Fracking in Indiana

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Fracking in Indiana
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Regulatory agency Indiana Department of Natural Resources
Estate ownership Split[1]
Fossil fuels present Oil, natural gas and coalbed methane[2]
Number of wells drilled 2,095 from 2005-2013[3]
Year fracking began Mid-1950s[4]
Number of wells fracked annually 75 in 2013[3]
Total wells fracked 505 from 2005-2013[3]
Percentage of wells frackeed 24.1% from 2005-2013[3]
Type of wells fracked Oil, natural gas and coalbed methane[5]
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Fracking in Indiana depends on available energy resources, the location of these resources, applicable laws and regulations, politics, and the power of environmental and industry groups. Decisions by policymakers and citizens, including state and local governments and ballot initiatives, affect if and how fracking occurs in a state.

From 2005 to 2013, 505 wells were fracked in Indiana.[6] Fracking is used most often in coalbed methane extraction. Because of the geology in Indiana, significantly less frac fluid is used for each well, usually between 7,000 and 20,000 gallons, or about 0.2 percent of the amount of frac fluid used in other parts of the country, according to the Indiana Department of Natural Resources.[3]

Fracking background

See also: Fracking

Hydraulic fracturing, or "fracking," is the process of injecting fluid--mostly water and sand, but with additional chemicals--into the ground at a high pressure to fracture shale rocks and release the oil and natural gas inside.

Recent technological advances in oil and gas drilling--horizontal drilling and hydraulic fracturing--have created a wealth of opportunities and challenges for states with fossil fuel reserves that can be accessed through the combination of these two technologies. The increased use of fracking has been an economic boon for many states, not only those with fracking, but also those with supporting industries, such as frac sand mining or associated machinery manufacturing.

Opponents of fracking argue that the potential negative environmental and human health impacts could be significant. Although wells have been fracked for over 65 years in the United States, concerns have been raised about whether federal, state and local regulatory agencies can keep up with the recent rapid increase in fracking activity, and adequately protect the environment and human health. As with any type of energy extraction, either traditional or renewable, there are economic, environmental and political trade-offs.


During the 1940s and 1950s, the Illinois Basin, a fossil fuels repository spanning from southern Illinois to northwest Kentucky and southwest Indiana, was the third largest oil producing basin in the United States. Underlying the Illinois Basin is the New Albany shale, a formation that could produce as many as 300 billion barrels of oil. Advancements in fracking techniques could make extraction of the resources in the New Albany shale more feasible.[7][8]

Fracking was first utilized in the Illinois Basin (and, by extension, in Indiana) in the 1950s.[9]


The two graphs below show oil and natural gas production in Indiana from 2000 to 2013. In 2000 Indiana produced 2,064,144 barrels of oil. Production decreased from then until 2003. After 2010 production increased rapidly, but remained under 2 million barrels until 2012. In 2013 Indiana produced 2,398,852 barrels of oil.[10][11] Natural gas production in Indiana has trended upward since 2000. In 2000 Indiana produced 899,000 MCF of gas. Production increased sharply from 2003 to 2004 by 1,937,073 MCF of gas. Production then peaked in 2011, when Indiana produced 9,075,145 MCF of natural gas. Production declined slightly in 2013 to 7,937,712 MCF.[12][13][14][15]

From 2005 to 2013, 505 wells were fracked in Indiana, representing 24.1 percent of all wells drilled in Indiana during that time.[6] Fracking is used most often in coalbed methane extraction, 60 percent of such wells are fracked according to the Indiana Department of Natural Resources. Because of the geology in Indiana significantly less frac fluid is used for each well, usually between 7,000 and 20,000 gallons, or about .2 percent of the amount of frac fluid used in other parts of the country, according to the Indiana Department of Natural Resources. Some wells in the southern portion of the state have been fracked with larger volumes of fluid, with some large increases in extraction. This means high volume fracking treatments may become more common.[3]

Oil production in Indiana, 2000-2013.png
Natural gas production in Indiana, 2000-2013.png

Areas of activity

Map of oil and gas wells in Indiana as of July 10, 2014

Below southwestern Indiana is the Illinois Basin Province. There are several large oil producing formations including Clay City, Salem-Louden Anticlines, DuQuoin Monocline and La Salle in the Illinois Basin. Within the Illinois Basin there are

  • eight shale plays
  • one coalbed methane play
  • one continuous play
  • two unconventional
  • six conventional plays.[8]

Oil was discovered in the Illinois Basin in 1866 in Litchfield. Major production began in 1905. There have been three waves of production in this basin, with the first occurring from 1905-1910. The development of exploration techniques led to another wave from 1930-1940. The third wave occurred in 1950 with the development of fracking.[8]

