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During the break-out session Working with Oil & Gas on June 18, we heard from a handful of speakers visiting from Texas on the environmental concerns of fracking and the overall environmental impact of drilling. Oil and gas energy has long been a stimulant of the Texas economy, and more recently, fracking has enabled big oil companies to tap into previously inaccessible oil and gas reserves. While many of our members prefer to explore alternative energy sources to oil and gas, during this session we got a history lesson on oil & gas in Texas, environmental concerns of drilling, and best practices for greener drilling. Here’s a recap:
Oil and Gas Production in Texas
This company from Austin, TX, (www.caddominerals.com | fb | bloomberg), provides a brief history of oil and gas drilling in Texas. In Texas, most mineral rights, including oil and gas rights, are privately owned. If the surface estate (the land and everything on it) has not yet been severed from the mineral estate (everything underground), landowners have the option to either lease or sell their mineral rights. In the leasing process, they give oil companies the right to explore and drill for oil and gas on their property. Most of the economic benefit from leasing comes in the form of royalty payments, which are only paid if and when drilling production actually occurs. This means that if the oil company never commences production, property owners never cash in on the potential value of the oil they’re sitting on. If landowners choose to sell their mineral rights, they sever the surface estate from the mineral estate. The new owner of the mineral estate pays a huge sum of money for the property, but in return reaps all of the future benefits of production and has the right to use the surface estate to access drilling sites.
Understanding the financial incentives of oil and gas production in places like Texas, for both the private citizen and the oil corporation, may help us understand the different attitude many take towards drilling practices. In Europe, we know that most of the mineral rights are owned by the government, so drilling has no direct economic benefit to citizens or corporations. It’s easier to rigidly stand against topics like drilling and fracking when all one sees are the harmful effects of these practices and not how they can help individuals and communities thrive. Selling and leasing mineral rights has richly benefited thousands of Texans, especially those in poorer rural communities, who would otherwise subsist on agriculture or ranching to survive. In addition to giving cash and opportunity to individuals, the oil & gas industry has provided jobs to hundreds of thousands of oil field workers and stimulated the economies of small towns across the shale plays where drilling occurs. To many in Texas, stopping oil production in pursuit of other energy sources would be a devastating blow.
Of course, even those who can see the economic benefits of drilling raise concerns over the environmental impact of oil production, and in particular fracking. We were joined by a handful of Texas geology professors who shared their opinions on the environmental impacts of drilling in Texas.
Hydraulic fracturing or fracking, was a method of oil extraction developed in the 1940s, but was not commonly employed until it gained popularity in production of the Barnett Shale in North Texas during the late 1990s. During the fracking process, drills bore vertically through thousands of feet of the earth’s crust. When drills reach the layer where oil an gas is trapped, they turn and make a horizontal tunnel through the rock. This tunnel is used to blast a stream of water and rock into the previously impervious rock at a high velocity, releasing oil and gases previously trapped.
There are a number of reasons fracking raises eyebrows including:
- Groundwater contamination: Many argue that fracking poses a threat to water sources, though others argue that it doesn’t because the fracking occurs thousands of feet under these valuable water resources.
- Earth tremors and quakes: While one would think the actual act of drilling causes instability, scientists actually point to the disposal of wastewater from drilling as the cause of earthquakes in places that have been heavily fracked. Wastewater used during drilling production is often disposed of in huge disposal wells thousands of feet under the earth’s surface. In Texas alone, the Railroad Commission (which governs oil & gas production as well), estimates that there are over 50,000 disposal wells. The disposal wells create instability in the underground faults, causing the rock to shift and thereby resulting in earthquakes. The increasing occurrence and severity of earthquakes in the areas close these disposal wells is especially alarming for residents.
- Chemicals: The fracking process requires the use of toxic chemicals that many are concerned could impact wildlife, livestock, and humans.
Since oil and gas production is such a huge part of Texas’ history and economy, it is unlikely that environmental concerns will put a significant damper on drilling anytime soon. The key now is to push big oil and gas companies towards greener oil production practices.
Environmentally Friendly Drilling (efdsystems.org), is an alliance born in Texas providing free scientifically-based, educational resources to address environmental concerns in the oil & gas industry. Their reach extends far beyond Texas, with member National Laboratories and Universities all over the United States. The research and education provided by EFD is expanding and enforcing best practices when it comes to environmentally-friendly drilling.