Oil and Gas Lawyer Blog
Two recent articles brought to mind the trade-offs in the debate over hydraulic fracturing.
First, the Department of Environmental Conservation of New York State issued its Final Supplemental Generic Environmental Impact Statement, on the environmental impacts of allowing hydraulic fracturing in New York. New York has had a moratorium on fracking for the last several years, even though a substantial portion of the Marcellus formation underlies the state. It appears that New York is headed for a permanent ban on the practice.
I haven’t studied the EIS, which runs to several hundred pages. But it is a thorough catalogue and discussion of the environmental impacts of the drilling boom from fracking and horizontal drilling, most of which we know well by now: water use, surface spills, groundwater impacts, waste disposal, air quality, greenhouse gas emissions, health risks, visual impacts on the landscape, truck traffic, seismicity — all are discussed in great detail.
Second, Jude Clemente has published a Forbes article, The Importance of Texas’ Oil and Natural Gas Surge, cataloguing the huge impact on our nation’s economy from the revolution resulting from fracking and horizontal drilling, and Texas’ central role in that story. His opening paragraph:
“The Texas Miracle” is being built on oil and natural gas. Thanks to hydraulic fracturing (“fracking”) coupled with horizontal drilling, Texas crude oil production has tripled since 2010, and gas output is up 15%. Every day, Texas now produces 3.6 million barrels (b/d) of crude oil and about 22 billion cubic feet (Bcf/day) of natural gas. Texas now accounts for nearly 40% of U.S. crude output, compared to less than 20% in mid-2009, and over 30% of our natural gas. Texas is the source of ~55% of the incremental U.S. oil production since 2008 that has transformed the international market. Texas’s shale oil revolution has been launched by the Eagle Ford play in South Texas and the Permian Basin in West Texas, constituting more than two-thirds of U.S. shale output in April. Texas now yields more oil than Iran or Iraq and more natural gas than any nation except Russia and the U.S. as a whole. About half of all rigs actively exploring for or producing oil in the U.S. sit in Texas.
Texas is the reason we now hear about “energy independence” in the US. Jude continues:
Texas has no state income tax, low corporate taxes, reduced costs, and a legal system that encourages free enterprise. In some recent years, Texas has accounted for 70% or more of all new jobs created in the country. Texas has one of the lowest unemployment rates at 4.2%, compared to 5.5% nationally. The Texas unemployment rate has been at or below the national rate for well over eight years. Texas’ personal income was up 5.6% in 2014, 5th nationally. Since 2000, Texas has created 2.1 million jobs, that’s more than double any other state. Led by oil and gas, in 2014, Texas was ranked the number one state by export revenues for the 13th year in a row. Gasoline, diesel, and other refined product exports have soared five-fold since 2009, hitting $65 billion last year. Petrochemical sales added some $13 billion, and propane and natural gas exports brought in another $10 billion. Fast-growing Mexico is Texas’ top trading partner, taking 36% of Texas’$290 billion in 2014 exports and nearly 2 Bcf/day of gas.
So, take your choice. Such success comes with a cost. The Texas legislature just passed HB 40, severely limiting how municipalities can regulate drilling within their borders. Texas clearly comes down on the side of the economic advantages that come from its abundance of natural resources. One result is truck traffic, significant demands on its dwindling groundwater, increased air emissions, health risks, seismicity, and so on. We’re used to it in Texas, as long as we get our royalty check.