The two-hour drive between Silicon Valley’s southern tip and Coalinga is a descent from heaven to hell, Andy Hsia-Coron says. Winding past flaxen hills, the occasional vineyard and cattle-dotted ranchland, the highway wraps west around Pinnacles National Park and ends on the brink of the Coalinga Oil Field.
“It looks like Mordor,” the anti-petroleum activist says of the 124-year-old derrick-ridden site. “A giant tower, these bobbing machines, convoluted pipes, giant dust devils, tumbleweeds—it looks like something out of Dante’s nightmare.”
It’s a landscape—stark and lifeless—that he’d like to prevent from taking shape in San Benito County, his home of nearly three decades. Whether that’s even a threat is a subject of contention.
“We have to think about our future and our precious resources,” remarks Hsia-Coron, a retired teacher and co-founder of San Benito Rising, a group that wants to ban what it deems extreme oil recovery methods similar to those used to siphon what’s left of petroleum reserves beneath Coalinga. “We don’t want to live in an industrial zone.”
Come November, he hopes voters will pass a countywide ban on fracking and other “high-impact” fossil fuel-harvesting, essentially outlawing all but conventional oil drilling. The fall ballot initiative has turned the county into an apologue in a broader dispute over oil extraction. The battle pits property rights advocates and oil interests against environmentalists and politicians who want to protect the landscape’s integrity.
San Benito County—a two-thirds-Democratic county that’s home to a growing number of Silicon Valley’s technology workers—is considered a bellwether for the rest of the state, giving the conversation import to communities across California. A growing number of local governments are considering new zoning laws to crack down on oil extraction, fearing that the state will fail to enforce its own rules for the industry.
Last week, Santa Cruz County became the first in the state to pass a fracking ban, a largely symbolic move since there’s no oil development planned for the area. There’s talk of bringing a similar ban to Santa Clara Valley over fears that aggressive oil acquisition requires too much water, could trigger earthquakes and injects toxins into the earth. In San Benito County, however, a moratorium on enhanced extraction—which includes but isn’t limited to fracking—could inflict considerable economic repercussions.
“[The initiative] is an attack on property rights,” says Armen Nahabedian, CEO of Citadel Exploration, which in January began drilling exploratory wells 17 miles southwest of Pinnacles. “It’s fueled by misinformation that’s being accepted as scientific fact.”
Nahabedian, a charismatic fourth-generation oilman, was five when he set foot on his first petroleum field. As a child, Christmas gifts came wrapped in oil maps. Save for a five-year stint in the Marine Corps as part of “Operation Iraqi Freedom,” he’s worked his entire life in an industry onerous to navigate in the Golden State. But he and Citadel co-owner Phil McPherson relish the challenge.
“If it wasn’t so difficult to get things done in California, I‘d have 30 Texans up here trying to do the same thing,” McPherson told Oil and Gas Investor, a trade publication. “Texans come in and they hit a brick wall and they try to break through it. The California way is to go around it like the water.”
Nahabedian says he’s driven by a desire for personal profit as well as creating jobs for others while weaning Americans off of their foreign oil dependence. “You can drill for it here or kill for it there,” he quips.
Since founding Citadel in 2011, Nahabedian has wrangled with county officials while they worked out an updated oil ordinance. Last fall, the company secured permits to bore wells for a venture dubbed Project Indian. If they strike oil, they’ll need a new permit to extract it by cyclic steam injection: pumping scalding water vapor into the earth to heat up oil deposits so they’re liquid enough to suck up to the surface.
Nehabedian calls his interest in the area opportunistic. A business contact for whom he scouted oil in the San Joaquin Valley basin referred him to the site atop the remunerative Monterey shale formation, a deposit stretching from Sacramento to Los Angeles once thought to hold 13.7 billion barrels of crude oil. The 2011 estimate fueled a speculative rush that prompted San Benito County, among other jurisdictions, to update local laws to keep pace with the sudden interest in mineral rights. That valuation slumped substantially last week, however, when federal authorities slashed the projected recoverable crude by 94 percent. The markdown dealt a blow to the nation’s oil futures and to expectations that a boom would create 2.8 million jobs and drum up $24.6 billion in annual tax revenue.
Citadel spokesman Robert Parry insists the lesser projection does nothing to affect the company’s prospects. They still expect to pull 1,000 barrels a day at full capacity—a dramatic jump from the 6,000 barrels a year the county now produces. That would bring a windfall of tax proceeds to San Benito County.
“We’re thinking up to $6 million a year in local tax revenue,” says Parry. “That would nearly [stopgap] the county’s budget deficit.”
But San Benito Rising’s initiative would end those plans, evaporating tens of millions of dollars in future annual profits for Citadel. The measure would outlaw not just fracking, but cyclic steam injection, acidization and any combination thereof. It would amortize investments for already-permitted projects to let them recoup some of the costs. It would also ban oil development in rural-residential parts of the county, but leave most ranch and farmland open to conventional drilling. Since the oil beneath the region is largely inaccessible by traditional extraction, the initiative is an effective ban.
The industry, prompted partly by Citadel’s stake in the region, struck back. A recent letter to the county from the California Independent Petroleum Association hinted at a lawsuit over lost revenue.
“We’ve been up against fear-mongering extremists,” Parry says. “They say they don’t want fracking, they hold up signs that say, ‘Don’t frack our Pinnacles.’ You know what? No one has proposed fracking here.
Steam injection is used in 60 percent of oil and gas recovery in California, he says. At nearby San Ardo Oil Field in Monterey County, 3,000 wells have been drilled with no reported water contamination in the Salinas River, he adds, pointing to a list of talking points spelled out in a black pamphlet labeled “Oil Facts” in big, bold type.
During our conversation, a young man in a black stars-and-planet-adorned hoody and a long tangle of brown dreadlocks saunters into the Hollister coffee shop with a clipboard and a pen. He’s collecting signatures for an initiative to tax medical cannabis.
“That’s a San Benito Rising guy,” Parry leans in and whispers. “See what we’re dealing with?”
San Benito Rising’s use of the word fracking has drawn eye-rolling ridicule from Citadel and the local press. A scathing editorial in the Hollister Freelance (owned by the same company as Metro) slammed Hsia-Coron et al for SBR’s alarmist semantics.
“The use of the emotionally charged buzzword is merely a way of deceiving the voting public in order to push the anti-petroleum agenda,” the Free Lance opined. The newspaper’s positions are developed with the participation of a community editorial board.
Hsia-Coron admits employing the term “fracking” to tap into a national sentiment against the practice. It leads to conversations about other methods he wants to ban.
“Sometimes hell is Coalinga, but sometimes it’s other people,” he says of his critics. “Thanks to the initiative process, this will be a directly democratic decision. Voters will make up their own minds.”