Energy in Depth

Energy in Depth: Today’s News

The State Journal (WV): Officials Hope Brine Pilot Project Helps Other Cities. “A pilot project that allows a Clarksburg wastewater treatment plant to accept gas well drilling brine could lead to other municipal systems making money from the Marcellus gas boom. After months of study, the state Department of Environmental Protection soon may recommend permit modifications for a Clarksburg wastewater treatment plant that is accepting gas well drilling brine. It’s a pilot project that Plant Manager Bill Goodwin hopes will help other municipal systems make money from the Marcellus gas boom. ‘It keeps everybody’s rates down,’ Goodwin said. ‘We have a $1.5 million budget. This is generating between $200,000 and $400,000,’ he said.”

Oil & Gas Journal: EIA Global Outlook Sees More use of Unconventional Fuel Sources. The US Energy Information Administration reported in its International Energy Outlook that unconventional sources including biofuels could provide nearly half of the growth in global liquid fuel supplies in the coming decades. “Unconventional gas production from both tight sand and shale formations could increase from 47% of the US total in 2006 to 56% in 2030,” the report continued. “There’s no question that the gas growth we see in the US from tight sands and shale depends on hydraulic fracturing. If that’s taken off the table, the impact would be profound,” Acting EIA Administrator Howard K. Gruenspecht said.

Wellsboro Gazette: Gas Could Fuel Hotel Boom. It’s getting harder and harder to find a hotel room in the gas producing areas of the Marcellus. As gas production activities grow, the need will become even greater. Fortuna Energy Inc. is expanding activities in the area, and its spokesperson says the company is having difficulties finding places for its workers to stay.

Energy in Depth: Today’s News

Shreveport Times: Bossier City Planning to Build Public, Natural Gas Pumps. “As gas prices creep up slowly, Bossier City officials are working to get natural gas pumps in the city for the public,” reports the Shreveport Times. “While city vehicles prepare to run on natural gas, [Mayor] Walker said he would like to then see two additional pumps added, one in the northern part of the city, and one in the southern part, ready to be used for public vehicles. Besides natural gas pumps, the city envisions making these pumping stations ready to dispense at least ethanol fuels in addition to natural gas, said Rodney Oar, director of Fleet Services for Bossier City.”

The Daily Review (Upstate, NY): Informational Meeting to be Held on Natural Gas Development in County. The Marcellus Shale Committee will hold a community information session from 6:30 p.m. to 8:30 p.m. on Wednesday, June 3, in Troy, New York.

Energy in Depth Issue Alert: Issue: Rep. Hinchey, EPA Administrator Jackson, HF, SDWA

On Tuesday, May 19, the office of U.S. Rep. Maurice Hinchey (D-N.Y.) issued a press release subsequent to a hearing of the House Interior Appropriations Subcommittee suggesting the congressman had gotten EPA administrator Lisa Jackson to “acknowledge” the need for her agency “to reexamine the Bush administration’s misguided views on the risks associated with hydraulic fracturing.”

Context

In 2005, Congress passed (with the vote of then-Sen. Barack Obama) the Energy Policy Act, a key provision of which sought to clarify Congress’s historical intent on whether the Safe Drinking Water Act (SDWA) of 1974 was ever designed to regulate hydraulic fracturing.

The answer was no, and in this case, history proved an effective guide: When SDWA was passed in 1974, hydraulic fracturing had already been in use for 25 years. Hydraulic fracturing was never considered for inclusion under SDWA jurisdiction at the time. The Act was amended in 1986, and then again in 1996. At no point in the process was the concept of SDWA regulation over fracturing ever considered a necessity – or even a possibility.

Subtext

Hydraulic fracturing is a commonly used, and increasingly critical, technology for finding and developing oil and gas resources trapped below rock that would otherwise be too deep, too hard and too expensive to access. The technique has been deployed more than a million times over the past 60 years, delivering to the American people more than 600 trillion cubic feet of American natural gas and seven billions barrels of American oil.

In 2008, a report issued by professors from Pennsylvania and New York suggested that the Marcellus Shale formation, a unit of sedimentary rock spread across much of the Appalachian Basin, could contain 516 trillion cubic feet of natural gas – enough to heat more than 60 million homes for 160 years. Without hydraulic fracturing, these resources cannot be feasibly or economically produced.

Politics

Those who oppose the responsible development of American energy have seized on hydraulic fracturing as a means of blocking reasonable access to, and production of, domestic energy resources. The centerpiece of their campaign appears to be focused on blaming hydraulic fracturing for everything from exploding houses in Ohio, to flammable water in Colorado, to hard water deposits in New York (each of these accusations, and others, are debunked here).

