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Boom, Bust or Both?

While state legislators overhaul Ohio’s energy industry, questions about the sustainability and safety of fracking go unanswered

By German Lopez · June 6th, 2012 · Cover Story
Boom, Bust or Both?

Supporters say it will lead to energy independence and an economic boom. Critics say it’s bad for the environment and will cause economic pain for many. It’s called hydraulic fracturing, but most people know it as “fracking.”

Fracking is a drilling technique in which thousands of gallons of water are shot into the earth in order to fracture shale and produce natural oil and gas. The water is then disposed in wastewater injection wells that store the water thousands of feet underground. In recent years, fracking has helped lead to a natural gas boom by opening up previously inaccessible areas for drilling.

On the surface, it’s hard to deny the economic boom caused by fracking. As the trucks and trains ride in and out of Carroll County in northeast Ohio, it’s clear something has changed. A county once known for its quiet, small-town feel is now bustling with economic activity, all thanks to the gas and oil rush largely attributed to fracking.

“There are a lot of people in our county that are going to benefit from this,” says Jeffrey Ohler, president of the Carroll County commissioners.

Convinced of this economic boom, Ohio legislators and the energy industry have embraced fracking. The Ohio Department of Natural Resources (ODNR) estimates 450 wells will be deployed by the end of 2013, up from 72 today.

But below the surface, cracks are beginning to develop. These cracks have raised questions about the sustainability and safety of fracking during a time when legislators are moving full-speed ahead with legislation that will regulate the industry for the next 20 years — if it lasts that long.

A boom in Carroll County

Carroll County is certainly seeing a bit of an economic boom right now. Crews are setting up oil wells everyday, trucks are bringing in new drills and equipment for drilling and the oil and gas industry is now a big employer in the county of approximately 30,000 residents. 

But Ohler, a Republican who has been a commissioner in Carroll County since January 2011, is concerned about the future.

“Certainly, it’s going to decrease unemployment, hopefully statewide, but there’s a lot of cost in the long term to the counties that are being affected,” he says.

For starters, Ohler is worried the oil and gas rush might not be an unemployment cure for his county. 

“Even though unemployment has dropped to some degree, I guess we are a little disappointed that there haven’t been more job opportunities for some of our local people,” he says.

Ohler acknowledges that some of the newly created jobs are “highly technical,” which means they require experienced workers that already know how to handle the technology. So instead of hiring local workers, oil and gas companies have brought in outside workers with more experience. But, according to the industry, Carroll County is only at 20 percent of the activity it will eventually reach, and Ohler hopes with more activity comes more jobs for locals.

Housing has also become a problem for Carroll County. Some landlords have taken advantage of the influx of transient workers and limited housing opportunities to raise the price of rent. Some former renters, who couldn’t afford the higher prices, were forced to move out and find other housing options. Although Ohler sees it as a problem, he cautions that such spikes in rent are not happening on a “wide scale.”

To help ease housing problems, the oil and gas companies are pushing to build “man camps.” These camps would provide temporary housing to anyone coming in to take advantage of the boom. Unfortunately, that solution presents some problems of its own. Currently, Carroll County does not have a county-wide water-and-sewage system, and the limited systems set up for tiny villages in the county do not have enough capacity for man camps.

Ohler says he sees such housing problems as a “long-term issue.” He also says that wealth disparity is a concern. From the perspective of his county, people in agriculture with more land will benefit tremendously due to many new opportunities to lease, while people in villages could see their finances “negatively impacted.”

To a degree, wealth disparity has played out in a conflict between local employers and the oil and gas companies. The small businesses in Carroll County are used to lower income levels and wages than what the oil and gas companies are providing, and this poses a big disadvantage for local businesses in the job market.

“We’re hoping it’s going to be positive and reduce the unemployment rate, but, at this point, we’re not sure,” Ohler says. 

He wants to see those who are currently unemployed take up the new job opportunities available instead of seeing people move from local jobs to oil and gas jobs. But he says it definitely won’t be that smooth, and Carroll County will see some local workers move on to better paying jobs in the oil and gas industry.

Fortunately for Carroll County, the oil and gas companies have been trying to take care of some problems. The companies have helped repair roads, and they set up a system to mainstream truck traffic, which Ohler says has helped during the school year.

Earth and air

Last New Year’s Eve, Youngstown, Ohio experienced a series of earthquakes that reached up to 4.0 magnitude. The earthquakes came as a shock to a town that had little history of seismic activity, and locals immediately began blaming nearby wastewater injection wells.

In response to the earthquakes and public outcry, ODNR issued an investigation into the cause of the earthquakes, and a moratorium was placed on wastewater injection wells in the area. The investigation found a wastewater injection well had caused earthquakes by pumping fluids directly into a previously unknown fault line.

