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U.S. Energy Information Administration

Map of U.S. shale gas and shale oil "plays," meaning areas of interest for exploration (as of May 9, 2011).


Modern day gold rush - States fast track policies for fracking energy resources

by David Kashi
July 12, 2012


Oil and gas companies invade states across the country in hopes of cashing in on newly discovered “black gold.” Some states are eager for the modern day Gold Rush but hurrying to develop policy on the controversial extraction method called hydraulic fracturing, or fracking. 

The U.S. Environment Information Agency (EIA) estimates that 827 trillion cubic feet of natural gas reserves are recoverable. That compares to Saudi Arabia’s natural gas reserves estimated to total about 275 trillion cubic feet, according to the Oil and Natural Gas Journal. 

“We have a supply of natural gas that can last America nearly 100 years,” said President Barak Obama in his 2012 state of the union address.

These formations are so large that experts say the U.S. can now become an exporter of natural gas in the next twenty years.

To put this into perspective, 1 trillion cubic feet of natural gas is enough to heat 15 million homes or to fuel 12 million natural-gas-fired vehicles for one year, according to the EIA.

The U.S. reserves address key national goals for energy independence and security.

Thanks in part to hydraulic fracturing and the ability to drill horizontally, natural gas and oil trapped thousands of feet below the earth’s surface can now be extracted.

Hydraulic fracturing involves some 750 chemicals, some harmless such as salts or citric acid and some extremely toxic ones, such as benzene and lead, according to a congressional report issue in April 2011. The report noted that unexpected components such as instant coffee and walnut hulls appear in the mix.

Water under high pressure and sand also are used in the mix to penetrate shale rock formations that trap the oil and natural gas, almost sponge-like, deep in the earth. 


Using fracking technology to tap newly found energy supplies leaves states across the U.S. debating regulations and oversight policies for fracking.

In Michigan this debate is now taking center stage.

“With energy prices continuing to soar, it is important that we develop diverse energy portfolio that protects Michigan consumers and also creates thousands of energy jobs throughout our state,” stated a report from the Michigan House of Representatives subcommittee on energy and job creation.

At the same time, Michigan is looking for ways to regulate fracking to protect the environment and residents.

“In Michigan, we are fortunate to have a rule-making environment where the Office of Oil, Gas, and Minerals within the DEQ (Department of Environmental Quality), producers and concerned citizens have worked together to make sure Michigan continues to vigorously defend one of our states most valuable resources: our water,” stated the Michigan report, issued in April.

With the unemployment rate in the U.S. at around 8.2 percent, many states can benefit from this industry, which has plenty of room for employment.

“Experts believe this will support more than 600,000 jobs by the end of the decade,” Obama said in State of the Union address.

According to the U.S. Bureau of Labor Statistics, oil and gas workers may not need a high school diploma and the median pay for those workers are about $18.00 per hour.

The northwestern region of North Dakota has seen a rapid increase in drilling. As of July 7, Baker Hughes, a consultant service that counts major oil and gas drilling rigs in the U.S. and Canada, confirmed that there are 196 total rigs that are operational in the state.

Compare this to three years ago when only about 70 rigs were operational.

With such rapid growth, some companies are having trouble finding employees. North Dakota’s unemployment rates have been steady since 2009, ranging from 3 percent to 4 percent.

But an increase in drilling in other states where the unemployment rates are high can help reduce it.

Take Michigan, for instance, where foreign competition and economic downturns hit the thriving car industry.

According to the Bureau of Labor Statistics from 2000 to 2006 Michigan felt the largest decline of any Midwest auto production state.

Some 73,600 jobs were lost, a decline of 32.5 percent. In terms of weekly wages, Michigan auto workers experienced a 13.9 percent decline on average.

Not only can the oil and gas industries bring new jobs to states, they can create a chain reaction in which all parts of states economy can benefit.

The Michigan House of Representatives subcommittee report stated that job creation from oil and natural gas generates $2 billion in economic activity and that it already provides more than 8,000 direct jobs in Michigan.

Yet, the oil and gas industry can’t solve all of Michigan’s economic problems, but they can assure continued strength in the manufacturing industry that has the potential to increase jobs.

“Energy is the root of manufacturing and you need the energy for manufacturing capability,” said Hal Fitch of the Office of Oil, Gas and Minerals for the Department of Environmental Quality in Michigan. “A predictable energy supply is key for manufacturing.”

 

So far Michigan has established and set rules regulated and enforced by the department. State regulation focuses on the protection of property, wildlife and the environment, while ensuring good air quality and the proper disposal of waste from drilling.

Other states are taking action to regulate and even block oil and gas companies from fracking in their states.

For this reason and others, states are now entering a difficult balancing act: Tapping into natural resources, helping the economy and answering to public pressure from conservationists and residents who may be affected by hydraulic fracking.

New York State is struggling with this debate. New York is sitting on a large basin of natural gas deposits right near the border with Pennsylvania.

Tapping into these new finds can help New York significantly reduce energy costs. However, residents in parts of the states are strongly opposed to any type of fracking that can potentially contaminate water supplies, according to New Yorkers Against Fracking, a lobbying site. 

New York is currently studying the impacts of fracking. In an email from the press office of the New York state Department of Environmental Conservation, there are currently no high-volume hydraulic fracturing operation in the state.

“Under state law, once it is determined that SGEIS (Supplemental Generic Environmental Impact Statement) will be conducted,” said Emily DeSantis, director of public information for New York's Department of Environmental Conservation. “No permits can be considered until that process is complete,”

In North Carolina, another state sitting on natural gas reservoirs, the state senate passed legislation to allow fracking recently but it was vetoed by Gov. Bev Purdue, a Democrat.

“It’s disappointing that the leaders in General Assembly would allow fracking without ensuring that adequate protections will be in place for drinking water, landowners, county and municipal governments, and the health and the safety of families in North Carolina,” Purdue said in a statement.

“I hope the General Assembly will re-visit this issue and strengthen the safeguards before fracking begins.”