Despite these claims, hydraulic fracturing continues to be aggressively regulated by the states, and has compiled an unparalleled record of safety over the 60 years since its first commercial use.

Economic Impacts

More recently, legislation co-sponsored by Rep. Hinchey has sought to destroy this existing state-federal regulatory partnership in favor of an EPA-only approach. Were this and other restrictive regulatory measures to come to pass, a recent analysis showed it could result in the forced closure of more than half of America’s oil wells, a third of its gas wells, cost the federal government $4 billion in lost revenue, slash American oil production by 183,000 barrels per day, and natural gas by 245 billion cubic feet per year.

EPA on Record

In 1995, then-EPA administrator Carol Browner (currently the president’s energy and environment czar) wrote that that her agency saw “no evidence” that hydraulic fracturing “has resulted in any contamination or endangerment of underground sources of drinking water (USDW).”

“Moreover,” she added, “given the horizontal and vertical distance between the drinking water well and the closest gas production wells, the possibility of contamination or endangerment of USDWs in the area is extremely remote.”

In 2004, EPA issued a landmark report examining the question of safety as it relates to hydraulic fracturing, finding “the injection of hydraulic fracturing fluids” poses “minimal threat to USDWs.” In arriving at that conclusion, EPA stated it had “reviewed more than 200 peer-reviewed publications, other research, and public comments.”

States on Record

Recognizing that hydraulic fracturing is both a safe technology and a key driver of local economic development, states such as Alabama, Louisiana, North Dakota, Utah, Wyoming, Oklahoma and Texas have recently taken up or passed resolutions informing Congress and EPA that the current regulatory relationship is working well, and that efforts to disrupt it could produce serious and long-term consequences.

In New Mexico, former U.S. Energy Secretary and current Governor Bill Richardson introduced a plan in February aimed at easing unnecessary compliance burdens, recognizing that thousands of jobs and millions in potential revenue were tied to safe, responsible, state-regulated natural gas and oil production.

Statement from Lee Fuller, policy director for Energy In Depth

“Those familiar with the history surrounding the passage and amendment of the Safe Drinking Water Act understand what this measure was intended to do, and what it clearly was not. Unfortunately, instead of taking on the issue of responsible energy development candidly and on its merits, opponents of natural resource development have decided to target the essential tools needed to safely and efficiently bring this energy to market.”

States to U.S. Congress: Hands Off Hydraulic Fracturing

As Waxman, DeGette consider handing regulatory reins over to EPA,state legislatures speak up in support for maintaining,strengthening current state-federal partnership

WASHINGTON, DC – As their federal counterparts in Washington, D.C. look for new and creative ways to restrict the responsible use of a critical natural gas and oil extraction technique known as hydraulic fracturing, states with decades of experience in regulating the technology are not taking the effort lying down.

Earlier this week, the Louisiana House became the latest in a string of legislatures where resolutions affirming the chamber’s support for hydraulic fracturing – or opposition to Congress’s effort to disrupt the current partnership – were either formally filed or broadly approved. Many of these states have effectively regulated fracturing activities for more than a half century, and stand to lose the most – in jobs, revenue, royalties and energy output – should EPA be given regulatory authority over the proven technology. To learn more specifics about hydraulic fracturing technology, click here.

“If hydraulic fracturing were unsafe, unregulated, and largely unnecessary as a tool of producing American energy, Congress would have a good reason to step in, and states would have an even better one to step out,” said Lee Fuller, a spokesman for Energy In Depth, a new coalition of American oil and natural gas trade groups. “Clearly, that is not the case. And that’s why you’ve seen states from the Southeast to the Intermountain West stand up, shoulder-to-shoulder, and affirm their support for this safe, critical and increasingly valuable well stimulation technology”.

The latest effort out of Baton Rouge, La. was introduced by Rep. Joe Harrison, R-Napoleonville, and calls on Congress to maintain a provision in existing federal law preserving Congress’s intent not to regulate hydraulic fracturing under the Safe Drinking Water Act (SDWA) of 1974, legislation designed to protect public water supplies. In 1974, hydraulic fracturing had already been in commercial use for 25 years. At no time during its deliberation, nor in subsequent debates on amendments to SDWA in 1986 and 1996, was the concept of regulating hydraulic fracturing under SDWA ever a consideration.

The reason? Hydraulic fracturing was then, and continues to be now, aggressively regulated by the states, compiling an impressive record of safety and performance over that time. More than 60 years after its first commercial use, not a single case of hydraulic fracturing-related contamination has been documented by the federal government. In fact, a landmark 2004 study conducted by EPA found that hydraulic fracturing posed “no threat” to underground drinking water supplies.

