Las
Vegas Sun
By Daniel Rothberg
Monday, March 13, 2017
In 2012, as oil companies used new drilling techniques
like fracking to expand their operations to previously unreachable areas,
Houston-based Noble Energy turned its attention to Nevada. The exploration firm
announced its intentions that year to pursue an expensive high-risk play in a
region long thought to have potential for a big payoff.
Noble leased about 350,000 acres and received state
permits allowing the use of hydraulic fracturing to tap into the uneven but
potentially oil-rich geology that characterizes the area east of Elko. By 2014,
Noble had invested millions, according to filings, to hydraulically fracture
three wells in Nevada. Two yielded oil. Notably, Noble received a permit for
horizontal drilling, an innovation that, with fracking, helped drive an oil
boom in the U.S. But as the boom increased supply and oil prices plummeted,
Noble started to cap its Nevada wells.
It has since exited the state. Noble’s journey marked
the beginning and end of the most serious attempt to create high-volume oil
supplies in Nevada by fracking, a high-pressure ground injection of water, sand
and chemicals, used to crack open rock and release oil.
Hydraulic fracturing has been used in conventional
drilling since the 1940s, but its use increased in the past several years as
other innovations allowed for prospecting in untapped areas. That expansion
often has come with controversy, as the practice of blasting chemicals
thousands of feet into the ground has been linked to groundwater contamination
and increased seismic activity. Several counties and two states — New York and
Vermont — have placed moratoriums on fracking activity, and Nevada may be next.
“No other well would be able to frack if the bill
passed with its current language,” said Assemblyman Justin Watkins, who
introduced a measure that would ban the extraction of oil and gas from
hydraulic fracturing.
When Noble Energy was pursuing its wells, it worked
with regulators in 2014 to create strict regulations. For instance, Nevada was
first in requiring the pre-disclosure of chemicals, according to Richard Perry,
administrator of the Nevada Division of Minerals Administrator. Watkins said
these regulations were some of the nation’s best, but that they are not enough.
“What the science points to is that no amount of
regulation of fracking can eliminate the harmful effects on our health,”
Watkins said.
The plan was opposed by the Reno-Sparks Chamber of
Commerce and the Western States Petroleum Association. Although there is no
formal opposition group, some observers of the oil industry expected opposition
to coalesce in the coming months and to come partly from rural counties that
receive funding from oil royalties — about $2.8 million last year in Nevada,
split between federal, state and local governments.
In practice, Watkins’ bill would have almost no effect
on current exploration; only one firm has a permit to do hydraulic fracturing.
The more pressing worry for opponents is that the legislation would block Nevada
from tapping into what they see as a profitable resource that could spur
economic development and bring more jobs to rural areas.
Nevada’s first oil well was built in 1907, but the
state is a smaller player in the U.S. market. The Bureau of Land Management has
issued 600 oil leases on federal land, but there are only 29 operating wells.
According to the Department of Energy, it produced 281,000 barrels in 2015,
compared with the 1.2 billion produced in Texas or 201 million in neighboring
California. Industry geologists argue Nevada could be a larger player with the
right investment. But big companies are more interested in developing oil shales
with proven track records.
“If it was easy, we’d all be rich,” said Allen Matzke,
whose SAM Oil is targeting conventional, vertical drilling sites that could be
enhanced with fracking….
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