May 31 (Bloomberg) -- California lawmakers rejected a bill that would have stopped drillers from using hydraulic fracturing to free oil and natural gas from shale beds until state regulators implement rules for the controversial practice.
Legislators turned attention to the technique because California may hold 15.4 billion barrels of oil -- two-thirds of the nation’s shale-oil reserves -- in a formation known as the Monterey Shale, according to federal estimates.
The proposed moratorium was among at least seven bills up for votes this week in the Legislature to strengthen state oversight of fracking, which forces millions of gallons of water, sand and chemicals deep underground to break up rock formations. Environmentalists say it may contaminate water and harm air quality.
“The safety of this method of oil extraction has come into question,” said Assemblywoman Holly Mitchell, a Democrat from Culver City, who sponsored the bill.
Opponents said it would be irresponsible to shut down an entire industry on unproven fears of pollution. California is the fourth-largest oil-producing state.
“Fracking takes place miles and miles and miles below the well surface,” said Assemblywoman Shannon Grove, a Republican from Bakersfield. The measure failed on a 35-24 vote.
The state’s Conservation Department, which oversees oil and gas production, is developing rules for storing and handling fracking fluids, its composition and notice of such drilling.
In the Senate, lawmakers earlier approved a bill that would direct the state to complete an independent scientific study by Jan. 1, 2015, of fracking risks, and would deny permits if the study is not finished in time. The measure, offered by Senator Fran Pavley, a Democrat from Agoura Hills, also requires public notice before drilling and the disclosure of chemicals.
“I am pleased my colleagues want to hold oil-well operators accountable and answer critical questions about groundwater quality, water supply, earthquakes and air quality,” Pavley said in a statement.
The Senate on May 28 approved legislation offered by Senator Lois Wolk, a Davis Democrat, that would require drillers to file a $100,000 indemnity bond for each well. Companies operating at least 20 wells would be permitted to file a blanket indemnity bond of $5 million, which would include bonds or fees required for idled sites.
Lawmakers set aside until next year a measure offered by Senator Hannah-Beth Jackson, a Democrat from Santa Barbara, that would have required state officials to monitor the transportation and disposal of hazardous waste water produced by fracking.
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