What The Frack?: Minimal Regulations Turn Communities Into The “Wild West” As America’s Shale Gas Boom Turns Bust

Natural gas development has exploded across the United States thanks to non-existent regulations, political support and a nod of approval from the Obama administration. But are the economic and environmental challenges associated with relying on natural gas and other underground fossil fuels deposits being sourced in seemingly every corner of the country  as America’s future energy source really worth the mounting risks?

Exploration and development of what the industry claims are endless gas deposits throughout the nation is literally changing the landscape of America almost overnight. With the muscle of the world’s largest energy companies behind it, aggressive sourcing of oil and gas has become a nationwide phenomenon and a  bet that proponents say is guaranteed not to fail, bringing energy independence and permanent ecomomic benefit to communities across the country.

But the reality on the ground amidst what some are calling America’s 21st century gold rush is quite different. “Fracking,” the process by which this new wave of oil and gas exploration has been made possible, is extremely controversial, risky, and generating grassroots opposition from locals in the middle of acres of new gas fields. And the ceaseless flow of raw fossil fuels generated by fracking is rapidly tipping America’s energy boom into a bust.

The gas boom spreading across the country is breathtaking in scope, with the more than 500,000 wells currently operating an almost 50 percent jump from 2000. Such explosive growth has led to increasing conflict between the mostly out-of-state energy interests seeking to pump the ground for the new liquid gold and put in place fracking operations on a massive scale.

A report in USA Today details the process by which small towns and farmers fields are turning into natural gas factories, changing landscapes and raising safety concerns.

 Since the late 1990s, American landscapes have become dotted with a small forest of shale gas wells — 13,000 new ones a year, or about 35 a day, according to the American Petroleum Institute. In the past decade, this steady stream of development has become a gusher as nearly half the country has staked claim to these energy riches. In 2000, the USA had 342,000 natural gas wells. By 2010, more than 510,000 were in place — a 49% jump — according to the U.S. Energy Information Administration.

Twenty states have shale gas wells, so-named because they tap rock layers that harbor the gas in shale formations (with names such as Marcellus, Utica, Barnett). The bulk of the drilling has come since 2006, according to the EIA. 

First, the “landmen,” or agents from drilling companies, show up offering three- to six-year drilling leases to property owners. The payoff can be as little as $15 an acre or up to $6,000 an acre, producing a new class of wealthy landowners, though some have used the windfall to simply pay off old farm debts.

Then the trucks arrive and the drilling starts, using a process called hydraulic fracturing, or “fracking,” to retrieve the natural gas. The process pumps millions of gallons of water, sand and chemicals underground to fracture shale layers and release its natural gas.

That’s what happens below the Earth’s surface. Above ground, rents increase and hotel rooms begin to fill up. In the process, out-of-the-way towns that had been moseying along for decades begin to change: Some folks are thrilled at the infusion of jobs and cash, and others worry about higher rents and the massive change in the landscape. After all, right before their eyes, forests and farms become factories for finding fossil fuel.

“The issue is, what kind of landscape is left behind? Who’s going to win? Who’s going to lose?” says Harvard public policy professor David Keith, speaking at a National Academy of Sciences event in May.

The question of “winners” or “losers” in the country’s new energy boom may take time to ultimately decide, but no one disputes the companies responsible for exploiting those hundreds of thousands of gas wells are already well ahead in the game. Because contrary to the complaints of industry lobbyists and many lawmakers, there has been virtually no oversight in most states and communities where drilling has taken off.

Indeed, Congress and even “liberal” states like New York are preparing to dramatically loosen the small level of regulations currently in place on all domestice energy production, fracking for shale oil and gas in particular.

In states like Pennsylvania, where the so-called “Marcellus” shale deposit has led to massive drilling operations in the western part of the state, the lack of regulations on everything from environmental hazards to payments to land owners has created a “wild west” atmosphere where energy producers are given free reign and sometime even control over local law enforcement.

 For more than a year now, Republicans in Washington — and Mitt Romney on the stump — have been pressing the case that the Obama administration is trying to squash an energy boom already well under way, fostered by the technological development of hydraulic fracturing, or fracking.

On Thursday, the House will vote on a broad bill to streamline the energy permitting process on federal lands and direct the administration to establish production objectives for oil, gas, coal and oil shale — part of a broader effort to establish Republicans as champions of domestic energy. On Wednesday, the Senate voted down a Republican bill to stop new regulations on utility emissions.

“We have these Big Government policies out of D. C. that are turning off the lights,” said Keith Rothfus, a Republican House candidate in a newly drawn Western Pennsylvania district he calls “America’s new energy capital.”

