Mon July 28, 2014
Fracking debate takes hold of Reese River Valley
The lease sale did go forward last week. The Bureau of Land Management says it generated about $137,000 from the sale and sold 27 parcels (about 38,000 acres). The sale high bid of $5,120 for a 2,560 acre parcel at $2 per acre was made by American General Energy Exploration Corporation.
The lease is for a period of 10 years with annual rentals of $1.50 per acre for the first five years and $2 an acre after that until production begins. Once a lease is producing, a royalty of 12.5 percent is charged. Nearly half the bid and rental receipts go to the state of Nevada.
A group of farmers and ranchers is suing the federal government in an effort to block the possible use of hydraulic fracturing in a valley near Austin, Nevada. Reese River Basin Citizens Against Fracking hopes a federal judge will grant an emergency injunction in time to halt the July 17th sale of the oil and gas leases. While fracking has not taken off in Nevada, some say the state could have vast potential given new technology.
For decades, families have run livestock and grown alfalfa in the Reese River Valley on the slopes of the Toiyabe Range. While the river is now dry, much of the valley is still green, thanks to years of irrigating and developing the desert soil.
Lee Hutchens energetically maneuvers his ATV as he finishes rounding up some of his Hereford cattle. Once finished, he cools off on his front deck, overlooking the hazy, hot valley. They're on their second cutting of alfalfa, he explains.
"We're looking at a circle system and that circle system irrigates 120 acres."
That water comes from ground wells. So he and his wife Dianne were alarmed when they recently learned that oil and gas leases on much of the public land in the valley would soon be up for auction.
"See that fence line right over there, approximately two hundred feet? That's one of the drilling areas right there going across the complete backside of our property and wrapping around our neighbor's property."
An oil and gas lease doesn't guarantee that exploratory drilling will happen-a company still needs permits from the state and federal government. Still, the Hutchens had no clue this was even a possibility. In fact, they spent years trying to buy some of that same public land for agriculture.
"We could be suffering damages, while they're trying to find out whether there's any oil...through potential water contamination, possible [loss of] volume of water. We don't know where they're going to drill, but they have the right to, if they buy the lease they can drill right there."
Hutchens makes it clear that so much is unknown to him about the regulations, or the dangers of hydraulic fracturing, also known as fracking. The technique involves injecting a pressurized mixture of water, chemicals and sand into the ground in order to release deposits of natural gas and oil. It's allowed companies to access shale in places like North Dakota and Pennsylvania and requires lots of water.
"The well that they are drilling is 8 to 10,000 to 15,000 feet deep. We are not producing out of shallow aquifers of 3 or 4 or 500 feet."
John Menghini is a petroleum engineer for the Bureau of Land Management. He says farmers' wells draw water from those shallow aquifers and shouldn't be impacted by fracking. Problems with water contamination only arise, he says, if the casings are inadequate or the wellbore is compromised.
"This casing is not light; this is anywhere from 30 pounds a foot to up to 40 pounds a foot...this is not light stuff."
If companies follow regulations, Menghini says contamination from fracking is not an issue, and he hasn't seen any scientific studies that convincingly make that connection. As for water usage, the state issues water rights, not the federal government. But attorney Glade Hall says why even issue these leases to explore for oil and gas, if water is already in short supply?
"We have a scarce resource now that's overtaxed, and it doesn't make any sense to bring in a new use that's going to take more water."
Hall is representing ranchers, including Lee Hutchens, in their lawsuit to block the sale of these leases. Their complaint cites over a 1,000 instances of groundwater contamination across the country, as well as evidence of increased earthquake activity and other environmental impacts. But in its environmental assessment, the Bureau of Land Management predicts leases will have minimal impact because, historically, Nevada has not been a major producer of oil. Hall says that's faulty logic.
"Past success using conventional techniques is no indication of what's going to happen when they employ fracking and get into the Chainman shale formation in Nevada."
The Chainman Shale could have some of the richest deposits of shale in the country and possibly the world, according to a recent study from an economist at the University of Wyoming. The formation underlies portions of eastern and central Nevada and, in time, could generate more than a billion dollars; that's if drillers are able to tap into deposits anywhere from 10,000 to more than 20,000 feet underground.
"The issuance of these leases gives rights to the person who purchases the lease to drill their wells. And the idea that this is no big deal, it's only a paper transaction...why are we doing it if that's all it is?"
But it's not that simple, says Chris Rose who's also with the Bureau of Land Management, or the BLM.
"The oil and gas lease sale environmental assessment only covers the lease sale. Any additional actions once a company is successful bidding would then require additional environmental analysis and documentation."
The bureau doesn't have the resources to do an on-the-ground environmental analysis for every parcel of land before leasing-in this case, that's more than a 100,000 acres. Instead, they wait for a company to purchase the lease, to submit an application to drill, and, at that point, they'll do further environmental review. Even though the Chainman Shale formation could prove lucrative, Rose says they don't mention it in their environmental assessment for this sale because it's really not their place to anticipate why a company wants certain land.
"They don't necessarily have to disclose where they got the information, or why they think oil might be there."
The BLM received thousands of public comments on this sale and eventually deferred dozens of parcels out of concern for water and sensitive habitat.
But, back in Reese Valley, locals remain skeptical that their voices are being heard. The Andreolas own a farm just down the road from the Hutchens and are also trying to halt the sale. Sitting in his dining room, Paul Andreola pours over a color coded map of the valley that shows all the land that could be leased.
"And if you notice, all the white on this map is deeded ground. Why don't you see anything north? There's nothing, they've picked all the populated areas where the wells are."
According to the bureau, nothing expressly prohibits drilling next to deeded land, and wells could be placed every 40 acres. Karlene Andreola also points out that regulators aren't required to do the more rigorous environmental review, known as an impact statement, before drilling. She believes all they've built is in jeopardy.
"We started out here when we bought this property, all we had was one pivot and that shack out back. All this land was desert."
Fracking hasn't yet proven itself in Nevada. Noble Energy, a company out of Houston, has recently set up some exploratory wells near Elko, but the state legislature hasn't adopted its final regulations-that will happen next year. It's hard to predict whether Nevada will see the same interest as some other Western states, like Wyoming and Colorado. But, by all accounts, this debate in the Reese River Valley is a prelude to a much larger one about the future of fracking in Nevada.