Because of that, other states – such as Alabama, North Dakota, Utah, Wyoming, Oklahoma and Texas – have taken up or passed resolutions similar to the one being considered in Louisiana. In New Mexico, former U.S. Energy Secretary and current Governor Bill Richardson introduced a plan in February aimed at easing unnecessary compliance burdens, recognizing that thousands of jobs and millions in potential revenue were tied to safe, responsible, state-regulated natural gas and oil production.

Those conclusions are supported in full by a recent set of studies known collectively as Project BRIEF (Bringing Real Information on Energy Forward), commissioned by the Energy in Depth coalition. In particular, BRIEF found that proposed changes to federal regulations, including those related to hydraulic fracturing, could result in:

• The forced closure of more than half of America’s oil wells, and a third of its gas wells
• $4 billion in lost revenue to the federal government; state treasuries would lose $785 million
• Domestic oil production slashed by 183,000 barrels per day; natural gas by 245 billion cubic feet per year

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Energy in Depth: Today’s News

Times-Union (Albany): The Key to Cleaner Future of Energy. Jerry R. Simmons, Executive Director of the National Association of Royalty Owners, writes on the benefits of natural gas production to property owners. He also outlines the practice’s safety record, pointing the Ground Water Protection Council, and more.

Planet Gore (National Review On-Line): Fractured Thinking. Chris Horner writes an extensive post on hydraulic fracturing and Rep. Dianna DeGette’s plans to insert legislation regulating the practice into the Waxman-Markey climate control bill.

The Greenwood Commonwealth (Mississippi): Bias Against Oil is Dangerous. In an editorial, The Greenwood Commonwealth writes against the attacks on the domestic oil and gas industry coming from Washington.

Tri-County Courier Express: Gas Wells on DuBois’ Reservoir Watershed? DuBois, Pennsylvania “is still exploring the option of drilling gas wells at the Anderson Creek Reservoir.” “We are looking forward to this venture because it will help the city out financially,” said Mayor John “Herm” Suplizio. “Suplizio said the city owns gas and oil rights to 2,000 acres. He said the city could lease all 2,000 acres and receive $500 per acre, which translates into $1 million. The city could also receive 15 percent in royalties for the gas.”

Energy in Depth: Today’s News

Shreveport Times: Report: Haynesville Shale Means Billions in New Business, Spending and Thousands of Jobs. A new study, “Economic Impact of the Haynesville Shale on the Louisiana Economy in 2008,” prepared by Loren C. Scott and Associates of Baton Rouge for the Louisiana Natural Resources Department, has concluded that natural gas activity has provided a major boost to the local economy. The report found that due to energy activity: “about $2.4 billion in business sales have been created in the state, nearly $3.9 billion in household earnings were created, including almost $3.2 billion in lease and royalty payments to private landowners… about 32,742 jobs were created, equal to slightly more than the total employment of all of Louisiana’s banks and credit unions, and state and local sales tax revenue increased by at least $153.3 million, with Red River Parish reporting tax collections up 300 percent in the first quarter of this year.” The report also said “our impact estimates understate the total infusion of new money in the state’s economy and, in turn, understate the true impacts on business sales, household earnings and employment in the state.”

Potential Hydraulic Fracturing Legislation Now Has a Sponsor

Rumors are circling around Washington that an amendment seeking to give EPA authority over the regulation of hydraulic fracturing will soon be added to massive climate change legislation sponsored by Congressman Henry Waxman of California and Ed Markey of Massachusetts. It appears the amendment’s author will be Congresswoman Diana DeGette of Colorado, who sponsored similar legislation in the last Congress (H.R. 7231).

 The Colorado Independent reports:

U.S. Rep. Diana DeGette is leading the charge to increase federal oversight of the nation’s natural gas industry, reintroducing a bill that specifically targets a process called hydraulic fracturing.

DeGette and hydraulic fracturing detractors claim the practice harms the environment and is damaging to public health. But Energy in Depth readers (and the EPA) know that’s not the case-and that states already effectively regulate hydraulic fracturing.

The fluids used in the process are more than 95 percent water, and fracturing activities take place thousands of feet below the water table. What’s more, extensive precautions are taken to case wells near the surface to prevent any leakage of fracturing fluid, oil or natural gas.

And while the Independent refers to highlighting the economic consequences of eliminating this safe engineering practice as an industry “tactic,” we’re sure the hundreds of thousands of Americans whose jobs rely on hydraulic fracturing might think differently.

