fracturing activities.

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Page 17: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

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Public Support for Regulated Hydraulic Fracturing

USC Dornsife/LA Times poll, June 7, 2013

Californians support hydraulic fracturing if properly regulated

41% of poll respondents said they supported hydraulic fracturing with additional regulations

19% said hydraulic fracturing was already regulated enough

30% opposed hydraulic fracturing under any circumstance

Page 18: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATION

Legislature needs to take a measured and responsible approach to hydraulic fracturing

All parties have a responsibility to acknowledge that:

There are legitimate issues related to hydraulic fracturing that must be addressed by regulators and the Legislature

Production of petroleum energy is a vital and necessary part of the California economy

A comprehensive regulatory package will sufficiently ensure that our state’s environmental health and natural resources are protected while safely using hydraulic fracturing technologies for energy production in California

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We Support Comprehensive, Balanced Regulation

Page 19: WESTERN STATES PETROLEUM ASSOCIATION Hydraulic Fracturing and Energy Production in California WESTERN STATES PETROLEUM ASSOCIATION Catherine Reheis-Boyd

WESTERN STATES PETROLEUM ASSOCIATIONWESTERN STATES PETROLEUM ASSOCIATION

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