The map shows wells that have been hydraulically fractured in Indiana as of July 10, 2014. Much of the oil, gas and coalbed methane activity is focused in the southwestern portion of the state, in the Illinois Basin.[16]

Economic impact

The use of fracking, often in combination with horizontal drilling, has made it possible to extract supplies of oil and natural gas that were once economically unfeasible to extract. This has led to significant growth in the domestic oil and gas industry, and in the supply of domestically produced oil and natural gas. The growth in activity has impacted the economy in direct ways, such as increased capital investments (from both the U.S. and other countries), royalty and lease payments, and government revenues in the form of fees and taxes. The increased supply of natural gas and oil has also affected electricity prices, manufacturing, service industries and employment. In many places, fracking has increased employment in the mining (oil and gas) sector and supporting industries, such as the restaurant and housing sectors. Consumers and manufacturers have also benefitted thus far from lower oil and natural gas prices, and increased demand for pipeline, drilling and other ancillary equipment. As demand for natural gas and oil grows, however, prices are expected to rise.[17]

Taxes, fees and revenue

Fracking booms can increase local government revenue through increases in property and sales taxes, which can help compensate for the costs detailed below. The primary revenue streams from fracking--mineral leasing revenues and severance taxes--go to state and federal governments.

Total severance tax income in Indiana, 2000-2013.png

The chart to the right shows severance tax income in Indiana from 2000 through 2013. In 2000 Indiana received $714,569 in oil and gas tax revenue. In 2005 revenue passed the million dollar mark, reaching $1,118,849. In 2008 revenue shot up to $2,079,354 and by 2013 revenue peaked at $2,518,211.[15]

Royalties, land sales and prices

The United States is one of the few countries where property owners can own the right to use and build on their land, known as surface rights, but they may not own the rights to the minerals located under their property. Depending on the state the mineral rights may have been sold in the past and may now belong to someone other than the surface owner. In fact, those mineral rights may belong to more than one individual, a company, or many individuals, who now have the right to extract those minerals, and in some states this can happen without the permission of the property owner. This can cause tension between the mineral owner, or whoever is leasing the mineral rights, and property owner.[18]

Economic impact study

Economic modeling
IMPLAN and REMI are two econometric modeling systems used in both the private and public sectors to predict economic outcomes of policy changes. While these systems are widely used and highly respected, their results are theoretical and may not be universally accepted.

Because the oil and gas industry has grown so rapidly, there is not a wealth of data regarding its economic impacts. Instead economists use forecasting models, such as IMPLAN and REMI, to predict the impact increased fossil fuel extraction is having on the economy. These studies usually measure both direct impacts, i.e., the jobs and income being added within the oil and gas industry, and indirect impacts, i.e., jobs created throughout the supply chain. These studies also include induced impact, i.e., jobs created through increased spending due to growth in the industry.[22]

The following data are taken from a study done by PricewaterhouseCoopers LLP (PwC), a research consulting firm, for the American Petroleum Institute about the economic impact of the oil and natural gas industry in 2011 in Indiana. According to the PwC study, the oil and gas industry added $16.6 billion in total value in 2011, including direct, indirect and induced value. Of this, $8.91 billion, or 3.4 percent of the state's total value added, was direct, $3.72 billion was indirect, and $3.96 billion was induced. In total, this accounted for 6.3 percent of the state's total value in 2011.[22]


The PwC study attributes 136,366 jobs, or 4.1 percent of state employment in Indiana in 2011, to jobs created directly or indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 39,628 people, or 1.1 percent of state total employment. Indirectly the industry employed 40,487 people and induced 56,251 jobs.

Direct, indirect and induced labor income, according to this study, was $6.7 billion, totaling 4.1 percent of Indiana's labor income in 2011. Direct labor income from the mining sector was $2.17 billion, or 1.3 percent of the state's total. Indirect labor income totaled $2.23 billion and induced labor income was $2.3 billion.[22]

Environmental impact

An oil well in Princeton, Indiana, 2012

Because of the sudden and unprecedented growth in fracking across the United States, getting high-quality, unbiased, state-specific information on the environmental impacts of fracking can be difficult. Most studies that would fit those first two qualifications are government studies that focus on the nation as a whole. As such, much of the information that follows in this section may only apply generally to the state. State-specific information has been added where possible.


