Monterey County Weekly: Judge allows oil test well near Pinnacles; lawyer says fracking is already happening, just not here.

Robert Parry
The first test well at Project Indian was drilled on Jan. 24. Steam injection can’t start under permitting for a propane-fired steam generator is completed.

Posted: Thursday, January 30, 2014 12:00 am
Sara Rubin

Oil executive Armen Nahabedian isn’t inclined to take environmental groups seriously. “If they want to go live in a cave and take their life back to a third-world means and be righteous, then I’ll salute them,” he says.

As it happened, David Hobstetter, a lawyer for the nonprofit Center for Biological Diversity, which is battling Nahabedian’s latest project just south of Pinnacles National Park, drove his car from San Francisco to Monterey and back on Jan. 27. He burned that gas to get to Monterey County Superior Court, where he was asking Judge Lydia Villarreal to block the first of 15 test wells approved by the San Benito County Board of Supervisors last year.

Hobstetter lost.

“One well has been drilled,” Villarreal said. “It doesn’t quite seem to rise to the level of public interest to stop the work on that one well.”

Nahabedian’s company, Citadel Exploration Inc., is in the early phase of a pilot project, Project Indian, on arid yellow ranchland in the Bitterwater region. The project could ultimately recover as much as 40 million barrels of oil, according to Citadel’s website.

First, they’ve got to prove to investors that it’s worth the trouble and expense to employ cyclic steam injection, also called huff-and-puff, to heat and thin heavy crude oil and bring it to the surface. That costs about $25-$30 a barrel, Nahabedian says, but it’s too early to know the steam-to-oil ratio at Project Indian, and whether it’s economically viable. (The company spent $500,000 to get its first test well up and running, attorneys said at the Jan. 27 hearing.)

To do that, Citadel got a permit for 15 test wells. It would take a separate application to state oil and gas regulators and the county for permits to scale up to commercial production. But the Center for Biological Diversity appealed the test well approval, then sued San Benito County last July.

“To me [a test well] is largely indistinguishable from a production well,” Hobstetter argued. “You don’t need multiple wells to have environmental impact.”

Villarreal also required Citadel to provide Hobstetter with a detailed agenda of its plans for future phases of the project, allowing him to challenge the project at future points.

The Center for Biological Diversity had asked Villarreal to halt Citadel’s first test well, drilled on Jan. 24, until the court rules on the lawsuit this spring. The nonprofit argues the county should have conducted a more rigorous environmental analysis of the test project, considering potential impacts to condor habitat, water consumption and potential spills.

Attorneys for Citadel told Villarreal there are even more controversial techniques happening in South Monterey County oilfields. “They’re even doing fracking, under or around the Salinas River,” said Debra Tipton of Anthony Lombardo & Associates.
Lombardo says he’s not sure if fracking is happening, but that huff-and-puff is no big deal: “There’s nothing new or unusual or dangerous.”

As to concerns about condors, he says there won’t be puddles of oil on the site: “It’s not like the old days of John Wayne movies. The site looks far cleaner and neater than when they’re drilling a water well.”

Special thanks to Richard Charter

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