But to make that case, Republicans will have to convince voters in regions like Western Pennsylvania that the free-for-all they see all around them could somehow be even more, well, free. It is a tough sell.

“It’s the Wild West,” said C. J. Callahan, a 29-year-old banker in Point Marion, grabbing dinner with his wife and newborn baby at Apple Annie’s, just down the road from the Headleys. “There aren’t regulations. It’s just, get it out as quick as you can, because they’re going to do the regulations down the road.”

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 But beyond the frack pads and drilling wells, it appears to be easier to find voters here worried more about too little regulation than too much.

Joe Bezjak, a retired junior high school principal in Nicholson Township, called the notion of overregulation “ludicrous.” In fact, he said, the whole region is bought and paid for by the gas men. Last month, police officers handcuffed him at gunpoint after a foreman on his property accused Mr. Bezjak of threatening him in a dispute over the farm’s electric fencing that had been repeatedly torn down by pipeline builders.

“I had a peaceful, loving life,” Mr. Bezjak, 73, said. “Believe me, I haven’t had many enjoyable days since these people have been around.”

While there is little doubt that conservative lawmakers and Republicans on Capitol Hill have been the  most aggressive champions for greater domestic fossil fuel exploration and especially expanding the fracking that has made the natural gas boom so overwhelming,  the Obama administration has done little to heed the calls of environmentalists and local activists calling for tighter rules to ensure protection and safety as foil and gas production booms.

President Obama himself gave the strongest possible statement of approval for expanding fracking in the United States, endorsing shale gas production in this past January’s State of the Union address and affirming that “America will develop this resource.

Backing up his promise to Congress, the president has already loosened federal rules and regulations on shale gas development and energy companies.  Rules changes proposed by the administration in May would force drilling companies to disclose the chemicals used in the fracking process — which along with massive amounts of water re used to break up underground rock and release hidden gas .

The industry has complained of even this minimal regulayory burden, but environmental experts contend that it is worthless since companies are only made to disclose information on chemicals and their impact on water supplies after they have been already used.

Drilling companies have said they don’t want to reveal the chemicals they use in fracking because that is proprietary information, Reuters reported. However, many communities are concerned that fracking contaminates groundwater.

“As we continue to offer millions of acres of America’s public lands for oil and gas development, it is critical that the public have full confidence that the right safety and environmental protections are in place,” Interior Secretary Ken Salazar said in a statement, according to Reuters.

However, the proposed rule may not alleviate the public’s fears. Companies only have to reveal the chemicals they use after they have completed drilling, not before, the New York Times reported. An earlier version of the rule that would have required chemicals be disclosed 30 days before drilling began was changed after lobbyists for oil producers argued that it might jeopardize their trade secrets.

But even these requirements are being held up by the administration. This month, Interior Secretary Ken Salazar announced that rules for chemical disclosure and fracking approval would be delayed again in order for the government to obtain more “feedback” from the industry in the wake of their violent opposition to any new  regulations. The setback raises doubts about whether the rules will ever be put into effect in the middle of a contentious election year when energy prices are a political factor in President Obama’s reelection bid.

The rise of natural gas and fracking across the country seems unstoppable, with strong political support for gutting any remaining regulations and lobbying from major energy industry players shutting down worries over environmental impacts as wells pop up virtually everywhere.

But could capitalism wind up putting a halt to what grassroots activism could not? Because even as the number of wells and permits for shale gas exploration continue to spike, the natural gas boom could well be on its way to becoming a bust.

Prices for natural gas have plummeted at an astonishing rate as production hits record highs in the US and demand continues to drop. Gas futures fell nearly 3 percent on Thursday as domestic supplies swelled.

Proponents are likely to point to lower energy prices as good news,  but financial experts say the industry is on the verge of a bust that has the potential to devastate states and communities that have built their economic future on the gas bubble.

Some say the surge in fracking is reminiscent of the Enron scandal of a decade ago, with allegations of questionable ethics hounding one of the industry’s largest companies, taxpayer subsidies propping up much of the nationwide shale gas bonanza, and concerns over environmental degradation looming over the entire boom.

 Is cheap natural gas really all that cheap? The risks associated with fracking have begun to raise questions, and when it comes to our domestic fossil fuel supply, relatively low retail prices mask a heavier load that includes taxpayer subsidies, profound impacts on public health and the environment, and a negative effect on some local economies.

Now on top of that it seems that the current boom in cheap natural gas might be a bubble, carried along not only by the factors noted above as well as some financial dealings reminiscent of the notorious Enron scandal barely ten years ago.

