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Will Newest National Park Be Marred by Oil Drilling?

Energy

Earth Island Journal

By Jason Mark

On Feb. 11, hundreds of people—including Secretary of the Interior Ken Salazar and State Representative Sam Farr (D-CA)—gathered together to celebrate the creation of the U.S.'s newest national park, Pinnacles. An unusual outcropping of volcanic rock spires rising from the oak savannah of the California Coast Range, Pinnacles is a 27,000-acre wildlands preserve that is home to foxes, badgers, eagles and an estimated 31 California condors, a species once on the edge of extinction that has now rebounded thanks to a decades-long recovery campaign.

An unusual outcropping of volcanic rock spires rising from the oak savannah of the California Coast Range. Pinnacles is a 27,000-acre wildlands preserve. Photo by Miguel Vieira

“Our parks offer opportunities to enjoy outdoor recreation with family and friends," Secretary Salazar said at the ceremony, reading from a letter from President Obama, "and they provide a safe and accessible setting to appreciate the bounty of our land. … Pinnacles National Park is now among these cherished sites."

Cherished, perhaps, but not necessarily free from potential threats.

As the dignitaries were celebrating Pinnacles’ elevation from a national monument to a national park, the staff at the local San Benito County Planning Department were preparing the paperwork for an application for exploratory oil wells just seven miles (as the condor flies) from the southern border of the park.

An 80-year-old California oil company, Citadel Exploration, is seeking to drill up to 15 steam injection wells on a cattle ranch south of the park. In the 1970s, Chevron drilling in the area came up with what in the industry is known as “heavy oil”—petroleum deposits with the consistency of Play-Doh. If Citadel’s exploratory wells hit oil that is recoverable and economic to extract, the company will then seek permits for full field development. A company executive says a full field could involve “conservatively, a couple of hundred wells” spread over some 680 acres.

That prospect has some residents of the region and environmental groups worried. They fear that the presence of heavy industry could undermine the recovery of the California condor, a federally protected endangered species. They say the steam injection process will use vast amounts of water in a semi-arid region—as much as 17 million gallons of water for the exploratory wells alone. And they warn of the possibility of groundwater contamination or surface spills that could come with drilling.

Opposition to this one exploratory drilling project is being fueled by larger worries over a possible new oil rush in Central California. The region sits above a geologic formation, the Monterey Shale, that, like the Bakken Shale in North Dakota, contains vast amounts of oil. The deposit is thought to hold more than 400 billion barrels of oil—far more than the Bakken or Texas’s Eagle Ford Shale. About 15 billion barrels of petroleum are recoverable using existing technologies, according to the U.S. Energy Information Agency. 

The park is home to an estimated 31 California condors, a species once on the edge of extinction that has now rebounded thanks to a decades-long recovery campaign. Photo by Emily Hoyer

Critics of the drilling near Pinnacles are afraid it could be a glimpse of what’s to come. “Our water quality, our air quality, our roads, our way of life—we don’t want to become an industrial zone,” says Maureen Cain, a member of a citizen’s group called Aromas Cares for Our Environment.  “A lot of it just doesn’t make sense for this area. But don’t say that to the oil guys.” 

Aromas is a sleepy farming town about 80 miles north of Pinnacles National Park. Cain and some her neighbors formed Aromas Cares for Our Environment last summer after a company called Freedom Resources began conducting seismic testing in the area for oil and gas deposits. The group has since been working with officials in San Benito County to re-write the county’s oil drilling ordinances, which haven’t been updated in about 40 years. 

“I don’t want to say there’s fear, but there is concern over what could be coming,” says Byron Turner, assistant planning director for the county.

The San Benito Planning Commission was supposed to decide on Citadel’s drilling permit at its February 20 meeting but significant public opposition to the proposal and a slew of last-minute comments forced the commission to schedule another hearing on the matter for March 20.

“We were able to get 20 people out [to the meeting], which is pretty good in a backward place like San Benito County,” says Patricia Lerman, another member of Aromas Cares for Our Environment. “We are not anti-oil. We all drive cars. I am talking to you from my Prius. But we believe strongly that we need to have safe and responsible drilling where it needs to happen. We don’t think that the application has safe and responsible regulation.”

