http://mag.newsweek.com/2014/02/28/oil-prospectors-seek-next-big-strike-south.html#.UxM82PhhCIQ.email

By Victoria Bekiempis / February 27, 2014 2:18 PM EST
Prospectors are looking for untapped regions in areas like Florida, near a habitat for an endangered panther. Imke Lass/Redux

The letter was printed on plain white paper in plain black type, and but for its unfamiliar globe logo “Total Safety” and its unsettling message, it was no different from most of the junk mail filling the mailboxes of 30 homes in a rural south Florida area called Golden Gate Estates, east of Naples.

“Dear Sir or Madam,” it read, “Total Safety US, Inc. is currently going around your area gathering information on households for Dan A. Hughes, so we can develop a contingency plan. We need the name of the main contact of the household, the number of people in your household, address and a number where you could be contacted in case of emergency, if you have transportation to evacuate and if you have any special needs in transportation.”

This message from “the world’s leading provider” of safety service solutions to the petrochemical industry went on to instruct recipients to contact a Jennifer Jones with any questions about the still unspecified project coming to their neighborhood. Each household had its own reference number.

With a little research, one of the many perplexed recipients, a retired artist by the name of Jaime Duran, learned that Dan A. Hughes was a Beeville, Texas-based oil outfit and that the company planned on drilling a test well on the pasture alongside his log cabin, less than 1,000 feet from his front porch.

“We could hear the cows in the next field when we moved here,” says Duran. He and his wife, Pamela, bought the lot at the end of an unpaved, one-lane road because they wanted a quiet place where they could grow fruits and vegetables in their golden years, far from the traffic and pollution of more populated areas. They liked the croaking of cicadas around sunset, the humid shadow of mosquitos during summertime, even the bear that ransacked their garden. And they had no reason to think that it would change. The neighboring lot was zoned agriculture and, he says, “This road was a dead end.”

But for companies like Dan A. Hughes, undeveloped plots of south Florida are anything but dead ends – they are new beginnings for the region’s long languishing petrochemical industry. As the price of oil climbs, American prospectors are increasingly looking for untapped regions, even in areas like Florida which, traditionally, aren’t big fonts of fossil fuels the way Pennsylvania or Kansas might be.

The state has had some small-scale petroleum production since 1943, when Humble Oil & Refining Co. struck oil south of Immokalee – the nation’s top tomato-producing region. There are now 162 wells operating in the state. In the south, they are in Collier, Henry, Lee and Dade counties. (There is also some production in the Panhandle’s Escambia and Santa Rosa counties, near Pensacola.) Refining peaked at 45 million barrels in 1978, amid the gas crisis, but has since spiraled to less than 2 million barrels annually.

A new pack of wildcatters, however, is convinced that the next big crude discovery is just around the corner – in the Sunshine State – and is actively seeking land leases and permits.

Of course, south Florida’s landscape is more than a little different from Louisiana’s Cancer Alley or Texas’s derrick-littered landscape. Much of the wildcatting could take place on the known habitat of the endangered Florida panther, of which there are estimated to be about a hundred extant. The area — comprised of the watershed that replenishes levels in the Big Cypress National Preserve and the Everglades — is also integral to the area’s hydrological health. It fills the aquifers millions of south Florida residents rely on for drinking water.

The looming conflict over south Florida’s oil potential also underscores several mining controversies in Florida and across the U.S. – the often uneasy relationship between mineral rights owners, homeowners and preservationists – and local politicians’ efforts to protect constituents above business interests.

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Barron Collier was a Southerner through and through, hailing from a prominent Tennessee family that even claimed relation to Virginia Dare, “the first white woman born to English parents in North America,” according to Paradise for Sale: Florida’s Booms and Busts by Nick Wynne and Richard Moorhead. His entry into the business world belied this lofty pedigree. Collier got his start as a low-level railroad hand – a sales solicitor, in fact, but invested in a printing company, which produced advertising placards for subways and streetcars. A few years and a few shrewd business moves later, Collier had amassed a “virtual monopoly on this form of advertising,” making him “a millionaire many times over” by the age of 26.

