No holiday is complete without a mess of fracking news

It's housekeeping time in the zany world of fracking.

Over the past few weeks, I've been collecting articles and information about the shale oil and natural gas boom that is poised to strike our little corner of the world… unless it doesn't, which is entirely possible.

Anyway, following are summaries of this information, mixed with some commentary. If anyone would like to find the original articles cited herein, please find the online version of this article. It will contain links for everything. (You can find it at www.athensnews.com, in the "Wearing Thin" category in the drop-down menu for "Opinion.")

Quick addition...

After filing this article for our print edition, these two articles, one by Reuters and one by the Pittsburgh Post-Gazette, came to my attention. They concern the corporate and leasing tactics of major players in the shale drilling boom. Very interesting, and could have a direct connection to what's happening locally with prospective oil and gas development.

First-hand investigations

Over the past few months, local folks have been taking tours of a fracking operation in Wetzel County, W.Va., located just to the northeast of Marietta along the Ohio River. They've come back with hair-raising accounts of the damages and disruption caused by hydraulic fracturing (in horizontal wells) in that area.

In a letter we printed on Nov. 9, Christine Hughes of Athens wrote that the tour covers "an area totaling only about 16 square miles, with terrain much like Athens County, that has 33 well pads, over 100 condensate tanks, miles of pipeline, 18 compressors in a three-mile area, and has experienced and documented hundreds of accidents by the fracking industry in the last three years."

Then, in a Dec. 7 letter, Dana Carlson of Athens wrote, "When Athenians toured sites in Wetzel county, we saw and heard about open chemical frack water pits mixed into the soil and buried, water wells contaminated, frack water spread on local roads, land and road slips, huge amounts of water sucked from streams and local sources during active fracking, noisy compressor stations, and terrible air quality. These aren't your old vertical gas wells."

Until recently, we hadn't received anything from someone who had toured a fracking area and come back with a positive account. That changed last week after an Athens County property owner returned from a learning tour of eastern Pennsylvania.

The property owner asked that his name not be used if I reprinted his account; he's involved in a local business, and wanted to avoid alienating current and potential customers (which is understandable, considering the fact that some local fracking opponents have used the term "evil" to describe anyone speaking in support of the practice.)

Here's what the local man wrote: "I decided I needed some first-hand knowledge of the facts surrounding oil and gas production. Emotions are running high in our community, and it's hard to tell fact from fiction. So last week some friends and I traveled to Pennsylvania to take a look around, kick some tires, talk to the locals and look at impacts to the rural landscape. We spent a couple days in Bradford, Wyoming and Susquehanna counties. These counties are at the epicenter of gas exploration in the Marcellus (shale) formation. We also took a trip to Dimock, Pa. (where "Gasland" was filmed).

"It was a highly enlightening trip. I went with as open a mind as I could muster, but with the nagging feeling that I would be scared to death. I have to say I am relieved. The impacts aren't nearly as extensive as local opinion would have us believe. I lived in that region as a child, and the local landscape looks pretty much the same (give or take a few fast food joints) as it did 30 years ago. I urge you to take the trip and see for yourself."

This suggests something that shouldn't be that surprising. In some areas, fracking has caused a lot of trouble; in other areas, it apparently has had minimal impacts. I would guess that the amount of regulation and the quality of enforcement have a lot to do with what happens from community to community, an insight that definitely qualifies as a "well, duh" moment.

Regulate and tax the hell out of it

In the recent past, I've written a few things that could be construed as pro-fracking, though it was more a case of pointing out the obvious flaws in the prevailing "fracking is evil in every way" outlook among Athens County's enlightened and open-minded intelligentsia.

But my basic outlook remains the same; fracking's coming to Ohio whether we like it or not, and people who demand a ban or moratorium are betraying their ignorance of politics in this state. It makes much more practical sense to work toward achievable goals, including higher taxes and stricter regulations for fracking, and I'm all for that.