A 20-page memo submitted to the county by the Center for Biological Diversity lists a range of concerns about the proposed drilling. According to CBD, “the potential for the Project to result in significant impacts to the California condor is obvious. … Infrastructure, like production facilities, roads and pipelines will eliminate habitat and food sources, discourage habitat use and break up habitat connectivity.” CBD also warns about the proposed drilling method. With cyclic steam injection (known as “huff and puff” among petroleum engineers), vast amounts of high-pressure steam are forced underground to thin out heavy oil deposits and improve their viscosity. The process is commonly used in the Athabasca tar sands in Alberta, and has an especially high carbon footprint because of the need to heat the water to create steam. CBD’s memo warns that “steam injection is a particularly risky method of oil extraction. … Cyclic steaming could cause this large amount of waste water, as well as oil and other fluids, to contaminate aquifers or surface water.” 

Phil McPherson, CFO of Citadel Exploration, says the concerns are being blown out of proportion. “You can do things safely, you can do things efficiently, with a minimum amount of impact to the environment,” he says. “In November we hosted a three-hour town hall meeting in Hollister. We sent out letters to all of the area landowners. They can ask us any question they want. We have nothing to hide here. We aren’t doing fracking. We aren’t doing anything new here.”

McPherson says the exploratory drilling will use existing roads already used by the cattle ranch. Cyclic steam injection, he says, is a proven oil extraction method that accounts for about 60 percent of California oil production. Waste water from the steam injection process won’t be left on the surface, but will go into tanks, where it will be cleaned and then re-used for other injections, so at to reduce water usage. And, he says, his company is investigating using solar panels for steam generation, which will cut down on the amount of energy needed for extraction. “We are trying some innovative and avant-garde things to make this run smoother,” McPherson says.

No matter what San Benito County officials decide at their March 20 meeting, it’s likely that battles like this will become more common in California as oil and gas companies start to employ new methods to tap into the Monterrey Shale.

A new oil rush is already evident at the massive San Ardo oil field, located just south of King City. Two days after Secretary Salazar celebrated the creation of Pinnacles National Park, I happened to be driving north on Highway 101 and passed the oil field, which is easily visible from the road. San Ardo, which is mostly owned by Chevron, hit its peak production in 1967; in recent years many of the pump jacks there have been still. But a few years ago some companies began experimenting with horizontal drilling techniques, and the new wells are beginning to show results. I pulled off the highway to take some pictures of the new drilling rigs dotting the basin. In the five minutes I was there, three massive trucks hauling equipment pulled into the field—one small example of the fresh activity in California’s oil patch.  

Visit EcoWatch’s FRACKING page for more related news on this topic.

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Tell the Bureau of Land Management to establish strong rules for fracking on public lands.

 

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Ola Elvestrun, Norway's environment minister, announced Thursday that it is freezing its contributions to the Amazon Fund, and will no longer be transferring €300 million ($33.2 million) to Brazil. In a press release, the Norwegian embassy in Brazil stated:

Given the present circumstances, Norway does not have either the legal or the technical basis for making its annual contribution to the Amazon Fund.

Brazilian President Jair Bolsonaro reacted with sarcasm to Norway's decision, which had been widely expected. After an official event, he commented: "Isn't Norway the country that kills whales at the North Pole? Doesn't it also produce oil? It has no basis for telling us what to do. It should give the money to Angela Merkel [the German Chancellor] to reforest Germany."

According to its website, the Amazon Fund is a "REDD+ mechanism created to raise donations for non-reimbursable investments in efforts to prevent, monitor and combat deforestation, as well as to promote the preservation and sustainable use in the Brazilian Amazon." The bulk of funding comes from Norway and Germany.

The annual transfer of funds from developed world donors to the Amazon Fund depends on a report from the Fund's technical committee. This committee meets after the National Institute of Space Research, which gathers official Amazon deforestation data, publishes its annual report with the definitive figures for deforestation in the previous year.