At one point during negotiations with a Chicago railroad, Collier agreed to buy an island off the coast of Florida from the company’s president, spurring what would become a fascination with the state’s wild lands. The Everglades, in particular, “captured Barron Collier’s soul.” From 1921 to 1923, Barron Collier bought 1.5 million acres in southern Lee County, to make livable the swamps and cypress stands. He would later get a county named after him, Collier County, in exchange for funding an interstate linking Tampa and Miami.

Collier’s purchases and developments were so extensive that one historian remarked in 1926 that he would be “the first man to make a billion dollars from land” – with the potential to exceed even the Astors’ profits from New York City real estate. Despite a lack of evidence – and the fact that prospectors had tried unsuccessfully to find oil in Florida since 1901 – Collier was convinced that the earth under the state bubbled with black gold, telling his son shortly before his death: “I can smell it.”

Four years later, Collier’s nose was vindicated when Humble Oil and Refining Company (since absorbed by Exxon) struck oil on the Sunniland trend, which spans from Fort Myers to Miami. His descendants stood to profit greatly from his persistence: Collier businesses own around 200,000 acres in southwest Florida. Though they donated 160,000 acres to form the Big Cypress National Preserve, they kept the mineral rights to this combined acreage.

Despite the potential profits from mineral rights, Sunniland is no Alaska’s famed Prudhoe Bay, which boasts both the U.S.’s and North America’s proved reserves and produces some 236,750 barrels of oil daily. Rather, Sunniland’s 16 or 17 wells yield 2,400 barrels daily, according to the trade publication Oil and Gas Investor. A consultant who spoke to Newsweek on background because he works closely with the oil industry says that in Florida it’s also more costly to seek oil, as it has to be transported by truck.
A confluence of market forces and new technologies, however, have given prospectors more reasons to dig in Florida, including Sunniland. In the past five years, the state Department of Environmental Protection (DEP) has received 39 drilling applications and granted 37 of them. (The other two applications were incomplete or withdrawn, according to the DEP.) Sixteen of these have been applied for in the past year – 14 of which are in Collier and Hendry counties, according to reports.

Prospectors also have economic incentive to dig deeper. The few wells drilled in the lower portion of Sunniland level all showed signs of oil. This has prospectors such as Brandt Temple, president of New Orleans-based Sunrise Exploration, actively developing the area. “Sunrise identified the play in 2010 and a number of wells have been permitted or drilled so far,” Temple said in an email to Newsweek. “Operators are keeping a tight lid on their results so far. Sunrise and its partners plan to drill a well in Hendry County this year.”

“Time will tell – every play is different,” he added. “When we take a good look at the stunning technology breakthroughs in drilling and completions that have SAFELY revolutionized the oil and gas industry in the past decade in CO, CA, PA, TX, OK, ND, MS, LA, MI, WV, OH and Canada – there is no reason to think those same technologies will not be successful here in FL as well.”

Another draw is horizontal drilling, which allows prospectors to put a longer network of pipes in underground rock formations, and hydraulic fracturing, a.k.a., fracking. The DEP has generally downplayed potential fracking, saying that Florida’s geography is not amenable to the practice. In an internal memo from 2011, one official even said it’s “not a factor” in south Florida.

In a recent email to Newsweek, department officials echoed these sentiments.
Florida’s present oilfields are not contained within shale, “the prime target of conventional hydraulic fracturing in other states.” In 2012, however, a DEP official requested a conference call with a prospector, saying there is an “imminent fracking job in S. Florida,” the Fort Myers News-Press first reported. The paper also notes that Alico, Inc., claims to have discovered as many as 94 tons of fracking sand in nearby Hendry County.

Plus, there’s some precedent for fracking in Florida. The DEP does have record of some wells being fracked, the last being in 2003, on the Panhandle.

