In their editorial, Due diligence—Drilling regulators should make sure ‘fracking’ in Ohio is done safely, the Dispatch warns that the state should proceed with caution, making sure it understands the process and its risks well enough to protect the environment and the public’s enjoyment of the parks. They warn that the “gold-rush mentality” is troubling and this potential wealth does not come without risk. The editorial warns that we should proceed slowly and learn from the mistakes made by other states involved in harvesting shale gas. Water and air quality are key concerns as well as spills and blowouts at the surface causing ground contamination.
Water purity is a major concern in Pennsylvania where the state has banned the waste water from the fracking process used in drilling horizontal wells from entering their wastewater treatment plants due to major pollution from the known and unknown chemicals used in the process. The water treatment plants can’t handle the influx of chemicals and the water discharged from the plants is polluting the state’s rivers and streams. The Ohio Environmental Protection Agency announced that it also will not allow the waste water to be treated in our water treatment plants leaving the waste from both Pennsylvania and Ohio to be disposed of in underground injection wells. This causes some experts to question whether our state has the capacity to handle all this. In an attempt to slow the influx of waste, the state raised the brine-disposal fee from 5 cents to 20 cents a barrel.
One bright spot is that last year the state did a major revamping of the mining laws giving regulators more authority to insist on safer well construction.
Included in the editorial is a call for regulators to require full disclosure of all chemicals used saying public safety and the environment are at stake. The editorial closes by saying:
Ohio has the benefit of learning from mistakes made in Pennsylvania and elsewhere, but officials still should exercise the caution necessary to avoid making new ones.
Many are eager to reap the financial benefits projected to come from natural gas drilling citing the $128 million Pennsylvania received and $178 million collected by Michigan. However, in a political blog on the Dispatch’s website titled Officials plan to go slow on oil, gas drilling on public lands, Laura Jones, spokeswoman for the Ohio Department of Natural Resources, said, “This will be a very deliberate, very measured process. There will be nothing happening fast.” It is projected that drilling in state parks and public lands won’t begin for at least a year while procedures and approvals are being put in place.
One step will be the creation of a five member Oil and Gas Drilling Commission to oversee drilling on state-owned land and grant leases. This commission may sound good on paper but I predict it will be nothing more than a rubber stamp for state and oil company officials since it is composed of four gubernatorial appointees and only one Natural Resources official. The Ohio Environmental Council, among others, has expressed concern that the bill would give the commission, rather than state agencies that own the land, too much authority to grant drilling leases.
While the commission is being created and rules written, Natural Resources officials are busy researching titles on land parcels to determine whether there are restrictions. House Bill 133, sponsored by Rep. John Adams, R-Sidney, which established the Commission, is designed to allow the process to move as quickly as possible as the rules are promulgated according to Rep. Adams.
Although the drilling companies will eventually nominate the parcels for drilling it is expected the state will do the nominating for the first year.
Sen. Teresa Fedor, D-Toledo, said drilling on public lands “remains unnecessary, unwanted and unsafe,” echoing concerns about how drilling could impact the natural beauty of parks and about the use of a hydraulic fracturing technique on deep shale that could harm groundwater supplies.
But, are we being too eager to capture the golden goose? Are we pursuing only fool’s gold? Some oil and gas company executives and experts are beginning to question the financial feasibility of pursuing the gas buried deep beneath shale deposits.
In an article titled Natural-gas industry: Companies over-hyping wells, some experts say Investors banking on controversial drilling, that appeared in the Dispatch Sunday, June 26, and reprinted from The New York Times, experts express grave doubts. Energy executives, industry lawyers, state geologists and market analysts are skeptical about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of the wells and the size of their reserves. Some are even comparing the frenzy to the dot com bust and fall of the housing bubble.
“Money is pouring in” from investors even though shale gas is “inherently unprofitable,” an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February email. “Reminds you of dot-coms.”
“The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work,” an analyst from IHS Drilling Data, an energy-research company, wrote in an email on Aug. 28, 2009. Company data for more than 10,000 wells in three major shale-gas formations raise further questions about the industry’s prospects. There is undoubtedly a vast amount of gas in the formations. The question remains how affordably it can be extracted.
Industry officials are also expressing environmental concerns. Referring to the fracking process which can require more than a million gallons of water per well, they are saying that if shale gas wells fade faster than expected, energy companies will have to drill more wells or hydrofrack them more often, resulting in more toxic waste.
The information was provided in emails obtained through open-records requests or provided to The New York Times by industry consultants and analysts who say they think the public perception of shale gas does not match reality. Deborah Rogers, a member of the advisory committee of the Federal Reserve Bank of Dallas, remembers saying, “I think we have a big problem” when she first studied well data from shale companies in October 2009 after attending a speech by the chief executive of Chesapeake.
Her research showed that the math wasn’t adding up and the wells were petering out faster than expected. “These wells are depleting so quickly that the operators are in an expensive game of ‘catch-up,'” Rogers wrote in an email on Nov. 17, 2009, to a petroleum geologist in Houston, who wrote back that he agreed.
When the boom began in 2008 oil and gas companies were offering Fort Worth residents as much as $27,500 per acre for signing leases. By late 2008 the recession began and natural gas prices plunged by nearly two-thirds, throwing the drilling companies’ business models into a tailspin. Some company engineers were projecting a well life span to be 20 to 30 years but some federal energy analysts were doubtful based on the wells’ performances.
Given the many hazards and uncertainties surrounding retrieval of natural gas, I once again plead for caution. The fact that many industry insiders and experts are questioning the financial feasibility should make us question the road we are on—it is not too late for a course correction. We do not want to rape, pillage, and plunder our state when there is so much to lose.
- New Jersey Senate Passes Fracking Ban (desmogblog.com)