Jeff DeLong

jdelong@rgj.com

More than 2 miles beneath the surface of Nevada's high desert, they're cracking open rocks in search of oily wealth.

Fracking, it's called. And in Nevada, it's new.

In a state world-famous as a gold producer, Houston-based Noble Energy Inc. is looking deep underground to make big bucks from previously untappable oil deposits, spending up to $130 million to identify the possible rewards. The venture is still in its early stages, with company representatives saying they have yet to assess the true potential, but word is out it could be significant.

So is concern by critics. After Noble Energy for the first time in Nevada's history employed the practice of hydraulic fracturing at an exploration well east of Elko in March, environmentalists, tribal members and other critics cite concern over threats to precious water supplies, impacts to a sensitive landscape and the potential that earthquakes could be triggered in one of the country's most seismically active states.

Some insist state officials currently crafting new regulations to guide activities are overly influenced by the very industry they're tasked with regulating.

Even the oil company's representatives acknowledge they're breaking new ground.

"What's unique about Nevada is it really is a frontier area," said Kevin Vorhaben, Rockies business unit manager for Noble Energy. "It's a chance to get in and really do the right thing for oil and gas development. We're excited to be in Nevada."

Fracking, commonly used to tap oil and natural gas deposits elsewhere in the country, allows access to hydrocarbon resources otherwise unreachable by conventional drilling operations. The process involves injecting a pressurized solution of water, sand and chemicals into deep shale formations, fracturing the rock and allowing oil or gas to seep into the well and rise to the surface for extraction.

It allows for horizontal drilling deep underground, accessing more deposits than possible with a vertical well. Noble's exploratory fracking will be limited to vertical wells but horizontal drilling could occur later.

'Checkerboard' of land targeted

Noble's activities target a checkerboard of private and public land in northeastern Nevada generally located between Elko and Wells north and south of Interstate 80. Sixty-seven percent of the 580-plus square-mile area is privately owned, with the remaining public land managed by the U.S. Bureau of Land Management.

The BLM is currently processing environmental assessments for Noble to drill up to 20 wells at Mary's River 4 miles northwest of Wells and up to another 20 just west of Jiggs. Fracking would be used to complete all wells drilled.

The two exploratory wells already drilled, with fracking already conducted at one, are located on private land about 17 miles east of Elko.

"It went great. The job went exactly as planned," Vorhaben said of Nevada's first fracking operation, conducted in Elko County last month.

The operation was observed by officials from the Nevada Division of Minerals and the Nevada Division of Environmental Protection, both charged by the 2013 Legislature to draft regulations guiding hydraulic fracturing activities in Nevada.

About 300,000 gallons of water from an adjoining well drilled for that purpose was used in the first fracking operation, Vorhaben said.

Early research indicates oil, not natural gas, is the hydrocarbon resource available in the project area, Vorhaben said.

"We're really excited about the initial results," Vorhaben said of early indications of potential oil resources. "We need more time to be able to assess the real potential."

Critics: Activity 'not OK'

While that potential is being assessed, critics insist too much is happening too fast.

Fracking is associated with significant problems in places such as Pennsylvania, Ohio, North Dakota, Texas and Wyoming, and there's no reason to expect some of those same problems won't occur in the Silver State, said Dawn Harris, a Reno woman who founded the group Frack Free Nevada over concern about Noble Energy's plans.

Harris said she's particularly troubled that fracking has begun even before Nevada has finalized regulations concerning the activity.

"What I find very problematic is fracking is already occurring and that program isn't in place," Harris said. "It's wrong. What's happening is not OK."

Similar concern was expressed by Bob Fulkerson, executive director of the Progressive Leadership Alliance of Nevada. During a March workshop on proposed fracking regulations hosted by the Nevada Division of Minerals in Carson City, Fulkerson spoke of dangers posed for an arid state by excessive use of water during hydraulic fracturing and of the potential that underground aquifers could be contaminated by chemicals.

"The primary goal in a desert is to protect our water. That's how we protect our life," Fulkerson said at the time.

That danger, Fulkerson said later, might last for some time.

"Our groundwater might not be polluted instantly, but what's to say it won't happen long after Noble Energy is gone," Fulkerson said. "Water is precious. It doesn't make a lot of sense to us."

Both Harris and Fulkerson also spoke of concern that fracking-related activities could trigger earthquakes, a phenomenon documented in Oklahoma by the U.S. Geological Survey.

"There's overwhelming research that suggests a connection between fracking and earthquake generation, and I think we ignore that at our peril," Fulkerson said.