“Out of that report, we also came up with a lot of new standards and requirements,” says Heidi Hetzel-Evans, a communications manager at ODNR.

Hetzel-Evans says a lot of the new standards and requirements are addressed by Senate Bill 315, which recently passed the Ohio legislature and is expected to be signed by Gov.

John Kasich. The legislation will require well operators to disclose the chemicals used for fracking within 60 days, although proprietary chemicals will still be protected. Operators will also have to report chemicals used when drilling through a water source, and regulators could ask operators for the chemicals used to maintain and plug a well.

Separate from Senate Bill 315, ODNR will also require additional seismic testing as part of obtaining a drilling permit.

According to Hetzel-Evans, these new requirements will make it a lot easier for ODNR to monitor any fluids being pumped underground and prevent incidents caused by previously unknown factors in the future.

However, dozens of fault lines are discovered every year. Earlier this year, a fault line in Mount Fuji was discovered by University of Tokyo seismologists after a three-year study, and scientists are now worried the fault line could cause parts of the mountain to crack and collapse. It is possible that some fault lines in Ohio could also be undiscovered, and that has caused some shakiness among critics of fracking.

Limited research in the area has found a correlation between a recent rise in earthquake activity and the process of fracking. In a study from the U.S. Geological Survey in April, the correlation was used to explain the increase in earthquake activity in middle America, which had 134 earthquakes above 3.0 magnitude in 2011, up from 87 in 2010, 50 in 2009, and an average of 21 between 1970 and 2000. The study concluded that the rise in earthquakes was “almost certainly manmade [sic],” but it advocated for more research.

Some critics don’t believe Senate Bill 315 will help much, if at all. Rep. Denise Driehaus, a Democrat who represents Cincinnati in the Ohio legislature, has a long history of demanding more regulations for fracking. She voted against Senate Bill 315.

“It didn’t go far enough to impose regulations on an industry that’s new to Ohio,” Driehaus says. “It seems to me that we, as state representatives, would want to protect the consumer, and I didn’t feel the bill went far enough to do that.”

Driehaus is concerned that the same kind of wastewater injection wells that caused the Youngstown earthquakes could come to Cincinnati. Since wastewater injection wells only dispose wastewater, they can be placed anywhere in Ohio, even where there is no oil and gas. 

“That concerns me because if we’re pushing toxic water into the ground, we have to be very careful about how we regulate something like that, and I just don’t see the regulations in place,” Driehaus says.

Beyond the earth, critics also see fracking and natural gas as threats to the air. The “Don’t Frack Ohio!” movement highlights environmental issues as the No. 1 problem with fracking and the natural gas it produces.

“The process of harvesting natural gas leaks methane, and methane is a more potent greenhouse gas than CO2,” says Daniel Kessler, a campaigner for “Don’t Frack Ohio!” “So it’s possible that natural gas could actually be worse for the climate than coal is, which is now considered to be the No. 1 contributor to climate change.”

A recent study from the National Oceanic and Atmospheric Administration (NOAA) supports Kessler’s concern. The study, published in the Journal of Geophysical Research, found that methane is leaking at least twice the rate during natural gas production than the industry and government have reported. 

Methane is capable of trapping 10 times the heat as carbon dioxide, according to the NOAA. Any notable increase in methane could make natural gas more dangerous for the climate than coal.

What’s in the chemicals?

No one — not even regulators — knows for sure what is in the fluids used for fracking, though there is some speculation by environmental groups.

Under current law, the industry is not required to give information about “proprietary recipes or mixes,” according to Hetzel-Evans. But she says Senate Bill 315 will enable more transparency.

“Senate Bill 315 expands what must be disclosed, and it mandates the department to create a database so that folks can get on and see what chemicals are being used at what well,” Hetzel-Evans says. 

Proprietary chemicals are still protected, but in the case of emergency, regulators are allowed to require companies to fully disclose all chemicals. But that’s only after something bad happens.

Hetzel-Evans notes that many companies already disclose some information on FracFocus, a voluntary disclosure website. However, companies still do not disclose proprietary information on FracFocus. In the reports released for Ohio by Chesapeake Energy, the details for many wells were often marked as “proprietary” and “trade secrets” with no further explanation.

The Ohio legislature recently added a provision to Senate Bill 315 that requires anyone suing for “trade secret” information to prove current or potential harm from the proprietary chemicals, even though anyone suing will have no idea what makes up the chemicals or how the unknown chemicals could be harming them. That provision pushed environmental groups like the Ohio Environmental Council to join “Don’t Frack Ohio!” in opposition to Senate Bill 315.

“These are chemicals that are pumped into the ground by the millions of gallons, and there’s a lot of questions as to what the consequences of that are,” Kessler says.

Sick of it

As environmental concerns have risen in the past years, there has also been a growing anxiety that pollution and water contamination caused by fracking can lead to health problems.