The geological traits that make Florida good for oil exploration might also make it particularly environmentally risky. Andrew Zimmerman, an associate professor in the University of Florida’s geology department, tells Newsweek that the state’s oil is found in cracked, porous limestone formations. This is also the same rock sourcing drinking water. Plus, south Florida already has its share of water problems. In addition to water managers constantly balancing over-wet or over-dry conditions, they are often being caught between the two bad choices of over-drawing from aquifers or dumping fresh water into the ocean. Lake Okeechobee, which is also a major player in the region’s water sources, is another ongoing problem, as the U.S. Army Corps of Engineers has recently diverted polluted water into the St. Lucie and Caloosahatchee Rivers from the lake to prevent its 80-year-old dike from bursting. That has dealt a near deathblow to these rivers’ estuaries, with locals complaining that the lake’s waters containing agricultural chemicals from nearby farms have killed numerous manatees, dolphins, fish and oysters.

The Everglades is also in the midst of a massive $1 billion restoration project, a joint state and federal effort which will protect some 2.4 million acres of interconnected wetlands by returning them to their natural state. These areas aren’t just habitats for more than 60 threatened and endangered species. They are also integral in providing approximately 7 million south Florida residents’ drinking water, according to Florida’s Department of Environmental Protection. “Because of that high probability of contamination spreading itself into the aquifer, I would be very hesitant to encourage any growth of the oil industry,” Zimmerman says.

He’s not coming from an alarmist standpoint, he explains, even admitting that oil exploration can be completed safely. However, there’s always a risk. “If you do any type of activity long enough, you’re going to have accident,” and, considering the water problems in south Florida, “it’s not going to be worth it.”

The developers are also asking the EPA for a permit to dig an injection well, which would pump brine, a salty, watery by-product of drilling, back into the earth for storage.

A recent ProPublica investigation revealed that injection wells, which have been growing in popularity as a means of waste disposal, are not as safe as previously thought, having “repeatedly leaked, sending dangerous chemicals and waste gurgling to the surface or, on occasion, seeping into shallow aquifers that store a significant portion of the nation’s drinking water.”

In south Florida specifically, the report notes that “20 of the nation’s most stringently regulated disposal wells failed in the early 1990s, releasing partly treated sewage into aquifers that may one day be needed to supply Miami’s drinking water.”

Florida has another big reason to be wary. In 2010, the Deepwater Horizon oil spill, said by many to be the worst oil spill in American history, dumped 4.9 million barrels of oil into the Gulf of Mexico, killing wildlife and laying waste to coastal economies dependent on the fishing and tourism industries.

The DEP contends that Florida’s oil operations have been safe throughout the years, without any “major accidents, spills, or blowouts” but admits that there have been some incidents. Since 1972, there have been 393 reported spills – totaling 1,281 barrels of crude oil spilled and 16,636 barrels of brine spilled. The DEP maintains that this amount is minimal, equating to .0002 percent of what has been produced.

The consultant to Florida’s oil industry who spoke to Newsweek on background agreed that nothing major had happened but did mention one incident pointing to pragmatic issues in addressing problems. In the early 1960s, when several fields operated on the Sunniland formation, operators decided to build a pipeline to Port Everglades, near Fort Lauderdale, rather than transport it by truck.

The pipeline operated until the late 1990s and closed because of “corrosion issues.” The pipeline couldn’t be fixed because there had been so much development above where it had been placed underground – and because part of it ran through newly designated water conservation areas. So, it was drained, flushed and filled with fresh water.

There’s also the issue of wildlife – the proposed drill site is less than a mile from the Florida Panther National Wildlife Refuge, located in what some describe as popular roaming grounds for the animals. The DEP has told residents that “the well location does not contain habitat for federal or state listed wildlife species…. No listed species have been observed on site.”