Here are the facts:

• Hydraulic fracturing is responsible for 30 percent of our domestic recoverable oil and natural gas, and has aided in the extraction of more than seven billion barrels of oil and 600 trillion cubic feet of natural gas.
• Up to 90 percent of the wells currently operating today have been fraced, and in the future, 60 to 80 percent of new wells may have to undergo fracturing in order to remain viable.
• In 2007, $226 billion was invested in domestic exploration and production. Those investments drive economic growth, support local businesses and keep Americans working. Royalties paid by producers totaled $30 billion in 2007, and billions were paid to federal and local governments in the form of severance and income taxes.
• Hydraulic fracturing accounts for a significant portion of the total economic activity attributable to domestic energy production. More than 300,000 Americans are employed in the exploration and production of domestic oil and natural gas.

What’s more, regulating hydraulic fracturing out of existence would have disastrous economic consequences, including the loss of thousands of jobs, billions in government revenue and the closure of 150,000 natural gas wells.

America can’t afford to unnecessarily curb domestic energy production and destroy jobs-and the DeGette amendment would do just that.

Energy in Depth: Today’s News

The Progress (PA): Township Officials Gather for Their Annual Spring Convention. Representatives of 30 townships came together at the Clearfield County Association of Township Officials annual meeting last week. Natural gas activities in the Marcellus were widely discussed. It was reported that a countywide Marcellus Shale Task Force Committee is being formed, which “will serve as a clearinghouse for information and promote the positive effects of gas development.”

PittsburghLive.com: Natural Gas Processing Plant Operational in Washington County. “A Washington County plant that will process natural gas taken from the Marcellus Shale formation in Southwest Pennsylvania and Northern West Virginia now is operational.” The plant can process 30 million cubic feet of natural gas daily. The plant’s opening was also reported in the Houston Chronicle.

American Daily Review: Case for Biofuels Weakens Further. American Daily Review’s Dennis Avery writes that while America continues to depend on foreign oil and biofuels do not appear to be the solution, “the U.S. is gaining energy independence in one area-the huge amounts of modestly priced natural gas, from shale, that are now hitting the market…We’re producing the shale gas with computer-guided horizontal drilling, then ‘frakking’ the shale layers with high-pressure liquids and sand to release more gas. Hugely productive new fields are being developed: Texas (the Barnett shale); Louisiana (the Haynesfield shale); and across Appalachia, from western New York clear down through West Virginia (the Marcellus shale)… We can use the same drilling technology for the 400 billion barrels of light, sweet crude oil in the Bakken shale formation that underlies the Dakotas, Montana, and Saskatchewan.”

A Taxing Debate

A story out of Pennsylvania today (which ran in several papers throughout the state) lays out the case that Governor Ed Rendell has been making for imposing new taxes on natural gas development in the Marcellus Shale — a 365 million-year-old layer of rock that underlies 54 of Pennsylvania’s 67 counties (and may hold more than $1 trillion worth of gas).

The governor’s position? Pennsylvania is an economic mess right now, and slapping new taxes on Marcellus Shale development could help generate $632 million for the state in just four years. But there’s a problem – from the Philadelphia Inquirer today:

“Virtually all of the Marcellus wells are still in the exploratory stage, with only one in southwestern Pennsylvania sending gas into a production pipeline.”

$632 million from a single producing pad? Maybe if were mining gold bullion instead of natural gas. Anyone else have anything else to say about that figure?

Stephen Rhoads, president of the Pennsylvania Oil and Gas Association, opposes the tax, calling Rendell’s numbers “a complete fantasy,” claiming a tax would yield less than $40 million.  He said the tax would also hit landowners as well as drillers, and disputed poll numbers that show the state’s residents support the tax.

Where did the Rendell administration come up with these numbers? Who’s been providing him the air support he needs to make these outlandish claims to the public, the legislature, and the press?

The Pennsylvania Budget and Policy Center, in a report released late last month, supported the governor’s proposal, saying severance taxes are common across the United States as a way to cover the public costs – most notably environmental ones – created by resource extraction.

However, the Pennsylvania Budget and Policy Center (PBPC) is a regional offshoot of the Center on Budget and Policy Priorities, a Washington, D.C.-based organization that advocates for larger, more expansive government and higher taxes, no matter what the issue.

If Gov. Rendell were trying to advance a tax on lollipops, you could bet PBPC would support it. And likely work up a quick study suggesting it generate a billion in revenue, and a trillion dollar savings in health care (no more trips to the dentist!)

Still, PBPC occasionally finds its way into energy-related issues now and then, recently coming out in strong opposition to energy exploration in and among a small portion of the state’s forest areas. How could producing more of our nation’s energy – and collecting the fees and taxes associated with it – be a bad plan from a budgetary perspective? It’s not. Too bad an outfit that touts itself as a “budget and policy center” can’t realize it.