As with any type of energy extraction, there are several areas of risk when it comes to air quality. In the case of fracking, these risks include air pollutants such as volatile organic compounds (VOCs) and methane. Some environmental groups have raised concerns that methane could be leaked during the extraction process, resulting in unnecessary pollution.[23][24] Most of this pollution occurs during the well completion phase. Fracking operations can also emit known carcinogens, which have been linked with increased rates of cancer.[25]


With regard to carbon dioxide, when natural gas is used to generate electricity in power plants, it produces fewer carbon emissions than coal-fired power plants. According to a 2014 study by the National Oceanic and Atmospheric Administration, "as a result of the increased use of natural gas, CO2 emissions from U.S. fossil-fuel power plants were 23% lower in 2012 than they would have been” without the increase in natural gas use.[26] During the extraction process, however, methane is emitted, and methane actually traps 20 times more carbon dioxide than other greenhouse gases. Nevertheless, according to the International Energy Agency (IEA), CO2 emissions in the United States dropped by 3.8 percent in 2012, due in large part to the "increased availability of natural gas, linked to the shale gas revolution."[27][26]

A 2014 report from the U.S. Environmental Protection Agency found a decrease of 3.3 percent in overall greenhouse gas emissions and a 12 percent decrease in methane emissions from 2011 to 2012. Natural gas extraction is the second largest producer of methane, after cattle.[24][28]


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State energy policy

State fracking policy

Energy policy terms

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Energy use in the U.S.

Energy policy in the U.S.

State environmental policy

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The central and eastern United States have been experiencing an increased number of earthquakes over the last few years, according to the U.S. Geological Survey (USGS), the government agency responsible for such data. Studies from the USGS have not found fracking directly responsible for this increase in felt earthquakes; however, the USGS is looking into regulations that would use seismic data to determine thresholds dictating when and where fracking can occur.[29] There is a growing body of evidence suggesting that this growth in the number of earthquakes has been caused by the increased use of injection wells to dispose of fracking wastewater. While fracking has been rarely known to cause earthquakes, there is an established scientific link between earthquakes and the disposal of fluids in deep, underground injection wells. Once a well has been fracked, the water returned to the surface is called wastewater, and contains large amounts of salt and other contaminants.[30] Some of this water can be recycled, but that water which can't be recycled is often stored in injection wells. These injection wells are generally considered the safest and most cost-effective place for wastewater to be stored. Injection wells are located thousands of feet underground and are encased in cement. Multiple drilling wells often rely on one disposal well for wastewater storage. The U.S. Environmental Protection Agency estimates there are 144,000 of these wells across the United States receiving 2 billion gallons of frack fluid per day.[29][31]

Induced seismology, or man-made earthquakes, have been around for decades and can be caused by mining, damming rivers and injecting fluids into underground wells. Earthquakes are caused by injection wells when water pumped into underground wells causes the faults under the earth to slip. Even though scientists at the USGS have been able to cause earthquakes intentionally by carefully injecting liquid into the earth, the link between injection wells and earthquakes is not fully understood. One of the largest concerns for scientists and regulators is that they do not have the tools to predict whether wastewater will cause seismic activity. These concerns are compounded by the lack of knowledge about where faults are located across the central and eastern United States. The USGS is just beginning to map these areas in more detail in order to understand the seismic risks. As of June 2014, these earthquakes have typically been small, two or three in magnitude on the Richter scale, but at least one scientist has raised concerns that earthquakes could grow in intensity if old injection wells continue to be used for storage.[29][30]


When it comes to water protection and fracking there are four main areas of risk: the depletion of fresh water sources, spills and leaks of fracking fluid into water, mismanaged produced water and flowback, and stormwater pollution. Stormwater, flowback, produced water and wastewater can be harmful because they contain total dissolved solids and naturally occurring radioactive materials. Because of the recent rapid growth in fracking, there are still many uncertainties about the effects of fracking on water. There are studies that link fracking to groundwater contamination, but they remain controversial. The U.S. Environmental Protection Agency is releasing a report in spring 2015 on the potential impacts of fracking on drinking water, and is working on effective programs for managing these potential risks.[25][32]

One of the main criticisms of fracking is that the process uses a disproportionately large amount of water. Up to 10 million gallons of fresh water may be required to frack one well. A 2014 study from the Bureau of Economic Geology at the University of Texas found, however, that the amount of water used in a traditional well, versus a hydraulically fractured well, is not appreciably different. According to one of the researchers, Dr. Bridget Scanlon, "The water used to produce oil using hydraulic fracturing is similar to the water used in the U.S. to produce oil using conventional techniques." The only difference between the amount of water used during the two oil or gas production techniques, is when in the process water is used. The study was funded by the Alfred P. Sloan Foundation.[33][34]


