To Frack or Not to Frack:A Workplace Issue

By Greg Byerly, Ace Employee

Scenario• My new boss owns a cabin and 20+ acres in rural Carroll

County in Ohio. His neighbor called and told him that a drilling company wants to buy the oil and gas rights to the land under all of the cabins in their community.

• He’s already noticed that some wells have already been drilled in the area. It involves something called “fracking” and apparently involves some sort of horizontal drilling.

• Beta Oil Inc. has offered $4,000 per acre for the gas and oil rights. Many of the other cabin owners have already signed a contract. There will also be annual royalties. Alpha Oil has only paid $2,000 per acre.

• His neighbor says, “they can get your gas even if you don’t sign a contract, by drilling horizontally under your land – so, you might as well get the money!”

Example: Topic [“Gas Drilling”] [continued]

• Beta Oil Inc. has offered $4,000 per acre for the gas and oil rights. Many of the other cabin owners have already signed a contract. There will also be annual royalties. Alpha Oil has only paid $2,000 per acre.

• My boss’ neighbors say, “they can get your gas even if you don’t sign a contract, by drilling horizontally under your land – so, you might as well get the money!”

• He also told me, confidentially, that the company also owns over 500 acres of land in another part of Carroll County….

• He asked me, as a recent college graduate, to do some quick research on oil and gas rights, drilling, leases, etc. He wants to know if it’s worth pursuing or thinking about.

RESEARCH QUESTION

Should rural landowners sell or lease their mineral rights to permit drilling for

gas and oil using fracking?

What are the potential impacts -- short and long-term, good or bad -- on the environment, energy independence,

agriculture, the community?

What is “Fracking”?How Does it Work?

• According to the EPA, hydraulic fracturing (commonly known as fracking) is a well stimulation process used by the oil and gas industry to extract underground resources (such as oil, natural gas, geothermal energy, and water).

• “Hydraulic fracturing involves pumping water, sand, and some trace chemicals under high pressure into a completed wellbore to create fissures in relatively impermeable geologic formations such as shale.

• The fissures allow oil or natural gas to flow into the well. The sand props the fissures open, preventing the resealing of pathways.

• Combined with horizontal drilling at depths of one to more than two miles below the earth’s surface, hydraulic fracturing has unlocked vast stores of natural gas.”

Why is Fracking being used?Where is being used?• Fracking is a new way to get gas

and oil from geological formations (e.g., Marcellus Shale) that earlier methods of drilling could not reach. – It utilizes “horizontal drilling.”

• Originally done in Oklahoma and Texas by Halliburton starting in the 1960s, but recently has expanded into other states, most notably in Marcellus Shale in New York, Pennsylvania and Ohio.

Why is it so controversial?

• Extremely divisive issue– Big companies vs. environmentalists– Need for energy vs. potential harmful effects– Previous accidents and disasters– Impact on rural communities and farms &

agriculture– Large amounts of money involved

Fractured State of Fracking Today

Anti-Fracking Groups

IndustryProponents

PUBLICOPINION

Government Studies/Agencies

Government Proponents

Industry Proponents

• Economic Growth – Benefits local economies– Tax revenue for local, state, and national government

• Jobs & Employment– High-paying jobs for Americans

• Lease payments and royalties for land owners• Energy Independence• Natural gas is environment-friendly• Drilling is safe

Industry ProponentsVideos Worth Viewing & Websites to Visit

Anti-Fracking Groups

• Environmental Concerns– Ground water pollution & water contamination– Mishandling of waste water generated by fracking– Chemicals used reach the surface, containment pools leak– Lower air quality– Possible cause of earthquakes

• Health Concerns– Polluted drinking water– Possible arsenic contamination and radiation risks

• Impact on rural communities and farms & agriculture

Anti-Fracking GroupsVideos Worth Viewing

Government Proponents

• Revenue!• Jobs!

Over the next four years, shale is expected to create more than 200,000 jobs in Ohio and bring in nearly half a billion dollars in additional revenue to the state.

-- Rob Nichols, Spokesperson for Ohio Governor Kasich

Ohio is not going to walk away from a potential industry.-- Ohio Governor John Kasich

Government Studies/Agencies

• In 2004 the EPA concluded that fracturing presented "little or no threat" to drinking water.”