An article in the Dec. 20 Columbus Dispatch covered a report that "Ohio could collect an additional $528 million over the next four years if it increased taxes on oil and natural-gas production to levels that Michigan and West Virginia charge energy companies…"

The report came courtesy of Policy Matters Ohio, an advocacy group based in Cleveland. It suggested that tax revenues from fracking "could help offset state budget cuts made to local governments and schools, and ease feared environmental and public costs associated with an expected boom in shale drilling."

"There are upfront costs of drilling, particularly maintenance of roads," Wendy Patton of Policy Matters Ohio told the Dispatch. "This industry also brings unusual financial risks associated with pollution."

Predictably, Rob Nichols, a spokesman for Ohio Gov. John Kasich's office, dismissed Policy Matters Ohio as a liberal group that supports "big government" and increased spending. "They want more money spent and more taxes to support it, period," he told the Dispatch.

And surprise, surprise, a spokesman for the all-powerful Ohio oil and gas industry also slammed the report, telling the Dispatch, "All this policy group is saying is 'Let's go and rake this industry and see if you can get more revenue out of it.'"

My response to Nichols would be, "There's a problem with that?"

The Policy Matters report said that a 5 percent tax on the value of natural gas and oil produced by shale wells could raise more than a half billion dollars between 2012 through 2015. According to the group, Michigan and West Virginia charge the same 5 percent tax rates, "which haven't slowed drilling," and neither has Texas' 7.5 percent tax and Oklahoma's 7 percent tax.

Job predictions may be a tad exaggerated

In a Dec. 16 article, the Dispatch reported that an Ohio State University professor had issued a study predicting that the drilling boom in Ohio will lead to 20,000 new jobs, either directly or indirectly.

While that's nothing so sneeze at, it's a 10^th of the number of jobs that a study commissioned by the oil and gas industry has predicted will result from the boom. And, of course, the more jobs the boom can promise, the more likely state leaders will support oil and gas development, and oppose efforts to regulate and tax the industry.

"We need to be setting realistic expectations," study author Mark Partridge, an economics professor specializing in urban and rural development at Ohio State, was quoted in the Dispatch.

According to the Dispatch, "Partridge's report found that the industry study made unrealistic assumptions about the percentage of spending and hiring that would remain in Ohio when the industry matures." Likewise, he said, it didn't account for the negative economic impacts of an oil and gas boom, including displaced coal miners and jobs lost due to environmental damage, such as in tourism.

The professor's report suggested that the 20,000 jobs in line for Ohio would be about the same as those created in Pennsylvania, where shale drilling has been happening for years.

And once again, Kasich spokesman Rob Nichols indicated to the Dispatch that he wasn't impressed: "Whether it's 20,000 jobs or 200,000, that's tens of thousands of families living in a part of the state that's starving for good economic news who would say, 'Sounds good, sign me up.' "

One Ohio county's experience so far

The Akron Beacon Journal ran an article on Dec. 11 examining the shale drilling boom in one of the prime Ohio areas for fracking, Carroll County. Carroll and adjacent Harrison County are the first in Ohio to produce natural gas from horizontal Utica shale wells. (As of the publication of the article, Carroll County had 23 permitted wells, and eight of them actually drilled.)

The article starts out: "Tiny Carroll County southeast of Canton is the bustling epicenter of Utica shale drilling in Ohio. And Carrollton, the county seat with 3,200 residents, is no longer a sleepy little town. The county's one motel, a Days Inn with 43 rooms, is filled nightly with drillers in their cowboy hats. Restaurants are busy and hiring staff."

The article then describes "a steady stream of truck traffic (hauling) components of drilling rigs into the county. Lights twinkle at night on newly raised 13-story derricks.

"Residents with gas leases are buying new vehicles and farm equipment in increasing numbers."

Amy Rutledge, executive director of the Carroll County Chamber of Commerce, tells the Beacon Journal, "It's an exciting time in Carroll County."