The Ohio legislature attempted to address health concerns in Senate Bill 315. Under the bill, doctors are allowed to disclose proprietary chemicals and the risks they pose to anyone injured during the construction of a well or the production process. However, the bill explicitly forbids doctors from disclosing such information to patients who could be in harm’s way if the patient hasn’t already been directly harmed from well construction or production.

This provision, dubbed a “gag order,” has come under fire from environmental groups, which credit the rule to lobbying from the oil and gas industry.

“It’s clear the industry is aware of the fact that [the chemicals] could have adverse effects on public health, and they’re taking steps to censor physicians from talking about it,” Kessler says.

Some in the legislature have also raised concerns.

“I think it puts the patient at risk for not knowing what made them sick and what’s in the water,” Driehaus says. “It becomes a consumer issue where a patient has no idea what happened and a doctor can’t tell him.”

Driehaus would have liked to see more water test requirements implemented in Senate Bill 315. One initiative she supports would test water sources before and after fracking occurs. That way, she says, people would know the potential health impacts of fracking on water sources.

“It protects the consumer, but it also protects the industry because they can’t be accused of something that didn’t happen with the testing done,” Driehaus says. 

The initiative was suggested as an amendment for Senate Bill 315, but it was rejected by the full Republican majority in a 53-38 vote.

In 2011, Driehaus also pushed for a bill that would have imposed a moratorium on fracking in Ohio until the U.S. EPA finishes a study on the effects of fracking on drinking water. That study will release preliminary results later this year, and a final report will be given sometime afterward.

“It’s not that I’m against fracking,” Driehaus says. “I’m against fracking if we don’t know that it’s safe in Ohio, and right now we don’t.”

Driehaus’s concerns have some support from research. In 2011, a peer-reviewed study conducted by scientists at Duke University found water wells near natural gas wells had much higher levels of flammable methane gas than other water wells. The type of methane gas found in these water wells was in line with the type of gas that energy companies were extracting.

The office of Gov. John Kasich did not respond to CityBeat’s repeated requests for comment on concerns regarding Senate Bill 315 and fracking in general. Several Republican legislators were also contacted via email and phone, but no response was given. 

How long will it last?

Back in Carroll County, Ohler is looking at an uncertain future thanks to what he calls the “boom and bust” cycle. People in the oil and gas industry have told Ohler that production and the current spike in activity should last 10 to 15 years. After that, the industry will move on to what Ohler calls a “supply stage” and begin to harvest all the product gained.

“There’s certainly going to be a lot less people needed to do that,” he says. This, Ohler claims, makes him “guarded” about the future. He knows his county will eventually see a decline in activity, and this could lead to shaky economic times. 

To Ohler, that’s just another reason to be more mindful of the short-term issues. Specifically, he is worried too many people will be displaced due to housing issues and never go back to Carroll County.

“If we lose the stable population and all of a sudden the transient workers leave and go to some other site, what’s that going to do to our county?” he says.

In March, Gov. Kasich proposed a hike on the oil and gas severance tax to pay for the lowering of Ohio’s individual and small business income taxes. Ohler says he would like to see most of the funds raised by the severance tax go back to counties that are producing oil and gas.

“We don’t think it’s quite fair that Franklin County, which doesn’t have any oil and gas at play, gets its income tax reduced only because [oil and gas companies] were producing in Carroll County,” he says.

With the funds from the increased severance tax, Ohler says his county would have an easier time addressing long-term concerns by building up schools and infrastructure for businesses outside of the oil and gas industry. Such improvements would help Carroll County avoid what Ohler sees as a “brain drain” of graduating students leaving Carroll County and never going back due to a lack of job opportunities.

If the oil and gas boom only lasts 10 to 15 years in these counties, it is also possible more reliance on the oil and gas tax could produce a budget shortfall once the boom is over. In North Dakota, which is also experiencing an oil and gas boom due to fracking, the North Dakota Farmers Union has used a similar line of reasoning to oppose Measure 2, a constitutional amendment on the June 12 ballot that would eliminate the property tax in North Dakota and make up for any revenue losses with higher oil and gas taxes.

Without any changes, Ohler says he’s worried the “bust portion” could lead to a dropping population, a lower income level and fewer jobs in Carroll County.

“Our concern is what we have left then,” he says.

Ohler hopes his county can at least use the developed infrastructure from the “boom portion” to keep and create jobs after a bust.

“Up until this happened, we didn’t have any additional commercial space if we had a company that wanted to come into Carrollton,” he says. “Maybe it’s going to provide us an opportunity to have infrastructure where we didn’t have it before.”

Still, for Ohler, now is a time for caution, and he wants his county to be prepared for any changes in the future.  ©

Correction: This story originally indicated that wastewater injection wells recycle polluted water. That is not the case, and the article has been updated to reflect that.

 
 
 
 

 

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