California Oil & Gas Setbacks Recommendations Memo
Kyle Ferrar, Western Program Coordinator for FracTracker Alliance, contributed to the December 2020 memo, “Recommendations to CalGEM for Assessing the Economic Value of Social Benefits from a 2,500’ Buffer Zone Between Oil & Gas Extraction Activities and Nearby Communities.”
Below is the introduction, and you can find the full memo here.
The purpose of this memo is to recommend guidelines to CalGEM for evaluating the economic value of the social benefits and costs to people and the environment in requiring a 2,500 foot setback for oil and gas drilling (OGD) activities. The 2,500’ setback distance should be considered a minimum required setback. The extensive technical literature, which we reference below, analyzes health benefits to populations when they live much farther away than 2,500’, such as 1km to 5km, but 2,500’ is a minimal setback in much of the literature. Economic analyses of the benefits and costs of setbacks should follow the technical literature and consider setbacks beyond 2,500’ also.
The social benefits and costs derive primarily from reducing the negative impacts of OGD pollution of soil, water, and air on the well-being of nearby communities. The impacts include a long list of health conditions that are known to result from hazardous exposures in the vulnerable populations living nearby. The benefits and costs to the OGD industry of implementing a setback are more limited under the assumption that the proposed setback will not impact total production of oil and gas.
The comment letter submitted by Voices in Solidarity against Oil in Neighborhoods (VISIÓN) on November 30, 2020 lays out an inclusive approach to assessing the health and safety consequences to the communities living near oil and gas extraction activities. This memo addresses how CalGEM might analyze the economic value of the net social benefits from reducing the pollution suffered by nearby communities. In doing so, this memo provides detailed recommendations on one part of the broader holistic evaluation that CalGEM must use in deciding the setback rule.
This memo consists of two parts. The first part documents factors that CalGEM should take into account when evaluating the economic benefits and costs of the forthcoming proposed rule. These include factors like the adverse health impacts of pollution from OGD, the hazards causing them and their sources, and the way they manifest into social and economic costs. It also describes populations that are particularly vulnerable to pollution and its effects as well as geographic factors that impact outcomes.
The second part of this memo documents the direct and indirect economic benefits of the proposed rule. Here, the memo discusses the methods and data that should be leveraged to analyze economic benefits of reducing exposure to OGD pollution through setbacks. This includes the health benefits, impacts on worker productivity, opportunity costs of OGD activity within the proposed setback, and the fact that impacted communities are paying the external costs of OGD.
Please find the full memo here.