• In 2010 Congress directed the EPA to “study the relationship between hydraulic fracturing and drinking water”– EPA noted: “Serious concerns have been raised by citizens and

their representatives about the potential impact of hydraulic fracturing on drinking water, human health and the environment. These concerns demand further study. “

– A Study Plan was released on November 3, 2011. Initial study results are expected by the end of 2012, with an additional report in 2014.

Government Studies/AgenciesConflicting, Contradicting and Non-Conclusive

• Energy Department vs. Environmental Protection Agency• Oil & Gas Industry vs. Environmentalists

– Lobbyists vs. Lobbyists

• State Regulations & Laws vs. Federal Regulations & Laws• Local vs. State• Farmers Rural Communities vs. Urban & Suburban

Carroll County (Ohio)TRANSFORMATION

Carroll County (Ohio)“As drillers strike gas, sleepy Carroll County braces for

boom times” [Cleveland Plain Dealer, October 23, 2011]

• “The state's much-anticipated natural gas boom is no dream in this rural county south of Canton's Stark County. Not with three producing wells and hundreds more foreseeable. Not with men in cowboy hats traversing the town square. Not with 130-foot-tall steel derricks aglow at night like some Cedar Point thrill ride lost in the countryside.”

• "Where else are you going to find a job working six months a year making one hundred grand?“

• “Carroll County -- a staid farming community of 30,000 -- stands to see about $1 billion in new investment if the rosiest scenarios come true. “

Fractured State of Fracking Today

Anti-Fracking Groups

IndustryProponents

PUBLICOPINION

Government Studies/Agencies

Government Proponents

Roll the dice? Take the money?

RESEARCH QUESTION & CONCLUSION

Question• Should rural landowners sell or lease their mineral rights to

permit drilling for gas and oil using fracking? Conclusion• Having evaluated the potential impacts -- short and long-

term, good or bad -- on the environment, energy independence, agriculture, the community, I believe landowners can ethically and appropriately lease their mineral rights and permit gas companies to use fracking to extract dry and natural gas from beneath their property.

Rationale

• Impacts are unknown– Studies need to be done. The EPA is undertaking a

significant study, to be completed in 2012.

• Government will regulate, courts will decide– Based on studies and environmental agencies– Forced by popular opinion

• Leases represent possibilities, not actions– Regulations can stop, delay, and enforce safety and

environmental protection standards

Research Process1. It was first necessary to get a certain level of background

information.– This required using online or web-based dictionaries, encyclopedias,

as well as doing basic Google searches. Fortunately, simply using “fracking” as a search term was generally all that was needed to find relevant information on both sides of the issue. However, in some cases it was useful to also include geographic locations (e.g., fracking Ohio”) or qualitative expressions (e.g., fracking stop*).

2. Since this is a very current topic, it was necessary to find the most recent information. – Whether searching for books, articles, websites, statistics, or other

information it was necessary to limit the results by date and, in some cases, by type (e.g., to find videos, maps, pictures, statistics).

– There have been very few books or refereed articles written on fracking.

Research Process [continued]

3. Evaluating the information found was very important, given the controversial aspects of fracking.– The websites of the oil and gas companies tended to extol the

benefits of fracking. These same companies have also frequently created separate web pages promoting the safety record of fracking (e.g., Chesapeake Energy’s GreenFrac™ website).

– Similarly, the environmentalists’ websites are often rants against fracking and frequently to not cite sources for statistics or acknowledge the factual inaccuracy in some claims.

• Videos, often available on YouTube, were both particularly good resources to learn about fracking, and often biased on one side or the other.

Resources Used

• I used OhioLINK, WorldCat, and Amazon.com to try to find books. It was too current of a topic to final many books, especially in libraries.

• I primarily used EBSCO Academic Complete to find articles. Most were from popular or newsmagazines.

• Most materials and information were found on the web, primarily by using Google. I did use Wikipedia, as well as online encyclopedias available through OhioLINK .

• I used FedStats.gov and USA.gov for background information and statistics, although these were not used in the PowerPoint (articles provided the statistics needed).

Note: A separate annotated bibliography is also provided.