Source: Lexington Herald-Leader (KY), January 12, 2015
Posted on: http://envfpn.advisen.com
There’s been little heat so far in Kentucky over hydraulic fracturing, or fracking, a technique of drilling for oil and natural gas that has caused division elsewhere in the country, but now the controversy has gushed up here.
The potential to develop a vast underground shale layer that curves from the northeastern part of the state through Central Kentucky has sparked increased interest among oil and gas companies within the last 18 months.
Companies signed hundreds of additional oil and gas leases with landowners in 2014, according to local officials.
Much of the interest has been in Lawrence, Johnson and Magoffin counties, which are no strangers to significant oil and gas exploration. But leasing agents also have approached landowners in places with little history of oil production, including southern Madison County and northern Rockcastle County, spooking some residents.
Industry engineers say fracking is a proven, safe technology. However, some landowners have refused leases over concerns about the potential for industrial development and heavy truck traffic in their rural area, and about spills or leaks that could damage springs and streams.
Some people in the area have organized in hopes of persuading neighbors not to let energy companies drill for oil and gas under their land.
“We want to protect a way of life and the natural environment as much as possible,” said Phillip Gilbert, who lives on a 250-acre farm on Clear Creek, in northern Rockcastle County, that’s been in his family for more than a century.
The object of the interest among oil and gas companies is an ancient geologic layer called the Rogersville shale.
It lies in a basin called the Rome Trough, which in Kentucky curves southwest from Lawrence County through parts of Central Kentucky and on into the southern part of the state.
There has long been oil and gas exploration in different parts of that basin, but it wasn’t until the early 2000s that a study by the Kentucky Geological Survey and others showed the layer of Rogersville shale could hold significant oil and gas.
At the time, energy companies couldn’t efficiently get oil and gas out of deep rock formations. Parts of the Rogersville shale are more than 9,000 feet underground, said David C. Harris, who heads the Energy & Minerals Section of the Kentucky Geological Survey and took part with geologist John Hickman in research on the Rogersville shale.
Drilling technology has since changed dramatically, however, sparking a boom that has made the U.S. a top global oil and gas producer.
The development of horizontal drilling in tandem with fracking made that possible. Oil and gas companies can drill down 2 miles or more, then branch off horizontal lines, allowing them to tap a bigger area.
Then they inject water — millions of gallons, in some cases — chemicals, and an agent such as sand, which breaks up the rock underground, freeing oil, gas and natural-gas liquids such as propane and butane locked in tiny pores in the rock.
Companies have used fracking at hundreds of wells to unlock oil and gas from deep rock layers in Texas, North Dakota, Pennyslvania and Ohio.
Risk and reward
In looking for the next big shale “play,” as the developments are called in the industry, a company ultimately found the decade-old study on the Rogersville layer in Kentucky and West Virginia.
Another company called ABARTA Energy in Pittsburgh said in an internal newsletter in July 2013 that it was working on a potential new shale play in the Rogersville layer in Kentucky.
“This is a brand new shale that has never produced commercial gas, but information from some old deep test wells indicate potential for vast reserves at great depths,” the newsletter said.
The company described the potential development as risky and expensive, but added “the rewards could also be extreme!”
Bruin Exploration, a part of Denver-based Cimarex Energy, is believed to have used hydraulic fracturing in a deep test well drilled in Lawrence County in late 2013. Information on what the company found is not yet publicly available, Harris said.
Those aren’t the only companies interested.
Johnson County Clerk Sallee Holbrook said there were so many company representatives doing research on land titles at one point last year that she had to limit their time on the computers. Lawrence County Clerk Chris Jobe said he put tables in the hall to accommodate the swarm of agents.
The number of oil and gas leases recorded in Johnson County jumped from 406 in 2013 to 1,331 in 2014, according to Holbrook’s office.
In Lawrence County, the number of leases increased from 1,041 in 2012 to 1,872 in 2013. The number went down in 2014, but still topped 1,500.
And in Magoffin County, people recorded 395 oil and gas leases in 2014, up from 72 the year before.
The jump in leasing activity doesn’t mean all those wells will be drilled. The companies are doing what is called locking up acreage, said Andrew V. McNeill, head of the Kentucky Oil and Gas Association, an industry group.
The price of oil will play a key role in whether companies take a risk on developing the Rogersville shale.
The conventional wisdom is that oil prices need to be $60 to $65 a barrel to make it feasible for companies to develop shales like the Rogersville layer, McNeill said.
Bloomberg News reported Friday the price of one benchmark crude oil had fallen to $48.36 for February delivery, and that companies were idling rigs.
