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'Fracking' could boost California economy by 14%, study says

March 15, 2013|By Michael J. Mishak
  • Homes along Onacrest Drive in the Windsor Hills neighborhood of unincorporated L.A. County are seen above the Inglewood oil field operated by Plains Exploration & Production Co. Residents living in the area suspect damage from their homes may have been caused by possible "fracking" at the field.
Homes along Onacrest Drive in the Windsor Hills neighborhood of unincorporated… (Al Seib / Los Angeles Times )

SACRAMENTO -- Tapping California's oil-rich Monterey shale using hydraulic fracturing could boost the state's economic activity by as much as 14.3% and create hundreds of thousands of jobs, according to a new USC study.

As detailed in Money & Co. blog, the development of the 1,750-square-mile formation in Central California could have a transformative effect on the Golden State's economy, with the state potentially reaping oil-related tax revenue of $4.5 billion in 2015 and $24.6 billion by 2020.

"Based on the experience of other states, not only would state unemployment fall, but significant migration of properly skilled workers into California would occur," said the report, which was conducted by USC and the Communications Institute, a Los Angeles think tank, and funded in part by a grant from the Western States Petroleum Assn.

The economic impact report is the first of its kind and comes as state regulators draft rules for "fracking," a controversial extraction process that involves injecting large volumes of chemical-laced water and sand deep into the ground to break apart rock and release oil.

Energy companies are exploring the technology's potential to tap the Monterey shale, the largest shale oil formation in the continental United States.

According to the U.S. Energy Information Administration, the formation, which runs from Northern California to Los Angeles, contains 15 billion barrels of oil — or 64% of the country's deep-rock deposits.

Though fracking has unlocked vast amounts of previously unreachable fossil fuels elsewhere, environmentalists and public health advocates in California have raised safety questions about the hundreds of chemicals used — many of them known carcinogens — and the potential for drinking water contamination.

The environmental effects must be studied, acknowledged USC professor Adam Rose, one of the study's co-leaders. He said there are plans for additional reports to examine how developing the Monterey shale would affect water quality and seismic activity.

Some state lawmakers have said the Brown administration's proposed rules aren't tough enough to protect the public and the environment. Legislators have introduced half a dozen bills to regulate fracking, including measures that would require oil companies to give advance notice to nearby landowners and conduct water monitoring around fracking operations.

On Wednesday, Gov. Jerry Brown told reporters he trusted his regulators to develop the new rules.

“They’ll be decided based on science, based on common sense and based on a deliberative process that listens to people – but also wants to take advantage of the great opportunities we have in this state,” he said.


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