Will a "Yes" or "No" vote on Measure P (the measure that bans all forms of enhanced drilling techniques, including steam injection and fracking) have an impact on Santa Barbara County's property values? This may be one of the biggest concerns for this California County's voters in November.
With nearly 7,000 new wells proposed locally, there is concern for the loss of property values - on top of environmental concerns related to fracking and other high intensity petroleum operations.
A Calgary and Duke University study of property values near shale gas wells notes a ten percent drop in values, but with fracking operations in place, values dropped some 22 percent. "Whether or not fracking causes groundwater pollution, people fear the risk enough that property values have dropped for homes with drinking-water wells near shale-gas pads, according to new research," writes Forbes in an article entitled Pollution Fears Crush Home Prices Near Fracking Wells.
"Real estate brokers say they see more signs of prospective home buyers worrying about the health and environmental effects of living close to a well," Reuters_News@reuters.com writes. "'For the most part, it renders those houses unsellable,' said Phyllis Wolper, a Denton, Texas, realtor who has several clients who live near oil and gas wells and have been unable to sell their homes."
These well sites impact individuals and developments. "When Gary Gless bought his sleek, modernist house in Los Angeles in 2002, he thought he had hit a "gold mine," reuters.com notes. "The world's largest inner-city park - featuring a lush, 18-hole golf course - was about to get built across the street. Gless's balcony was set to overlook the clubhouse and first tee....Today, instead of golf carts and fairways, Gless looks out on to drilling wells and oil pads. The park plan was ditched, and Freeport-McMoRan Oil & Gas LLC now operates 700 wells there - and 400 more are on the way. All the drilling, Gless says, has caused house foundations to crack and swimming pools to start to slide down hills."And fracking operations are non-stop, thanks to the "Halliburton Loophole", a 2005 amendment to the Clean Air and Water Acts that VP Dick Cheney, former Halliburton CEO, pushed through Congress exempting fracking operations from almost all Environmental Protection Agency regulations.
California already has a thriving fracking industry. The majority of the state's new and active wells are concentrated in Kern and Los Angeles counties, said a National Resource Defense Council report entitled Drilling in California: Who's at Risk? However, expanded fracking in the large Monterey Formation is projected to bring the oil and gas industry into more communities, especially in Ventura, Monterey, Fresno, and Santa Barbara counties . According to http://ecowatch.com in Fracking the American Dream,
"Coupled with existing exemptions to a variety of pollution laws like the Clean Air Act, the Resource Conservation and Recovery Act, the Superfund Act, and the Emergency Planning and Community Right to Know Act, the 2005 carve-outs gave the fracking industry seven total exemptions from important environmental regulations," reported a recent truthout.org article.
"In Pavilion, WY, where the EPA has linked groundwater contamination with fracking, Louis Meeks saw the value of his 40-acre alfalfa farm all but disappear completely. In 2006, his land and home were appraised at $239,000. Two years later, as ProPublica reported, "a local realtor sent Meeks a coldly worded letter saying his place was essentially worthless and she could not list his property."
"Last July, Nationwide Insurance spelled out specifically that it would not provide coverage for damage related to fracking. According to an internal memo outlining the company's policy, 'After months of research and discussion, we have determined that the exposures presented by hydraulic fracturing are too great to ignore. Risks involved with hydraulic fracturing are now prohibited for General Liability, Commercial Auto, Motor Truck Cargo, Auto Physical Damage and Public Auto (insurance) coverage," notes ecowatch.com.'
One little noticed side effect of this property value impact is that the secondary mortgage market hasn't caught up with the risk of loaning on properties affected by fracking and extreme oil production methods. As they do, these properties could be harder to finance. Housing Wire has reported on a webinar entitled, Oil and Gas Exploration for Mortgage Bankers, in which Daniel McKenna, with the Ballard Spahr's Mortgage Banking Group said, "The loans are actually low risk. But Fannie, Freddie, the FHA, and the VA prohibit gas leases on their loans. There are a ton of different regulations that impact selling these loans on the secondary market."
Even Exxon CEO and Board Chairman Rex Tillerson, is suing to stop construction of a water tower that would supply nearby drilling operations because of the nuisance of, among other things, heavy truck traffic, noise and traffic hazards from the fracking operations the tower would support.
So the CEO of the single largest drilling company in the world acknowledges the "constant and unbearable nuisance" that would come from having "lights on at all hours of the night...traffic at unreasonable hours... noise from mechanical and electrical equipment." And Tillerson's lawsuit - filed in 2013 with other plaintiffs, including former House Majority Leader Dick Armey - claims the project would do "irreparable harm" to his property values, in papers filed for the Denton County, Texas lawsuit.
Then, there's the real danger of earthquakes from injecting waste water back into the ground, which have been occurring with increasing frequency in some Oklahoma fracking fields, as reported on NPR Radio in a July 2014 broadcast by Linda Wertheimer.
Denver, Colorado had the same problems with so-called natural gas injection wells back in the 1960s, and played a critical role in discovering the link between forced injection wells and induced earthquakes.
There are currently more than 1.1 million active oil and gas wells in the United States, and more than 15 million Americans now live within a mile of the hundreds of thousands that have been drilled since 2000, according to the Wall Street Journal. Made possible by the advent of fracking, drilling is taking place in shale formations from California to New York and from Wyoming to Texas. And there's no indication that this "unprecedented industrialization" shows any signs of slowing. Almost 47,000 new oil and natural gas wells were drilled in 2012, and industry analysts project that pace will only continue.
Harlan Green © 2014