McNeill said the state’s oil and gas industry provided more than 3,200 jobs in 2013. That number could jump if there is a significant increase, he said, providing information that the boom fueled by fracking has created more than 20,000 jobs in Pennsylvania, Ohio and West Virginia.
Harris said shales in Central Kentucky don’t appear to be as rich in organic content as in northeast Kentucky, so the potential for oil and gas development in them is lower.
If shales in Central Kentucky are developed, companies would have to use fracking to unlock oil or gas, Harris said.
Environmental concerns
There has been small-scale fracking in Kentucky for decades, but not on the magnitude of high-pressure water fracking operations like those that have mushroomed in other states the last decade.
A large water fracking operation can cover several surface acres and emit methane. Fracturing the rock far below often requires pushing millions of gallons of chemical-laced water into the borehole. The water flushes back up out of the well and can come back with naturally occurring radioactive material from underground.
Disposal of the waste in underground injection wells has been linked to small earthquakes.
The potential for large-scale water fracking has caused concerns about damage to surface water and groundwater among some residents in Madison and Rockcastle counties.
“That’s what terrifies me,” said Ron Owens, who lives in the valley along Clear Creek.
He and his wife, Janice, said many people in the valley get their water from clear springs that flow out of the steep hillsides and feed the creek.
“We don’t call it Clear Creek for nothing. The water’s clear,” Janice Owens said.
Leasing agents have been persistent in Clear Creek, contacting some landowners multiple times, residents said.
People in the valley know of only one neighbor who signed a lease, but they said they think more people have in the Red Lick area, just to the north in Madison County.
There were six oil and gas leases recorded in Madison County last year, compared with none in 2013, according to the clerk’s office. The office said companies are not required to file the leases immediately.
There is a concern that some people may have signed leases without a full understanding of the terms — including how much money they could expect — and the potential impact.
“People weren’t informed here,” Janice Owens said.
Residents are organizing to try to get out the word about their concerns.
Jim Scheff, who heads a forest-preservation group called Kentucky Heartwood, helped set up a group called Frack Free Foothills, which wants to inform residents on potential problems.
“When somebody signs a lease, they’re affecting everyone in their community,” Scheff said.
Some Clear Creek residents have been going door to door urging neighbors to be wary of signing leases that would allow oil and gas exploration, and are working to set up a community meeting.
“There’s just a multitude of concerns. We’re hoping to make a stand,” Gilbert said.
Reviewing standards
The oil and gas industry argues that fracking poses no danger to groundwater and that fears to the contrary are not justified.
For one thing, fracking typically takes place far below the groundwater table.
In addition, Kentucky requires that steel casings be cemented in oil and gas boreholes to prevent oil or chemicals from escaping into the water table. Inspectors check for compliance.
“The industry feels like they’re a very strong set of standards,” McNeill said.
Studies have not documented significant problems with fracking chemicals leaking from boreholes and contaminating groundwater. For instance, regulators from eight states told federal officials in 2012 that fracking had not been shown to cause groundwater contamination, according to the U.S. Government Accountability Office.
A 2011 Duke University study in Pennsylvania and New York did find higher concentrations of methane in water wells near fracking sites — though the source could not be confirmed — but did not find contamination from fracking fluids, GAO said.
There have been cases of surface leaks of fracking water and oil, however.
In the first 10 months of last year, for instance, there were 53 surface spills in Ohio of fluids produced from fracking, according to an organization called the FracTracker Alliance.
Citing health concerns, New York Gov. Andrew Cuomo in December banned hydraulic fracturing.
The U.S. Environmental Protection Agency regulates disposal of the wastewater and has standards to make sure it doesn’t leak from the injection wells. GAO has said EPA needs to improve oversight and enforcement, however.
Tom FitzGerald, head of the Kentucky Resources Council, said the current rules governing drilling would not adequately protect health and the environment if companies start developing large-scale hydraulic fracturing in Kentucky.
Among other things, the state needs better notice to landowners and communities when companies intend to explore or drill for oil and gas; improved requirements for bonds and reclamation; and requirements for companies to show how they will control emissions of air pollutants, FitzGerald told state authorities.
“The current regulatory framework has significant gaps in protection of landowners and the environment,” he said.
The state convened a working group last year to review oil and gas regulations, in part because of the potential for increased fracking in Kentucky, said Dick Brown, spokesman for the Kentucky Energy and Environment Cabinet.
As to concerns about environmental damage from fracking, Brown said, the reason for the work group “is to review our statutes to determine if controls are adequate and, if not, make recommendations to strengthen them.”