In several appellations on California’s Central Coast, winemakers tout the benefits of growing vines on soils rich with decomposing shale, which allows for good drainage and deep root penetration. Now that same terroir also promises bountiful harvests for the energy industry, whose experts predict that the region’s Monterey shale formation contains more than 15 billion gallons of oil.
But unlike typical drilling operations, which have long existed alongside many Central Coast vineyards, the only way to extract oil from the shale is with hydraulic fracturing, aka fracking, a process in which water and chemicals are pumped into the ground at high pressure to break up the rocks and force out oil or natural gas. Though the basic technique has been used sporadically for at least 60 years in California, recent innovations combined with high energy prices make fracking more alluring than ever. Shale formations in Texas, North Dakota, Pennsylvania and Ohio have produced promising returns.
Yet as the technique's popularity grows so does the controversy. Critics claim fracking threatens freshwater resources, both because the process utilizes vast quantities of local water and because the chemicals used may contaminate sources. Fracking operations bring heavy traffic and pollution to quiet rural areas. And some geologists believe the process may increase the risk of earthquakes. Debates are raging in other states where fracking is under way. New York has been undergoing a 4-year environmental and health review to determine if fracking will be permitted and, if so, under what conditions. A decision is expected in late Feb.
Oilers are intensely exploring the Central Coast. In December, mineral rights leases to 17,000 acres on federal lands near vineyards in southern Monterey County were sold, and another auction is scheduled for May 2013. Vintners are starting to wonder what fracking might mean for them. “We understand that energy is an issue, just as our water is an issue,” said Paula Getzelman, who grows 5 acres of Syrah, Grenache and Mourvèdre with her husband at Tre Gatti Vineyards in the Lockwood Valley of southern Monterey County, less than five miles from a recent federal lease sale. “What we’re saying is, if something spoils our water, we’re all done out here.”
Paul Johnson, president of the Monterey County Vintners and Growers Association, agreed. “Oil companies are buying [mineral rights] up, and if oil companies are buying it, they are obviously planning on doing fracking,” said Johnson, who manages various Central Coast properties under his family’s Johnson Vineyard Company. “We just want assurances that the water supply will be kept safe.”
Others watching the situation include some of the bigger names in Central Coast winemaking and grapegrowing, such as J. Lohr, which produces more than 1 million cases a year and sources a tiny amount of grapes from the Lockwood Valley, and Scott Scheid of Scheid Vineyards, which owns 6,000 acres of vineyards in Monterey County.
Tupper Hull, a spokesperson for the Western States Petroleum Association (WSPA), said that the vintners needn’t worry about water quality or quantity. The amount of water used for fracking is “minuscule” compared to agriculture, said Hull, and fracking in the Monterey shale formation would take place many thousands of feet below the surface, far away from the groundwater aquifers. “The likelihood of any contamination from hydraulic fracturing itself is as close to zero as I suppose you could get,” said Hull.
Environmentalists aren’t so convinced, however, and have enlisted growers like Getzelman in their antifracking campaigns. “This is a free-for-all right now,” said Kassie Siegel, an attorney with the Center for Biological Diversity, which is fighting the federal Bureau of Land Management’s (BLM) auctions of mineral rights in California and elsewhere. “These areas in Texas and North Dakota and Pennsylvania have been transformed overnight into industrial wastelands. Both state and federal regulators are completely dropping the ball in California.”
Due in part to such advocacy, both state and federal officials are working on new regulations. Last summer, the BLM proposed new rules for fracking on federal lands, and this past December, California's Division of Oil, Gas and Geothermal Resources released a draft of proposed changes, which are expected to be adopted in about one year, according to Don Drysdale, from the California Department of Conservation’s public affairs office. “The department is not aware of any environmental harm done by the use of hydraulic fracturing over the past several decades in California, and the intent of the new regulations is to ensure that this method continues to be used safely,” he told Wine Spectator. “Both oil/gas production and agriculture/viticulture are key components of California’s economy and the Department of Conservation is considering the needs of both industries.”
In the meantime, smaller jurisdictions have tried to fill the regulatory void, most notably Santa Barbara County, where a company was found fracking without proper permits amidst Los Alamos Valley vineyards in 2011. That triggered a fast-tracked revamp of the county’s regulations, and now any company wishing to do so must go through full environmental review. Other jurisdictions have expressed an interest in copying Santa Barbara’s rules, according to Doug Anthony, the county deputy director who handles energy issues, noting a recent inquiry from Santa Cruz County. While he could not claim that Santa Barbara’s regulations were the strictest in the land, as some have suggested, Anthony did confirm that since the new regulations were adopted in December 2011, not a single application for fracking has come across his desk.
While the oil industry would prefer that new regulations are handled at the state level, WSPA spokesperson Hull said that additional rules are welcome, both to ensure that chemicals in use are disclosed (so long as trade secrets are properly protected) and to assure officials and the public of fracking’s safety. “We don’t think there’s any reason to not be confident in the safety, but it’s important that people outside the industry also understand that,” said Hull.
But this buzz about a Central Coast boom might also be premature, since no company has yet shown that fracking oil from the Monterey shale formation can be done in a cost-effective manner. “The jury seems to still be out on that question,” said Hull, noting that there were as many fracked wells in 2011 as 2012, and that they remain a small fraction of the oil production in the state. “It’s not clear yet whether the geology is of a type that responds well to hydraulic fracturing.”
Most vintners remain optimistic that all sides can find rules that work. “The oil industry in southern Monterey County has peacefully coexisted with agriculture for quite a few years, and if it can continue to do that, then that’s fine,” said Scott Scheid. “If agriculture can continue unabated and unaffected, that’s what we’re looking for.”
Doneldon Dennis — Minnesota — January 16, 2013 5:13am ET
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