Fracking: A Boom or Bust Decision for New York by Chris Faulkner, President and CEO Breitling Oil and Gas New York NY (SPX) Jan 15, 2013
Debate over whether New York should allow hydraulic fracturing has heated up in the past month, fueled by a 30-day public comment period before Governor Andrew Cuomo decides whether to lift the moratorium on the practice and the Department of Environmental Conservation (DEC) meets its deadline for finalizing fracking regulations in mid-February.
The sound and the fury over fracking have been ratcheted up by misleading and inaccurate documentaries like “Gasland” and big Hollywood productions like “Promised Land,” producing an anti- fracking sentiment among many people who don’t actually know much about the practice. The internet is replete with half-baked theories about the environmental dangers of fracking and junk “science” that is often untraceable to a credible source.
New York could be next boom state All this furor is over the oil and gas reserves trapped in the Marcellus shale that lies beneath New York, Pennsylvania, West Virginia and Ohio. Pennsylvania and New York sit atop the most productive sections of the Marcellus shale, and Pennsylvania is already profiting richly from allowing oil and gas companies to drill using fracking techniques. The natural gas industry alone has invested more than $4 billion in Pennsylvania leases, land acquisitions and infrastructure development, creating 13,500 direct and indirect jobs in 2009 and expecting to create as many as 211,000 jobs. Penn State estimated that the gas industry generates a value-added increase in spending of more than $1 billion. State and local tax revenues gained more than $1 billion in 2009.
New York homeowners could receive $5,000 per acre, plus royalties of 12 percent to 20 percent, by leasing land to gas companies, and the state could reap more than $1 billion in state and local tax revenues from natural gas drilling, according to the Manhattan Institute. It’s no wonder that a recent poll by Siena College revealed that about 42 percent of New Yorkers support fracking (36 percent oppose it). But New York has placed a moratorium on the practice, allowing time to observe the impacts in Pennsylvania and gather more data.
Muddy waters stirring controversy, causing delays Part of the problem for Governor Cuomo and others wrestling with fracking issues is that
much of the data is conflicting and sometimes suspected of industry influence. The EPA began a new study in November of 2011 for precisely that reason, having found that other studies conducted to date are inconclusive or incomplete or have come under scrutiny for suspected industry influence. This has been a problem for all concerned, serving only to fan the flames of controversy and stall progress toward a sound regulatory structure for fracking.
In the meantime, the New York DEC issued a report (currently closed to the public) summarizing previous research on the effects of fracking on the environment. According to The New York Times, the report concludes that “by implementing the proposed mitigation measures the Department expects that human chemical exposures during normal [hydraulic fracturing] operations will be prevented or reduced below significant health concern.”
Other studies have reached similar conclusions. The Energy Institute at the University of Texas at Austin, for example, published a report last February titled “Fact-Based Regulation for Environmental Protection in Shale Gas Development.” The authors conducted an exhaustive study of the claims versus the facts, concluding that there is little actual evidence of risk to aquifers: “None of the water well claims involve hydraulic fracturing fluid additives, and none of these constituents has been found by chemical testing of water wells.”
Even environmental groups have come up short of verifying the anti-fracking claims. For example, the Pacific Institute, a nonprofit organization whose stated purpose is to “create a healthier planet and sustainable communities,” tackled the question of fracking’s impact on water resources. Its June 2012 report noted that while there are numerous anecdotal accounts of polluted water sources and/or adverse health effects caused by suspected fracking pollutants, “Most significantly, a lack of credible and comprehensive data and information is a major impediment to identify or clearly assess the key water-related risks associated with hydraulic fracturing and to develop sound policies to minimize those risks…the discourse around the issue is largely driven by opinion.”
Journalists like Sci-Tech-Today reporter Kevin Begos have also attempted to find evidence supporting the dramatic accounts of health problems stemming from nearby gas wells. In his July 23 article investigating claims made by environmental groups and Josh Fox, the maker of the anti-fracking documentary “Gasland,” in a letter to New York Governor Andrew Cuomo, Begos was unable to get any form of confirmation from researchers at the University of Texas Southwestern Medical Center, the Texas Cancer Registry, or Susan G. Komen for the Cure.
Industry actually profits from environmentally safe practices One of the assumptions of fracking opponents is that the oil industry is ignoring environmental safety in the pursuit of profit. What they tend to overlook is the fact that adoption of greener fracking practices will have minimal impact on profits and, in some cases, may actually increase profits. Translation: oil companies have profit incentive to observe environmentally friendly practices.
Reducing methane emissions, for example, actually increases profits because methane is natural gas. It’s in the industry’s best interest to find leaks and capture the escaping methane, which is also in the planet’s best interest.
This is an area where, again, the studies don’t agree as to the actual amount of methane escaping into the environment from fracking operations. MIT recently released a study showing that fracking produces a scant fraction more methane into the air than conventional gas drilling. Other research published in the Journal of Geophysical Research suggested that twice as much
methane is leaking into the environment as the rate reported by the industry. Whatever the actual amount, the EPA released new rules last April to reduce the amount of methane gas that escapes during fracking by 25 percent, and the bottom line remains the same: rig operators can increase profits by more efficiently capturing the methane. Oil and gas companies are working on improved methods for methane capture and leak prevention, including simple measures like installing heat tracers on control valves to prevent freezing that allows leakage.
Responsiveness is good business Like any smart business, oil and gas companies adapt to the regulatory, market and physical environment in with they operate. Despite the lack of data supporting fracking opponents’ claims of adverse environmental and health impacts linked to the chemical additives used in fracking, oil and gas companies are sensitive to the concerns regarding fracking chemicals and have long been working on fracking “recipes” that are safer for all concerned.
Halliburton is even touting a new “food-based” fracking fluid so safe that the CEO introduced it at an industry conference by sipping it in front of an audience. Others in the industry are developing their own fracking recipes replacing toxic chemicals with food-grade additives to ensure safety.
Oil and gas companies big into recycling Bet you didn’t know that oil and gas companies are looking for better ways to recycle. That’s because water is a big issue in fracking, especially after the last couple years of drought.
Environmentalists worry about the amount of water used in fracking, as well as the proper storage and disposal of polluted flowback water. Oil and gas companies worry about those issues, too, albeit from more of a logistical and profit-centric perspective.
The result, however, is the same – both sides want to reduce the amount of water used and develop better ways to either use the waste byproduct or safely dispose of it. Carbon dioxide and nitrogen processes that use a fraction of the water have been tested by oil and gas companies, as well as closed loop drilling and other methods for recycling the water used in fracking.
At present, more than 16 percent of water used in Marcellus shale fracking operations is being recycled, and the practice is growing.
The environmental impacts of fracking can be effectively curtailed through a combination of technology innovation and smart regulation. Federal and state legislators are looking at ways to regulate fracking procedures. With the cooperation of the oil and gas industry, New York can put smart regulations in place that will protect its citizens and the environment while creating an economic boom that will benefit the entire state.
Chris Faulkner is the Founder, President and CEO of Breitling Oil and Gas, an independent oil and natural gas company based in Irving, Texas. With diverse and extensive experience in all aspects of the oil and gas industry in North America, Europe and the Middle East, Mr. Faulkner is an advisor to the ECF Asia Shale Committee and sits on the Board of Directors for the North Texas Commission.