According to the article, landowners are signing leases for between $3,000 and $5,000 an acre, "based on promising drilling tests." In Athens County, the top reported signing bonus for leases has been $2,500 an acre, though this apparently is based on far less hard evidence than shown in the area around Carroll County.

The positive take on shale drilling in the Beacon Journal piece is a far cry from Athens County, where government officials have been ambivalent, if not downright hostile, to fracking, and our local chamber of commerce has suggested it has no interest in jumping into the fracking debate, either pro or con (a wise choice if you ask me).

The Beacon Journal piece at one point states that there's little environmental opposition to fracking in Carroll County, though a simple Google search suggests that opposition does exist. (For instance, "Stop Hydraulic Fracturing [Fracking] in Carroll County" has a Facebook page.)

The main utility of the Beacon Journal particular article is that it gives a comprehensive statistical overview of the state of the shale boom in Ohio, while imparting a sense of how huge this thing could actually become.

The article reports that the state had issued permits for 23 wells in Carroll County as of mid-December. "Eight have been drilled in Carroll, and an additional eight are under construction, all by Oklahoma-based Chesapeake Energy Corp. Hundreds more are planned by Chesapeake and other companies…

"To date, Ohio has permitted 76 horizontal wells, of which 14 have been drilled, according to state data. Fifty-eight vertical wells have been approved, of which 11 have been drilled." The numbers are likely higher than this, based on how the wells are categorized.

ODNR spokeswoman Heidi Hetzel-Evans tells the Beacon Journal that the number of drilling permits is likely to keep growing "on a steady basis."

The biggest oil and gas player in Ohio, according to the piece, is Chesapeake Energy, which has spent $2 billion to lease 1.5 million acres in our state. "It has said it may drill 12,000 wells in Ohio, and its holdings could be worth $20 billion. Each well can cost more than $6 million."

The article continues, "Ohio is expecting as many as 4,000 wells drilled into the Utica shale in the next four years as more rigs are moved into the state."

Why no local control?

An article in the Dec. 15 New York Times, "As Gas Drilling Spreads, Towns Stand Ground Over Control," suggested that Ohio, in not allowing local governments to regulate oil and gas drilling, or related waste-water disposal, is the exception rather than rule among states. However, politicians and the oil and gas industry in Pennsylvania are trying to change that.

The basic premise of the article is that towns and cities in Pennsylvania and other states are starting to push back against the petroleum industry's efforts to drill wells closer and closer to residential areas and parks.

It also raises the point that the oil and gas industry is running up against basic conservative principles when it lobbies state governments to restrict local control.

The lead paragraph says it all: "The fight, which pits towns and cities against energy companies and states eager for growth, has raised a fundamental question about the role of local government: How much authority should communities have over the use of their land?"

Pennsylvania, according to the piece, is currently considering bills similar to one that's in effect in Ohio that would strongly restrict "a community's right to control where gas companies can operate on private property."

The Times piece quotes Brian Coppola, chairman of the Board of Supervisors of a township in a county west of Pittsburgh: "I'm a conservative Republican, and this goes against all my principles." The pending legislation, he told the reporter, "is an enormous land grab on the part of the industry… Our property rights are being trampled."

The article reports instances where energy companies have taken municipalities to court over local restrictions, sometimes forcing them to pay huge amounts of money to defend themselves.

Be careful with those leases

The final article in this exercise in fracking education also appeared in the New York Times, this one on Dec. 12.

It goes into great detail about the perils of signing oil and gas leases, and includes numerous suggestions for red flags that landowners should watch out when reviewing leases.

In the interests of space, I can't go into detail about the advice in the article, but suffice to say that the underlying message is – IF YOU'RE PRESENTED WITH A LEASE FOR YOUR OIL AND GAS RIGHTS, HIRE A LAWYER WHO KNOWS MINERAL LAW.

The several hundred dollars that the lawyer charges you will be dwarfed by the potential benefits of doing this right (or the potential damages of doing it wrong).