The South Florida Wildlands Association counters that there has been “an actual panther observation in the proposed drill site (a rare occurrence even for seasoned panther scientists).” Data from the Florida Fish and Wildlife Commission, the conservancy continues in a letter to the DEP opposing drilling, “show the area to be a hot spot for our state animal.” The commission maps provided by the conservancy show that two female and three male panthers’ home ranges “either include or are immediately adjacent to the proposed drill site.”

Another three call home the Picayune Strand State Forest, which is immediately south of the proposed drill site and part of the Everglades restoration project.

Alexis Meyer, who coordinates the Florida Sierra Club panther campaign, tells Newsweek that the challenge to panthers’ viability is habitat destruction. “They have no place to go,” she says. “The oil and gas exploration is happening right in panther primary habitat – which are the lands essential to their continued existence.” Humans near the slated drill site area also concerned about their habitat.

In a worst-case scenario, drilling could have deadly consequences.

Hydrogen sulfide is a gas that smells of eggs but rivals hydrogen cyanide in its potential to kill and is often present in fields with sour crude oil, the kind found in south Florida.
A DEP document maintains that hydrogen sulfide is not a big concern in south Florida, saying in a memo that “southwest Florida wells drilled to the lower Sunniland formation generally yield low or zero volume natural gas or H2S concentrations.”

Jennifer Jones, the coordinator referenced in the Total Safety letter to Sunniland residents, was a bit more direct when discussing safety procedure in the area, saying in April that “if something goes wrong, if a well blows up, hazardous gases can be released.”
These kinds of fears aren’t fueled by mere fear-mongering. In October, a North Dakota oilfield worker died after being exposed to hydrogen sulfide on the job. In July, a father and his son-in-law died because of hydrogen sulfide exposure on a Kansas oilfield.

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As more and more Americans are learning that new drilling technologies could quickly turn the land under or next to their property into an oil field, questions about who owns mineral rights and what the owners of said rights can do with their resources abound, as well as legal confusion.

D.R. Horton, the country’s largest home builder, has held on to the mineral rights under “more than 10,000 lots” in Florida alone,” including a subdivision in Naples, near Golden Gate Estates. This is a common practice “in states where shale plays are either well under way or possible,” Reuters recently reported.

Most of the affected owners didn’t even know. Many of these states do not require developers to disclose this to buyers, meaning, as with D.R. Horton, a contract gives the builder “all geothermal energy and resources…on, in or under the lot.” In other words, homeowners who don’t own mineral rights can have hydrocarbon development on their property and have absolutely no say in the matter. (The Tampa Bay Times reports that D.R. Horton has sent letters to some Florida homeowners offering to return severed mineral rights, but it’s unclear how many letters the company had sent.)

In one Greeley, Colo. subdivision, homeowners learned, after purchasing their home, that an oil company would begin drilling under their neighborhood “right across the street,” Reuters also notes. The confused residents received one consolation – the oil company would let them pick the landscaping to hide the well heads and keep noise down.
Duran has seen firsthand how ugly this situation could get. During a meeting with prospectors to discuss their ongoing concerns, a prospector told Duran, his wife, a neighbor and several activists that they shouldn’t make so much of a fuss, threatening: “If we wanted to, we could drill right on your property and there’s nothing you can do about it.”

There was one consolation for Duran who, because of the oil well slated for next door, has felt pretty powerless these last few months: He made sure he owned the mineral rights under his property before moving in.

There has been some pushback about mineral right severance in general and how they are used in Florida. Some members of the Florida house want developers to disclose to would be homeowners before they sit down to sign paperwork whether the mineral rights have been severed from their property.

Increased attention toward Florida’s petroleum resources has also rekindled conversations about the industry’s future there, as State Senator Darren Soto recently penned a letter to the DEP asking for the agency “to immediately suspend all recently approved oil exploration permits in the Everglades to assure the Environmental Protection Committees in both the Senate and House have a chance to review the risks and effects of this decision.” Because of backlash from Duran and other concerned residents, the U.S. Environmental Protection Agency has agreed to a public hearing March 11 before deciding whether to grant the injection well permit.

Special thanks to Richard Charter