E&P industry decries proposed Los Angeles fracking moratorium

Houston (Platts)--3Mar2014/627 pm EST/2327 GMT


Oil and gas industry officials are decrying a move by the city of Los Angeles last week toward establishing a moratorium on hydraulic fracturing, an action could have a symbolic effect that extends beyond its actual potential impact on oil and gas production.

The LA City Council on Friday unanimously passed a motion instructing the city attorney's office to draft new zoning regulations that would prohibit fracking and other well-stimulation techniques within the city limits until the driller could prove the safety of the techniques to the council's satisfaction.

"It is really unfortunate that the City Council elected to take such an action that will severely impact an industry that's been a part of the LA scene for decades," Tupper Hull, a spokesman for the Western States Petroleum Association, said Monday.

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"This issue came up very suddenly. It didn't have a lot of thoughtful consideration," Hull said.

He said the language of the proposed regulation is written so broadly that it could shut down virtually all oil and gas production, not only within the city of Los Angeles but also in Los Angeles County, the second-biggest producing county in the state.

As in most of the state, the majority of the gas produced in the county comes in association with oil production. According to the state Department of Conservation's Division of Oil, Gas & Geothermal Resources, in 2012, operators in Los Angeles County produced 51,000 Mcf/d of gas and 66,000 b/d of oil.

Hull said the city's action is "inappropriate" given the recent passage by the state legislature of a new statewide fracking law, SB 4, which Hull said established "the most stringent regulations in the country."

He argued that fracking has been used for decades in California and elsewhere with no known harm to the environment.

"The desire to preclude its use is unwarranted," Hull said.

In a statement, Rock Zierman, CEO of the California Independent Petroleum Association, said the City Council action also called for a ban on the use of wastewater injection wells, which could result in halting all oil and gas production within city limits.

"When oil is produced, up to 95% of the fluid that comes out of the well is brackish oil-barring water which is then re-injected back into the formation from which it came. If oil and gas companies are not able to re-inject the produced water, they are not able to produce at all and must shut in their wells," Zierman said.

Although municipalities in other states have moved to enact limits on fracking within their boundaries, if Los Angeles goes ahead with the proposed moratorium it will become the largest city in the country to have done so.

It could also provide impetus to anti-fracking forces across the state, who have sought to impose a statewide ban.

There are about 1,880 active and 2,932 abandoned oil and gas wells within the city of Los Angeles, but state officials do not have a good handle on how many have undergone fracking.

"We don't have a lot of data about the use of well stimulation within the city," Don Drysdale, a Department of Conservation spokesman, said in an email Monday. "Until January 1 of this year, operators were not required to report the use of hydraulic fracturing or other forms of well stimulation."

Last year, some operators in the state, at DOGGR's request, began to voluntarily report their fracking operations to the independently operated FracFocus website, Drysdale said.

Currently, there are four reports for Los Angeles County, although there is no breakdown for which city the fracking operations took place.

Zierman also pointed to other aspects of the proposed fracking ban that he found troubling.

"The resolution explicitly exempts hydraulic fracturing for natural gas storage facilities from the ban, but bans it for production of the natural gas that goes in to the storage facilities. It also exempts acidization done by city agencies. That kind of policy hypocrisy highlights the extremely arbitrary nature of this discussion," he said.

--Jim Magill, jim.magill@platts.com
--Edited by Jason Lindquist, jason.lindquist@platts.com

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