Fracking the Flatirons by Photo Credit: jdial
Here in the Saudi Arabia of natural gas, a '100-year supply of shale reserves' is ours for the taking. That's what the U.S. Energy Information Association tells us, says Charles Davis, an avuncular professor of political science from Colorado State University. All we have to do is assume the position.
For the east coast, the fracking 'boom' came early. Horizontal drilling had been polished (I wouldn't say perfected) in the Gulf of Mexico. The vertical-to-horizontal fracking process now dominating the scene is the same on- or offshore. In Colorado, the years 2000 to 2010 saw drilling, but mainly for coal-bed methane, which collects in coal seams. There was trouble even then when property owners started to realize that their rights ended practically beneath the soles of their feet, but more was coming.
In 2011 In 2011 unconventional fracking in effect uncovered the Niobrara shale underlying most of Colorado's Front Range. As in other shale-bearing areas to the east, officials of every persuasion scrambled to decide how best to exploit this energetic debutante. Seduced by the glittering specter of Energy Independence many gave their all to the extraction industry, and now some are aghast at what those unions begat (we'll get to Garfield County next week).
What They Learn by Mike Stanfill
Before 2005 the U.S. Environmental Protection Agency had the ability to oversee certain environmental standards over fracking, but then the Energy Policy Act, which was abetted in its passage by then-Senator Obama's yea, exempted fracking from EPA enforcement of clean and safe drinking water. The oil and gas industry now stands alone, Davis tells us, having in effect been disjoined from other energy industries.
The federal-level attempt to address the 'Halliburton Loophole', as it came to be known, was the ill-fated Fracturing Responsibility and Awareness of Chemicals Act--the FRAC Act--introduced in 2008, proposed in 2009, and obliterated in 2011 in the Republican-controlled House of Representatives. As I mentioned last week, the EPA has announced that its study of the safety of hydraulic fracturing, due now in 2014, will be devoid of any mention of air-quality impacts. Let's see--After its oversight of water in the fracking process is removed, EPA magnanimously recuses its oversight of air. How pliant of the agency.
Meanwhile the gas rush gushes, and the U.S. Bureau of Land Management dives right in. Yes, recently released BLM rules strengthen its leasing oversight somewhat, requiring, among other things, that all chemicals used in fracking be disclosed publicly after fracking of a given well is done. (Does that mean after each frack or after all fracks?) In any event, these rules having done their job to the satisfaction of the BLM, it now hastens to lease public lands to oil and gas factions and, as of a year ago, had leased to O&G interests some 10 percent of the state of Colorado. These leases are good for ten years and are thus in effect sales to industry of public lands.
The BLM has been equally zealous in the east. There, all forest acreage leased since 2011 (but for about 10 percent in Alabama) lies over shale deposits. From 2011 to mid-2012, the federal government leased or scheduled for auction more than 10 times as much land (384,000 acres) as it had leased in the two years preceding. While private land over shale deposits can sell for thousands of dollars an acre, the mineral rights in 2012 BLM leases in eastern U.S. averaged $47 per acre (a somewhat better showing than its two-dollars-per-acre handouts in the west).The States?
How fare the states in monitoring the gas rush? Fifty states, fifty potential responses. From an industry perspective, the resulting hodgepodge, far from being daunting, is pure delight. That's because of competition, both inter- and intrastate. There is what Davis calls a 'state structural bias' favoring development over environmental protection, as the former introduces money into a state instead of draining it. There lies one potent rationale for accepting the caress of industry.
Some steps have been taken to keep those caresses in line. Since 1935 states have regulated the oil and gas industry via the Interstate Oil Compact, an organization joined by the governors of 30 member and eight associate states. This sat well with O&G companies, who quailed before federal regs. The Compact, which has no enforcement powers, initially aimed to conserve oil and natural gas and minimize waste, but eventually its focus expanded to include protecting human and environmental health. However, such focus becomes fuzzy when, as happens, the same agency is charged with both regulating and promoting development.
If the gas rush needs a poster child Pennsylvania serves. The largest natural gas-producing state, it's perched atop the largest-known gas reservoir in the country, the Marcellus Shale formation. Like many poster children, Pennsylvania has seen some abuse. In the years since intense drilling activity began there and unlike its sister states, Pennsylvania has imposed no levies and no severance taxes on the O&G industry. (Even tax-hating Texas has a severance tax.)
Now, however, Davis said, Governor Tom Corbett is expected to sign a bill that at last extracts some payback for environmental depredations. The bill will increase penalties for violations and require set-backs, inspections, and air-quality reports. In exchange for the pain of paying, the industry initially sought to prevent any regulation of drilling activity by municipalities. Legislators balked, so the industry settled for this: As long as set-back requirements are observed, municipalities must allow drilling anywhere, including residential zones. Drove a hard bargain, those legislators. Democratic State Representative Scott Conklin called the bill's provisions a form of "corporate eminent domain".
In Colorado, the state government declared that it alone has the right to regulate the O&G industry. What it really seeks to regulate, it seems, is lower rungs of government. Which brings us to Longmont.Your Mayor?
Can municipalities keep drillers from 'dozing their playgrounds? Uneasy with drilling activities pervading the plains, Longmont was the first city in Colorado to ban fracking in town. It was promptly sued by the state's regulatory committee, the Colorado Oil and Gas Conservation Commission, which charges that the city's regulations surpass those of the state, which is a no-no. The governor was quick to fulminate as well. A few months later, after undeterred Longmont voters added the ban to the city's charter, Colorado Oil and Gas Association filed another suit, and the principal O&G-drilling company in the area has asked to intervene in that one. Although the state has not in fact joined the fray, Governor John Hickenlooper, a geologist himself, pledged state support for any O&G company that litigates. Nevertheless, two other Colorado cities soon followed suit, in a manner of speaking.
In 1992 the Colorado Supreme Court ruled that localities cannot outright ban drilling. If Colorado counties and cities want to try their hands at regulating, says the state, those regs must be in 'harmony' with state regs and cannot add provisions that might deplete industry profit. But, according to the state constitution, Colorado is a local home-rule state. Where voters have so chartered, municipalities have the right to local self-governance. It is complicated.
Descrying signs of mutiny, Hickenlooper sought a more moderate stance. He acknowledged that, while the threat of unbridled O&G expansion might make some folks uncomfortable, not to be forgot are the rights of those who own the underground. For in Colorado, as in other states, the divide between surface land and underground resources 'splits the estate'. Let property owners beware.