Something fishy has been in the air since at least last June, when the New York Times started to raise questions about the methods that the gas industry uses to calculate the long-term profitability of gas wells.

In August, the Times reported that a major player in the current natural gas boom, Chesapeake Energy Corp., was among the targets of an investigation by New York State Attorney General Eric Schneiderman. New York pension funds have millions invested in four gas companies including Chesapeake, and Schneiderman was exercising a form of high-powered shareholder activism by raising questions about the industry’s profitability.

The bust cycle is already impacting states where the fracking frenzy took off early. In Michigan, aggressive development of that state’s gas deposits has led to a collapse of the industry.  Gas exploration has “ground to a halt” as prices nosedive and many companies pull out of the state, leaving Michigan’s economy on shaky footing, a fate many fracking opponents will point to as a warning for other states seeking to develop their own shale gas resources.

One such state is New York, where Democratic Gov. Andrew Cuomo has fought for approval of gas exploration in economically depressed areas of the Empire State. Energy interests are thrilled with the governor’s decision, but scientific experts and environmental activists are sounding the alarm over what they warn could be an ecological and economic catastrophe.

 With New York reportedly set to allow fracking in portions of the state near the Pennsylvania border, researchers at one of the Empire State’s top universities are warning of catastrophic consequences associated with increased gas drilling.

Cornell University’s Anthony Ingraffea, a professor of civil and environmental engineering, and Susan Christopherson, a professor of city and regional planning, on Monday afternoon briefed New York’s congressional delegation, along with several key panels such as the House Committee on Natural Resources, on the footprint the natural gas industry could leave in its wake.

Mr. Ingraffea, the author of a controversial report claiming natural gas is even worse than coal as a contributor to global warming, said policymakers at both the state and federal level should re-evaluate guidelines governing natural gas drilling and consider placing limits on how much can be extracted.

“Maybe your policy should be to slow down development of unconventional shale gas,” such as that extracted by fracking — hydraulic fracturing, Mr. Ingraffea told reporters at a press conference before his Capitol Hill briefing. “Along the way you have to figure out if you’re going to reduce fossil fuel use.”

Responsible for economic booms and low unemployment rates in parts of Pennsylvania and elsewhere, fracking — the use of water, sand and chemicals to crack underground rock and release huge quantities of gas — has become a heated topic in New York, parts of which sit atop the vast Marcellus Shale gas reserve.

Besides concerns over pollution and water contamination, scientists are increasingly warning that fracking and expanded shale gas production is a major contributor to greenhouse gases and global climate change. 

Research has uncovered that gas wells developed through fracking leak more methane than traditional wells, pumping 40 to 60 percent more emissions into the atmosphere. Methane is actually worse than carbon dioxide in terms of trapping heat and warming the planet, making the explosion of fracked wells in the US and other countries a disturbing development that could serve to exacerbate the rise in global temperatures.

 Add methane emissions to the growing list of environmental risks posed by fracking.

 Opposition to the hydraulic fracturing of deep shales to release natural gas rose sharply last year over worries that the large volumes of chemical-laden water used in the operations could contaminate drinking water. Then, in early January, earthquakes in Ohio were blamed on the disposal of that water in deep underground structures. Yesterday, two Cornell University professors said at a press conference that fracking releases large amounts of natural gas, which consists mostly of methane, directly into the atmosphere—much more than previously thought.

 Robert Howarth, an ecologist and evolutionary biologist, and Anthony Ingraffea, a civil and environmental engineer, reported that fracked wells leak 40 to 60 percent more methane than conventional natural gas wells. When water with its chemical load is forced down a well to break the shale, it flows back up and is stored in large ponds or tanks. But volumes of methane also flow back up the well at the same time and are released into the atmosphere before they can be captured for use. This giant belch of “fugitive methane” can be seen in infrared videos taken at well sites.

While  the energy industry and some lawmakers would insist that such risks are worth the gain fracking has made in lowering energy prices and boosting domestic energy production, the evidence is far from conclusive on these supposed facts.

A recent report highlighted in the Wall Street Journal concludes that the US is within years of abandoning its reliance on Middle Eastern oil and eventually all foreign oil imports, mostly thanks to the increase in oil and gas production from fracking and other sources of “tight” or previously unreachable deposits.

That stunning bit of data is largely misleading, however. Government documents show that the country’s reliance on foreign oil is declining on its own, detached from any spike in shale gas production and largely due to lower fuel consumption. Conservation and renewable fuels dwarf the impact of fracked shale fields on America’s energy demand and supply. Production from shale fields is actually forecast to peak and precipitously decline as early as the end of the decade.