Natural Gas Extraction:
Issues and Policy Options
Presented by
Shannon L. Ferrell
Larry Sanders
Oklahoma State University
February 27, 2012
1
• Methods
Background • Technical Foundation
Issues
Overview
• Environmental
• Community
Framing
• Status quo
Options /
• More government involvement
Consequences
• Less government involvement
Policy Examples
2
Background
METHODS
REVIEW
OF
LITERATURE
OPTIONS
&
CONSEQUENCES
TECHNICAL
ASPECTS
OF HYDRAULIC
FRACTURING
MECHANICS OF
FRACKING
BRIEF POLICY/
REGULATORY
HISTORY
3
Issues: Environmental
General
Environmental
Water
Air
Solid Waste
General concerns
/ insufficient
information
Quantity &
source used
Well emissions
Disposal of drill
cuttings / mud
Habitat
fragmentation
Surface Spills
Equipment
emissions
Handling NORM
wastes
Impacts of
injected fluid
Flowback /
produced water
emissions
Liability Issues
Avoidance of
liabilities by
bankruptcy
/dissolution
Fluid component
disclosure
Wastewater
treatment
4
Issues: Community
Financing
responses to
NGE impacts
Engaging
community
stakeholders
Housing
Sociological
impacts
Generating
revenue for
gov’t functions
Need for
planning /
stakeholder
engagement
Availability for
workers
Crime / fear of
crime
Allocation of
revenues
Social isolation
/ community
identity
Accessibility for
fixed- & lowincome
residents
Substance
abuse
Sexual abuse /
disease
Youth issues
Family stressors
5
Issues: Community
Workforce
availability
Transportation
infrastructure
Availability of
facilities
Available
workforce
Existing
infrastructure
repairs
Visual impacts
Availability of
staff
Local worker
suitability
Expansion of
infrastructure
Auditory
impacts
Education
Worker skills
Landowner
impacts
Surface
damages
Landowner /
mineral
negotiation
6
Framework
How to extract
natural gas resources
Protect / enhance
the environment
(thru hydraulic
fracturing)
Quality
of Life
Provides additional
energy sources;
maintains/enhances
econ. dev.
Protect / enhance
community wellbeing
Problem is role of government & responsibility of industry to
provide the economic foundation for the preferred quality of
life: getting it where, when, how much and at a price we want 7
MORE
INVOLVEMENT
• Higher NG price;
supply instability
• Air/water protection
• Threat to economic
development/jobs
• Landowner profit
opportunities less
• Mitigation/public
response to
concerns funded by
severance
tax/mandated funds
Response alternatives
and likely consequences
STATUS QUO
• Low NG price
• Water quality/quantity
uncertainty
• Local revenue issues to cover
impacts
• Economic development/jobs
• Boom-bust issues
• Landowner profit opportunities
• Landowner adverse impacts
• Other environmental issues
LESS
INVOLVEMENT
• Low/lower NG price;
increased supply
• More adverse
environmental/com
munity impacts likely
• Less NG for future
generations
• Higher profit margin
for industry
• More economic
development/jobs
8
Alternatives:
Environmental
General
Environmental
Water
Air
Solid Waste
Liability Issues
Moratoria
Regulate quantity
& source used
“Green”
completion reqs
Regulation under
RCRA (remove
exemption)
Limit bankruptcy
dischargeability
of liabilities
Increased
research efforts
Secondary
containment reqs
Equipment
emissions
limitations
New NORM
handling reqs
Prohibit
dissolution of
entities w/ envir.
liabilities
Regulate fracking
under SDWA UIC
/ well specs
Sealed vessel
storage reqs
Fluid component
disclosure reqs
Increase/ expand
treatment reqs
9
Alternatives: Community
Financing responses
to NGE impacts
Engaging
community
stakeholders
Housing
Sociological impacts
Ad valorem
severance tax
Education efforts
for community
leaders
Community-built
housing
Crime prevention
through
community
engagement
programs
Fixed (per unit)
severance tax
Public
deliberation
forums
Developer-built
housing
On-site drug
abuse prevention
programs
Resource
revenue trust
funds
Community
social events
engaging current
& new residents
Facilitation of
private housing
development
Public-private
partnerships to
address sexual
abuse / disease
Voluntary
mitigation funds
Streamline
housing approval
/ permit process
Community
programs for
supportive youth
environments
Revenue-sharing
between
governmental
levels/units
Voucher /
subsidy programs
for low- or fixedincome residents
Domestic violence
support / therapy
programs
10
Alternatives: Community
Education
Workforce
availability
Transportation
infrastructure
Landowner
impacts
Temporary
facilities
Accelerated
training
programs
Posting vehicle
weight limits
Visual impact
mitigation
Alternative
class
schedules
Public-private
training
partnerships
Well permit fees
allocated to
transportation
systems
Auditory
impact
mitigation
Road
maintenance
agreements
Setbacks /
siting
requirements
Alternative
schooling
arrangements
(online /
homeschooling)
Surface damage
compensation
requirements
Landowner /
mineral owner
education
programs
11
Conclusions
• Much uncertainty about natural gas
extraction issues remains
• All stakeholders have numerous
options for action
• Informed dialog among stakeholders
at every level is critical
12
Thanks! Contact information:
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