Oil/gas search: Fracking comes to Nevada

1/16/13 - A Jan. 9 story had the wrong year for peak production from a proposed oil development project in northeastern Nevada. Houston-based Noble Energy Inc. said its project using hydraulic fracturing, or fracking, could produce up to 50,000 barrels of oil a day by 2020. <br><br>1/9/13 - A story in Wednesday’s edition included an incorrect production number for a proposed oil and gas development in northeastern Nevada using hydraulic fracturing or fracking. Houston-based Noble Energy Inc. has said the project could produce as much as 50,000 barrels of oil a day by late 2014.

The Silver State is about to get fracked.

Houston-based Noble Energy Inc. is pursuing plans to drill for oil and natural gas across a 40,000-acre swath of public and private land near the city of Wells, about 400 miles north of Las Vegas.

The project would mark the first use of hydraulic fracturing in Nevada.

The use of pressurized fluid to smash oil and gas from previously untapped shale deposits has sparked mining booms and stirred serious environmental concerns from New York to Alaska.

Noble's plans for Elko County are expected to test state regulators who are more accustomed to dealing with Nevada's historically small, conventional oil industry.

"I think it's going to be an exciting time for all of us," said Alan Coyner, administrator for the state Division of Minerals.

Noble has yet to file any proposals or permit applications with the state, but Coyner said company officials have met with his agency, the Division of Environmental Protection and the Division of Water Resources.

Coyner is confident that the state has the necessary regulations in place to address hydraulic fracturing, but time will tell if new rules and more people are needed to administer a large-scale project by a worldwide player like Noble.

"We are not a major oil-producing state. We're not the Saudi Arabia of the U.S. like we are for gold and geothermal production," Coyner said. "We'll see how Nevada holds up."

Noble's proposal to drill as many as 20 exploratory wells more than a mile deep on public land in the northeastern corner of the state is undergoing an environmental assessment by the U.S. Bureau of Land Management.

The international energy giant hopes to secure the necessary permits and start drilling by the end of the year.

In a conference call with investment analysts last month, company officials said they have secured leases in Elko County totaling 350,000 acres. They plan to spend $130 million over the next four years to develop the project, which could produce as much as 50,000 barrels of oil per day by late 2014. That's enough petroleum to match Nevada's entire 2012 oil output in about one week.

As Noble Senior Vice President Susan Cunningham put it during the call, "We're thrilled with the possibilities of this under-explored petroleum system."

Environmental advocates are decidedly less enthusiastic.

Rob Mrowka heads the Nevada office for the Arizona-based conservation group Center for Biological Diversity. He said that his organization has not yet adopted an official position on fracking, but that it generally opposes the practice because of its potential to poison groundwater, foul the air and lead to chemical spills and other contamination near drill sites.

Noble's proposed well field in Elko County straddles portions of at least two creeks that empty into the Humboldt, Nevada's longest river. The project is named for the nearby Marys River and would include wells 6,000 to 14,000 feet deep, putting them thousands of feet below the groundwater table.

Mrowka said that some oil companies have been slow to disclose the proprietary fluid mixtures they use for fracking, but that some of the known chemicals make up what he called "a long list of bad guys."

"Fracking is not a good thing," he said. "We don't feel there is a safe way to do it."

Noble's proposal to the Bureau of Land Management includes both vertical and horizontal wells, but company officials have told the agency that they only plan to drill vertically right now, according to Whitney Wirthlin, the BLM geologist assigned to oversee the project.

"The vertical holes are much less environmentally invasive. They're much more environmentally friendly than horizontal wells," Wirthlin said.

Coyner said Noble "will be put through a number of hoops" by the state, including a review of the fluid that will be used for fracking.

"If 99.5 percent of it is water and sand, what is in that (other) point-five percent?" he said. "What does it constitute ... and how toxic is it?"

When it comes to oil, Nevada is largely undiscovered country. Coyner said fewer than 1,000 wells have been drilled in the state, and only about 70 are now in production, churning out modest amounts of low-grade petroleum generally used for tar or asphalt.

Since an all-time high of 4 million barrels in 1990, oil production in Nevada has plummeted to fewer than 400,000 barrels a year.

More oil is pumped from the ground in one day in North Dakota - where the fracking boom has added more than 2,000 new wells in recent years - than Nevada produced in 2012.

Nearly all of Nevada's oil comes from a single place: Railroad Valley in northeastern Nye County. "There is no significant recorded production from Elko County," Coyner said.

The BLM field office in Wells is much more accustomed to dealing with cattle ranchers and gold mines. Wirthlin said the BLM doesn't see many applications for oil drilling permits.

"This is our first big one," she said. "We're so new to this."

If Noble comes up empty, Coyner said, it could be a long time before Nevada sees another hydraulic fracturing project. There's just too much fracking to be done in places such as Wyoming and Colorado and on the Marcellus Shale, which underlies portions of Pennsylvania, West Virginia, New York and Ohio.

But if the Silver State's first big shale play pays off, it could touch off a fracking rush in Nevada, Coyner said.

"If they're successful, Katie bar the door."

Contact reporter Henry Brean at hbrean@reviewjournal.com or 702-383-0350.