Because of the recent, rapid growth of fracking, little is known about the potential impacts to human health. Government agencies dealing with human health issues have raised concerns about some chemicals that can be released during the fracking process, including VOCs. The Centers for Disease Control are working with the EPA and federal, state and local agencies to better understand potential impacts.[35][36]


Fracking can also present challenges to communities. Increased oil and natural gas production happens in boom or bust cycles, and often these cycles disproportionately occur in rural communities. Large scale fracking booms can also lead to increases in crime, such as substance abuse, sex trade and domestic abuse. An influx of oil and gas workers also strains housing and traffic resources. This lack of housing can push oil and gas workers into so-called 'man camps,' which are "clusters of mobile homes, RVs, and trucks," or into hotels. A fracking boom also puts heavy traffic on roads, which can strain infrastructure, increase traffic accidents, and increase the likelihood of oil spills. Local governments respond by hiring more police, social workers, health care workers and emergency response personnel, thereby spending more of their budgets on roads and social programs. Currently, much of the tax revenue generated by the oil and gas industry goes to the federal and state government, not the local governments.[25]

Departments, agencies and organizations

  • The Indiana Department of Natural Resources (IDNR) is broadly charged with the protection, enhancement, preservation and use of the state's natural resources. The department is composed of two teams: the Regulatory Management Team and the Land Management Team. These teams are in turn comprised of the department's various divisions.[37]
    • Regulatory Management Team: Divisions of Water; Entomology and Plant Pathology; Historic Preservation and Archeology; Reclamation; and Oil and Gas[37]
    • Land Management Team: Divisions of State Parks and Reservoirs; Nature Preserves; Land Acquisition; Fish and Wildlife; Outdoor Recreation and Forestry[37]
  • Within IDNR, the Division of Oil and Gas is responsible for administering the statutes that "regulate petroleum exploration and production operations." Specific areas of regulatory responsibility central to fossil fuel wells include well spacing, exploration, permitting, drilling, completion, production and abandonment. They division also oversees fracking, underground injection wells used for storing spent fluid from the well development process and the underground storage of natural gas and other petroleum products.[38]
  • Founded in 1986, the Indiana Department of Environmental Management (IDEM) is responsible for enforcing federal and state regulations pertaining to air quality, pollution, water quality and other environmental health issues. The department employs approximately 900 people.[39]

Major organizations

  • The Indiana Oil and Gas Association (IOGA) is a trade group comprised primarily of oil and gas producers. The group "represents its membership on issues of state, federal and local regulation/legislation that has, does and will affect the business of the industry." IOGA is listed as a "cooperating association" by the Independent Petroleum Association of America, which is a national trade group that "advocates its members' views before the U.S. Congress, the Administration and federal agencies."[40][41][42]
  • Frack Free Michiana is an anti-fracking group located in South Bend, Indiana. According to its vision statement, the group "will take action through educating and mobilizing citizens and legislators to reject dirty energy and move immediately towards the development of renewable energy." Frack Free Michiana is listed as a "coalition member" by Americans Against Fracking, which is a nationwide anti-fracking group.[43][44]

Natural gas use in Indiana

For more information on energy consumption in Indiana, see "Energy policy in Indiana"

In Indiana, almost two in three homes employ natural gas to heat their homes, probably due to the low cost of natural gas in the state. Over 27 percent of homes use electricity as their heat source. Only one percent of homes use fuel oil as the primary source of heat.[2]

Consumption of energy for heating homes in Indiana
Source Indiana 2011 U.S. average 2011
Natural gas 61.7% 49.5%
Fuel oil 1% 6.5%
Electricity 27.1% 35.4%
Liquid Petroleum Gases (LPG) 7.1% 5%
Other/none 3% 3.6%

Indiana produced 1,063.4 trillion BTU of energy in 2011. Of that, 79 percent came from coal and about 12 percent from biofuels. Together, coal, crude oil, natural gas and what the EIA classifies as 'other' renewable energies made up nine percent. Most came from the other renewable energies, such as biomass and hydroelectric energy.[45]

Natural gas provides only about eight percent of electricity, but that makes up the next largest portion after coal. Most natural gas has to be imported through interstate pipelines. The gas mainly comes from Kentucky and Illinois.[2]

There are 20 natural gas utilities. The larger ones are Citizens Gas, NIPSCO, Vectren North and Vectren South. Of these 20 utilities, 17 have withdrawn from the Indiana Utility Regulatory Commission's (IURC) jurisdiction. These utilities are regulated by local governments.[46][47]

