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Legislative News
A number of state and local legislators have passed laws
prohibiting frack gas drilling - while
environmental concerns and questions of taxation are resolved.
Many of the laws prohibit frack
drilling within city limits. These laws are often symbolic at best,
because there is no room or desire to drill in these areas.
With jobs, tax revenues and low energy prices at risk,
proponents of frack gas drilling are taking
their case to the court of public opinion.
For example, the state of New York is facing opposition
to its current drilling moratorium.
A motion has been filed that would amend the law and
allow drilling in certain parts of the state.
Similarly, in the past month, the state of Texas passed
legislation allowing for the development of natural gas production in
a "Texas Triangle" between Houston, San Antonio, and
Austin.
Independent Energy Consultants has a number of local
governments as clients and we encourage you to familiarize yourselves
with this issue.
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Your Energy Manager
Topic: Hydraulic Fracturing
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Welcome, 
Independent
Energy Consultants, Inc. is committed to helping its clients
make well-informed and cost-effective decisions regarding their
energy supply and consumption. We are sending you this newsletter to
help you understand how decisions made, or not made, affect your
company's bottom line.
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Hydraulic Fracturing (Fracking Defined)
Hydraulic Fracturing, more commonly known as 'Fracking', uses explosives and high pressure
water to break open shale rock formations deep underground and
collect deposits of natural gas and oil trapped within the rock.
After drilling a vertical shaft 6-8 thousand feet into the earth, the
drilling process moves horizontally approximately one thousand feet
through shale rock formations. When the drilling is complete,
explosive charges are then inserted every 50 to 80 feet along the
horizontal runs. When detonated, the charges create fractures in the
rock which liberate methane (natural gas) trapped within the shale
rock.
High pressure "fracturing fluids" or "pumping
fluids," made primarily of water and sand, are then injected
into the well to further widen the fractures and release additional
pockets of natural gas. The slurry is then retrieved and stored
in retention basins for subsequent treating and recycling. After a
setup period of one to three months, a fracked
well can produce continuously for 20 to 40 years with the fracking process repeated nearly 20 times. Fracking technology was developed in the 1940s,
and has become the drilling method of choice to extract the vast
amounts of natural gas found in huge shale formations throughout the
U.S. and world. Click here to see a brief video of the fracking process and here to see a map of the
major shale gas formations in the U.S.
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Environmental
Concerns
Environmentalists have three main concerns about the fracking process:
1.
They
fear the chemically treated slurry that is injected into the well
will contaminate water above and below the ground. They believe it
will either spread to underground water sources, or not be properly
processed after it is pumped out of the well. The slurry is a
proprietary cocktail of chemicals, some known to be toxic or
carcinogenic. Opponents of fracking
believe water contamination from the slurry is causing severe health
effects and is being covered up by the oil and gas industry.
They also question an apparent cozy relationship between federal
lawmakers and the fracking industry.
For example, the Energy Policy Act of 2005 exempted the fracking process from the requirements of the
Clean Water Act, the Safe Drinking Water Act, and the Clean Air Act.
2.
There
are further concerns that breaking the shale rock will release
naturally occurring radioactive gases or volatile organic compounds
(VOCs) that could also permeate water sources or become airborne
hazards.
3.
The
final concern is that the drilling and fracturing will destabilize
the ground itself, making drilling areas more prone to earthquakes.
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In response to environmentalist concerns, the natural
gas industry is quick to point out their excellent track record with
hydraulic fracturing supported by government studies. They point to
these precautionary measures and economic benefits derived from the fracking process:
- The rock fracturing
and gas extraction process takes place thousands of feet into
the earth, safely away from sources of groundwater and drinking
water.
- The central shaft is
lined with steel piping and cement, blocking the spread of any
fluids into the ground.
- The fracking slurry is made up of only 0.5
percent chemicals many of which are found in common household
products like table salt, cleaners, disinfectants, food
additives, soaps and detergents. The remaining components of the
slurry are 90 percent water, and 9.5 percent sand. Click here to see a list of chemicals
found in fracking slurry (p8).
- In 2004, the U.S. EPA
released a report confirming that
hydraulic fracturing and the injected fluids posed little to no
threat to underground sources of drinking water. No cases were
found to link well water contamination to fracturing fluids. In
2009 the Ground Water Protection Council (GWPC) released a
similar document refuting accounts that
fracturing fluid had contaminated drinking water.
- The industry
acknowledges seismic activity near and around drill sites, but
these tremors are so small we do not feel them. They question
whether they are actually the result of drilling or simply
normal seismic movements that we are now seeing because we have
sensitive equipment for monitoring them.
In addition to
an excellent track record of safety, hydraulic fracturing has had
numerous economic impacts. The industry has created jobs, increased
tax revenues, and helped to drive down natural gas prices. Here are a
couple of examples cited by the American Petroleum Institute about
the Marcellus Shale Formation.
- According to economists
and industry experts at Penn State University, the Marcellus
Shale Formation has the potential to be the second largest
natural gas field in the world. A recent study estimates
that in 2009 the development of this resource added over 44,000
new jobs in Pennsylvania, $389 million in state and local tax
revenue, over $1 billion in federal tax revenue, and nearly $4
billion in value-added to the state's economy. Similarly, in
West Virginia it created over 13,000 new jobs, and contributed
over $220 million in federal, state, and local tax revenue and
$939 million in value-added to the state's economy.
- According to the
study, over the next decade, the development of Marcellus shale
could generate nearly 300,000 new jobs, over $6 billion in
federal, state, and local tax revenue and nearly $25 billion in
value added to the economy by 2020.
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Despite the current controversy surrounding frack-gas drilling, one thing is known for
sure. The discovery of natural gas trapped in shale formations
and the development of techniques like hydraulic fracturing have been
an enormous boon to the energy industry. They have opened up vast
untapped supplies of natural gas and have created tens of thousands
of manufacturing jobs. The onshore shale gas drilling has also
reduced our dependency on riskier supplies of natural gas such as
those found in the Gulf of Mexico. With the emergence of shale gas,
the contribution of natural gas coming from the Gulf has decreased.
According to Energy Information Agency data, offshore natural gas
production from the Gulf of Mexico has declined by almost 50 percent
from its level of 300,000 Bcf/month in
2005.
The increased supply of cleaner
burning natural gas is also causing policy makers and industry
leaders to look to natural gas as a preferred fuel source in our
country's energy portfolio. In the U.S. we consume an average of 66 Bcf of natural gas per day. Shale gas has already
boosted our production capability by more than 2 Bcf/day
over the same time last year. The EIA estimated that shale gas
contributed to 16% of our total production in 2009, and projects it
will increase to 26% by 2035.
Despite these benefits, the
debate over hydraulic fracturing is far from over. Industry leaders
and environmentalists will continue to debate the pros and cons of
this drilling technique. Independent Energy Consultants will
continue to follow the issue and attempt to weed out the junk science
and/or propaganda, to give our clients accurate and timely
information from an industry and environmental perspective.
Contact us for all your energy
needs.
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