But this year the Amazon Fund's technical committee, along with its steering committee, COFA, were abolished by the Bolsonaro government on 11 April as part of a sweeping move to dissolve some 600 bodies, most of which had NGO involvement. The Bolsonaro government views NGO work in Brazil as a conspiracy to undermine Brazil's sovereignty.

The Brazilian government then demanded far-reaching changes in the way the fund is managed, as documented in a previous article. As a result, the Amazon Fund's technical committee has been unable to meet; Norway says it therefore cannot continue making donations without a favorable report from the committee.

Archer Daniels Midland soy silos in Mato Grosso along the BR-163 highway, where Amazon rainforest has largely been replaced by soy destined for the EU, UK, China and other international markets.

Thaís Borges.

An Uncertain Future

The Amazon Fund was announced during the 2007 United Nations Climate Change Conference in Bali, during a period when environmentalists were alarmed at the rocketing rate of deforestation in the Brazilian Amazon. It was created as a way of encouraging Brazil to continue bringing down the rate of forest conversion to pastures and croplands.

Government agencies, such as IBAMA, Brazil's environmental agency, and NGOs shared Amazon Fund donations. IBAMA used the money primarily to enforce deforestation laws, while the NGOs oversaw projects to support sustainable communities and livelihoods in the Amazon.

There has been some controversy as to whether the Fund has actually achieved its goals: in the three years before the deal, the rate of deforestation fell dramatically but, after money from the Fund started pouring into the Amazon, the rate remained fairly stationary until 2014, when it began to rise once again. But, in general, the international donors have been pleased with the Fund's performance, and until the Bolsonaro government came to office, the program was expected to continue indefinitely.

Norway has been the main donor (94 percent) to the Amazon Fund, followed by Germany (5 percent), and Brazil's state-owned oil company, Petrobrás (1 percent). Over the past 11 years, the Norwegians have made, by far, the biggest contribution: R$3.2 billion ($855 million) out of the total of R$3.4 billion ($903 million).

Up till now the Fund has approved 103 projects, with the dispersal of R$1.8 billion ($478 million). These projects will not be affected by Norway's funding freeze because the donors have already provided the funding and the Brazilian Development Bank is contractually obliged to disburse the money until the end of the projects. But there are another 54 projects, currently being analyzed, whose future is far less secure.

One of the projects left stranded by the dissolution of the Fund's committees is Projeto Frutificar, which should be a three-year project, with a budget of R$29 million ($7.3 million), for the production of açai and cacao by 1,000 small-scale farmers in the states of Amapá and Pará. The project was drawn up by the Brazilian NGO IPAM (Institute of Environmental research in Amazonia).

Paulo Moutinho, an IPAM researcher, told Globo newspaper: "Our program was ready to go when the [Brazilian] government asked for changes in the Fund. It's now stuck in the BNDES. Without funding from Norway, we don't know what will happen to it."

Norway is not the only European nation to be reconsidering the way it funds environmental projects in Brazil. Germany has many environmental projects in the Latin American country, apart from its small contribution to the Amazon Fund, and is deeply concerned about the way the rate of deforestation has been soaring this year.

The German environment ministry told Mongabay that its minister, Svenja Schulze, had decided to put financial support for forest and biodiversity projects in Brazil on hold, with €35 million ($39 million) for various projects now frozen.

The ministry explained why: "The Brazilian government's policy in the Amazon raises doubts whether a consistent reduction in deforestation rates is still being pursued. Only when clarity is restored, can project collaboration be continued."

Bauxite mines in Paragominas, Brazil. The Bolsonaro administration is urging new laws that would allow large-scale mining within Brazil's indigenous reserves.

Hydro / Halvor Molland / Flickr

Alternative Amazon Funding

Although there will certainly be disruption in the short-term as a result of the paralysis in the Amazon Fund, the governors of Brazil's Amazon states, which rely on international funding for their environmental projects, are already scrambling to create alternative channels.

In a press release issued yesterday Helder Barbalho, the governor of Pará, the state with the highest number of projects financed by the Fund, said that he will do all he can to maintain and increase his state partnership with Norway.