Where electricity comes from in Indiana[48]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 11,000 0.13% 0.04%
Natural gas-fired 762,000 8.73% 0.08%
Coal-fired 7,378,000 84.49% 0.43%
Hydroelectric 42,000 0.48% 0.01%
Other renewables 324,000 3.71% 0.16%
Total net electricity generation 8,732,000 100% 0.21%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

News items

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See also

External links


  1. Conservation Law Center, "Mineral Interests on Your Land: A Guide for Landowners in Indiana and Illinois," accessed July 15, 2014
  2. 2.0 2.1 2.2 U.S. Energy Information Administration, "Indiana Profile Analysis," updated December 18, 2013
  3. 3.0 3.1 3.2 3.3 3.4 3.5 Indiana Division of Oil and Gas, "Hydraulic Fracturing 101," December 18, 2013
  4. Indiana Department of Natural Resources, "Hydraulic Fracturing 101," December 18, 2013
  5. Indiana Department of Natural Resources, "Hydraulic Fracturing Fluid Volume Comparisons - 2005 to 2012," accessed July 15, 2014
  6. 6.0 6.1 Indiana Department of Natural Resources, "Annual Well Completions and Hydraulic Fracturing Data - 2005 to 2012," accessed July 10, 2014
  7. Free Republic, "The New Albany Shale," October 24, 2013," accessed February 27, 2014
  8. 8.0 8.1 8.2 "U.S. Geological Survey," "Illinois Basin Province," accessed March 1, 2014
  9. Indiana Department of Natural Resources, "Hydraulic Fracturing in Indiana," accessed July 15, 2014
  10. One barrel of oil produces about 19 gallons of gas
  11. U.S. Energy Information Administration, "Frequently Asked Questions," May 30, 2013, accessed March 18, 2014
  12. Six thousand feet of gas equals about one barrel of oil, which equals about 19 gallons of gasoline.
  13. U.S. Geological Survey, "World level summary of petroleum estimates for undiscovered conventional petroleum and reserve growth for oil, gas, and natural gas liquids (NGL).," 2000," accessed April 23, 2014
  14. U.S. Energy Information Administration, "Frequently Asked Questions," May 30, 2013, accessed March 18, 2014
  15. 15.0 15.1 Indiana Department of Natural Resources, "Production_Data," accessed July 10, 2014
  16. Indiana Department of Natural Resources, "DNR Oil and Gas Well Records," accessed July 10, 2014
  17. IHS, "US unconventional oil and gas revolution to increase disposable income by more than $2,700 per household and boost US trade position by more than $164 billion in 2020," accessed September 17, 2014
  18., “Mineral Rights,” accessed January 29, 2014
  19. IMPLAN, "IMPLAN€'s History of Expert Economic Data," accessed September 17, 2014
  20. REMI, "About Us," accessed September 17, 2014
  21. REMI, "Clients," accessed September 17, 2014
  22. 22.0 22.1 22.2 PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
  23. University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
  24. 24.0 24.1 Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
  25. 25.0 25.1 25.2 Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
  26. 26.0 26.1 Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
  27. International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 2013
  28. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  29. 29.0 29.1 29.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  30. 30.0 30.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  31. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  32. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  33. WOAI, "Research: Fracking Uses No More Water Than Traditional Oil Production," October 6, 2014
  34. Bureau of Economic Geology, "US Shale Reserves and Production Bureau Shale Gas Study," October 6, 2014
  35. U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
  36. Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
  37. 37.0 37.1 37.2 Indiana Department of Natural Resources, "What We Do," accessed July 15, 2014
  38. Indiana Department of Natural Resources, "Oil and Gas - About Us," accessed July 15, 2014
  39. Indiana Department of Environmental Management, "IDEM's Mission Statement," accessed July 15, 2014
  40. Indiana Oil and Gas Association, "Home page," accessed July 16, 2014
  41. Independent Petroleum Association of America, "About IPAA," accessed July 16, 2014
  42. Independent Petroleum Association of America, "Cooperating Associations," accessed July 16, 2014
  43. Facebook, "Frack Free Michiana," accessed July 16, 2014
  44. Americans Against Fracking, "Coalition Members," accessed July 16, 2014
  45. U.S. Energy Information Administration, "State Energy Data System, Production,” accessed February 18, 2014
  46. Indiana Office of Utility Consumer Counselor, "Natural Gas Cases of Note," accessed March 4, 2014
  47. Indiana Office of Utility Consumer Counselor, "Municipal Utilities - A Brief Regulatory Overview," accessed March 4, 2014
  48. U.S. Energy Information Administration, "Indiana Profile Overview," accessed February 5, 2014