Fulkerson also expressed skepticism Nevada's Commission on Mineral Resources will ultimately approve effective regulations guiding fracking due to members' ties with industry.

"We're trusting the minerals commission to develop these regulations, and the commission members each have a stake in either mining, oil or gas development," Fulkerson said. "It's hard to trust regulations coming from an inherently biased process."

That process is also being rushed, he said.

"The political pressure in Nevada is so overwhelming, there's the impetus to do this as quickly as possible, and that's what the minerals commission is responding to," Fulkerson said.

Another issue surrounds potential effects from drilling and road construction on terrain used by the greater sage grouse. The chicken-sized bird is a candidate for listing as threatened or endangered under the Endangered Species Act.

Elko County, the cross-hairs of Noble Energy's plans, provides the most valuable sage grouse habitat in Nevada. Regulators need to pay attention to how planned development might affect that habitat and the bird's potential listing, said Kyle Davis, representing the Nevada Conservation League. Many say the bird's listing would come at crippling economic cost to Nevada.

Regulators say concerns are noted

Rich Perry, administrator for the Nevada Division of Minerals, said his office and the Division of Environmental Protection are committed to approving comprehensive and effective regulations on fracking. Officials are reviewing all written and verbal comments submitted by the public, and additional public hearings are likely in August or September before final action is taken by the Commission on Mineral Resources, Perry said.

"I know there are concerns about the use of this," Perry said. "In other states, there have been some issues."

Nevada can likely learn from some of those, he said.

"Nevada's coming late in the game here with regards to regulating hydraulic fracturing," Perry said. "Other states have learned about what works and what doesn't. We can take advantage of that."

Noble Energy's Vorhaben said his company is committed to pursuing its plans in an environmentally responsible manner.

"Noble Energy is committed to protection of human health and the environment," he said in statement read during that March hearing in Carson City. "We firmly believe that with good regulation, we can have the energy we need, the economy we want and the environment we deserve."

Fracking occurs at depths far below groundwater aquifers, with several layers of rock formations between aquifers and fracking zones, Vorhaben said. The wells themselves have several layers of cement and steel to guard against leaks where they pass through aquifers, he said, adding that his company has contracted with the Desert Research Institute to conduct a groundwater study to help guide future operations.

"Noble is absolutely committed to protecting the groundwater," Vorhaben said.

As for earthquake danger, fracking itself poses no risk, Vorhaben said. While there is evidence that disposal of wastewater used in fracking operations by injecting it into the ground make be linked to seismic events, "scientists agree these are rare," he said.

One person watching events unfold is Graham Kent, director of the Nevada Seismological Laboratory at University of Nevada, Reno. The majority at Kent's students at UNR end up with jobs in the oil industry, he said.

Kent has no way of knowing if it's true, but he's been hearing that Noble may be on track to extract 600 million to more than 1 billion barrels of oil from its Nevada project area.

"That's the scuttlebutt," Kent said. "From what I understand, the potential for oil out there is pretty significant."

Using fracking, can that oil be withdrawn safely or are concerns voiced by critics valid ones?

Really, either case could be true, Kent said. It's clear there have been problems elsewhere.

"To the degree certain companies probably haven't done a good job and there wasn't a lot of oversight, they messed up. There is that potential," Kent said. "My own opinion is if it's well regulated, there is the potential of getting this out with minimal damage."

What is fracking?

Hydraulic fracturing is a procedure that can increase the flow of oil or natural gas from a well. It is done by pumping water, sand and chemicals down a well and into deep shale formations under sufficient pressure to fracture the rock. The idea is to create a network of interconnected fractures to allow movement of oil or gas to the well bore for extraction. For and illustrated look at Fracking, See Page 6

Source: RGJ research

Oil from shale

The fracking operations planned by Noble Oil Inc. in northeastern Nevada are not the first to extract oil from shale in the area. In 1916 at Elko, Robert Catlin drilled a main shaft for use in a short-lived plant used to pull oil from shale. Nevada's only successful oil-from-shale operation peaked in operation in the early 1920s, with the plant closing in the fall of 1924. The oil was said to be too expensive to compete with other fossil oils of the time.

Source: Elko Rose Garden Association

372,000

Acres of private and public land targeted for potential oil development.

40

Potential oil wells using fracking on BLM land near Wells and Jiggs.

2

Exploration wells already drilled on private land near Elko.

1

Wells with fracking already conducted.

300,000

Gallons of water used in first fracking operation.