Barbalho had announced earlier that his state would be receiving €12.5 million ($11.1 million) to run deforestation monitoring centers in five regions of Pará. Barbalho said: "The state governments' monitoring systems are recording a high level of deforestation in Pará, as in the other Amazon states. The money will be made available to those who want to help [the Pará government reduce deforestation] without this being seen as international intervention."

Amazonas state has funding partnerships with Germany and is negotiating deals with France. "I am talking with countries, mainly European, that are interested in investing in projects in the Amazon," said Amazonas governor Wilson Miranda Lima. "It is important to look at Amazônia, not only from the point of view of conservation, but also — and this is even more important — from the point of view of its citizens. It's impossible to preserve Amazônia if its inhabitants are poor."

Signing of the EU-Mercusor Latin American trading agreement earlier this year. The pact still needs to be ratified.

Council of Hemispheric Affairs

Looming International Difficulties

The Bolsonaro government's perceived reluctance to take effective measures to curb deforestation may in the longer-term lead to a far more serious problem than the paralysis of the Amazon Fund.

In June, the European Union and Mercosur, the South American trade bloc, reached an agreement to create the largest trading bloc in the world. If all goes ahead as planned, the pact would account for a quarter of the world's economy, involving 780 million people, and remove import tariffs on 90 percent of the goods traded between the two blocs. The Brazilian government has predicted that the deal will lead to an increase of almost $100 billion in Brazilian exports, particularly agricultural products, by 2035.

But the huge surge this year in Amazon deforestation is leading some European countries to think twice about ratifying the deal. In an interview with Mongabay, the German environment ministry made it very clear that Germany is very worried about events in the Amazon: "We are deeply concerned given the pace of destruction in Brazil … The Amazon Forest is vital for the atmospheric circulation and considered as one of the tipping points of the climate system."

The ministry stated that, for the trade deal to go ahead, Brazil must carry out its commitment under the Paris Climate agreement to reduce its greenhouse gas emissions by 43 percent below the 2005 level by 2030. The German environment ministry said: If the trade deal is to go ahead, "It is necessary that Brazil is effectively implementing its climate change objectives adopted under the [Paris] Agreement. It is precisely this commitment that is expressly confirmed in the text of the EU-Mercosur Free Trade Agreement."

Blairo Maggi, Brazil agriculture minister under the Temer administration, and a major shareholder in Amaggi, the largest Brazilian-owned commodities trading company, has said very little in public since Bolsonaro came to power; he's been "in a voluntary retreat," as he puts it. But Maggi is so concerned about the damage Bolsonaro's off the cuff remarks and policies are doing to international relationships he decided to speak out earlier this week.

Former Brazil Agriculture Minister Blairo Maggi, who has broken a self-imposed silence to criticize the Bolsonaro government, saying that its rhetoric and policies could threaten Brazil's international commodities trade.

Senado Federal / Visualhunt / CC BY

Maggi, a ruralista who strongly supports agribusiness, told the newspaper, Valor Econômico, that, even if the European Union doesn't get to the point of tearing up a deal that has taken 20 years to negotiate, there could be long delays. "These environmental confusions could create a situation in which the EU says that Brazil isn't sticking to the rules." Maggi speculated. "France doesn't want the deal and perhaps it is taking advantage of the situation to tear it up. Or the deal could take much longer to ratify — three, five years."

Such a delay could have severe repercussions for Brazil's struggling economy which relies heavily on its commodities trade with the EU. Analysists say that Bolsonaro's fears over such an outcome could be one reason for his recently announced October meeting with Chinese President Xi Jinping, another key trading partner.

Maggi is worried about another, even more alarming, potential consequence of Bolsonaro's failure to stem illegal deforestation — Brazil could be hit by a boycott by its foreign customers. "I don't buy this idea that the world needs Brazil … We are only a player and, worse still, replaceable." Maggi warns, "As an exporter, I'm telling you: things are getting very difficult. Brazil has been saying for years that it is possible to produce and preserve, but with this [Bolsonaro administration] rhetoric, we are going back to square one … We could find markets closed to us."

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