Fracking in Kansas

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Fracking in Kansas
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Regulation
Regulatory agency Kansas Corporation Commission; Oil and Gas Conservation Division
Estate ownership Split[1]
Resources
Fossil fuels present Oil, natural gas and coal[2]
Fracking
Year fracking began 1947[3]
Other state fracking pages
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Fracking in Kansas 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.

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 tradeoffs.

History

The first oil well in Kansas was drilled in 1860 in Lykins County, although the well was not especially productive and was closed by the beginning of the Civil War.[4]

Hydraulic fracturing was first used in Kansas in 1947 in a gas field in Grant County. This event marked the first use of fracking in the United States. Between 1947 and 2012, fracking was used on some 57,000 wells in Kansas.[3]

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.[5]

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. As of June 2013, Kansas employed the following mineral severance tax:

  • "$1 per ton of coal
  • 8% on gross value of oil or gas
  • Exemptions for gas wells with gross value less than or equal to $87 per day
  • Exemptions for low-producing oil wells."

Once all mineral production tax refunds have been paid out, 7 percent of the revenue collected goes to the county mineral production tax fund. The remaining revenue goes into the state general fund. If however, the revenue collected is higher than predicted, 14.63 percent goes to the incentive for technical education fund, totaling no more than $1,500,000. The remaining 85.37 percent of this surplus goes to the technical education fund. This amount cannot exceed $8,750,000.[6]

Kansas also has an oil and gas conservation fee of:

  • 91 mills per barrel of oil and
  • 12.9 mills per MCF of natural gas.

The revenue collected from this tax is deposited in the Conservation Fee Fund.[6]

Royalties and land sales

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.[7] The federal government doesn't collect data on oil and natural gas royalty and land sales on private land. A 2014 study attempted to estimate these figures and determined that Kansas (among the lower 48 states) was eighth in private royalty income in the nation. The study also found that for 2010:

  • Private oil revenue was $2,286 million
  • Private natural gas revenue was $1,101 million
  • Estimated royalty income was $423 million
  • Royalty income was 0.39 percent of state average income.[8][9]

Economic impact studies

Below is a study about the economic impact of the oil and natural gas industry (also categorized as the mining industry in some studies) in Kansas. Both the author and sponsor of the study have been listed.

Study for the American Petroleum Institute

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.[13]

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. According to the PwC study, the oil and gas industry added $12.9 billion in total value in 2011, including direct, indirect and induced value. Of this $5.86 billion, or 4.3 percent of the state's total value added was direct, $4.02 billion was indirect and $3.03 billion was induced, totaling 9.5 percent of the state's total value in 2011.[13]

Employment

The PwC study attributes 148,336 jobs, or 8.1 percent of state employment in 2011, to jobs created directly by, indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 56,941 people, or 3.1 percent of state total employment. Indirectly the industry employed 47,252 people and induced 44,143 jobs.

Direct, indirect and induced labor income, according to this study, was $7.21 billion, totaling 8.6 percent of the state's labor income in 2011. Direct labor income from the mining sector was $2.94 billion, or 3.5 percent of the state's total. Indirect labor income totaled $2.53 billion and induced labor income was $1.75 billion.[13]

Environmental impact

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.

Air

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.[14][15] 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.[16]

Emissions

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.[17] 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."[18][17]

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.[15][19]

Earthquakes

Policypedia
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State energy policy

State fracking policy

Energy policy terms

Fracking in the U.S.

Energy use in the U.S.

Energy policy in the U.S.

State environmental policy


See also
Local fracking on the ballot

Statewide fracking on the ballot

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.[20] 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.[21] 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.[20][22]

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.[20][21]

Water

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.[16][23]

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.[24][25]

Health

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.[26][27]

Socioeconomic impact

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.[16]

Departments, agencies and organizations

  • The Oil and Gas Conservation Division (OGCD) is an agency within the Kansas Corporation Commission. OGCD regulates oil and gas production and exploration operations in Kansas, including fracking. The division's mission statement is as follows:[28]
The Conservation Division protects correlative rights and prevents waste of natural resources. This is specifically done by effective regulatory oversight of oil and natural gas exploration and production activities, and intrastate gas storage.[29]

—Kansas Oil and Gas Conservation Division

  • The Division of Environment is an agency within the Kansas Department of Health and Environment. The division's mission statement is as follows:[30]
The mission of the Division of Environment is the protection of the public health and environment. The Division conducts regulatory programs involving public water supplies, industrial discharges, wastewater treatment systems, solid waste landfills, hazardous waste, air emissions, radioactive materials, asbestos removal, refined petroleum storage tanks, and other sources which impact the environment. In addition, the Division administers other programs to remediate contamination, lessen nonpoint pollution, and evaluate environmental conditions across the state.[29]

—Kansas Division of Environment

Major organizations

  • The Kansas Independent Oil and Gas Association (KIOGA) is a non-profit organization and trade group that represents the state's independent oil and gas producers and allied service and supply companies. Founded in 1937, KIOGA's stated mission is "to improve the market for oil and gas produced in Kansas and to promote the welfare of the oil and gas industry in the state of Kansas." KIOGA 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."[31][32][33]
  • The Kansas Sierra Club is the state chapter of the national Sierra Club, an environmental advocacy group founded in 1892. The Kansas chapter's stated mission is "to explore, enjoy and protect the wild places of the earth; to practice and promote the responsible use of the earth's ecosystems and resources; to educate and enlist humanity to protect and restore the quality of the natural and human environment; and to use all lawful means to carry out these objectives." The national Sierra Club has voiced opposition to fracking.[34][35]

Natural gas use in Kansas

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

In 2011, over one-third of energy use in Kansas was in the industrial sector. A quarter was consumed in the transportation sector. The residential and commercial sectors each consumed about one-fifth of the state's total energy. Most of the energy used in the state was from petroleum, followed by coal and natural gas.[2]

Consumption of energy for heating homes in Kansas
Source Kansas 2011 U.S. average 2011
Natural gas 67.3% 49.5%
Fuel oil 0.1% 6.5%
Electricity 22.3% 35.4%
Liquid Petroleum Gases (LPG) 7.8% 5%
Other/none 2.4% 3.6%

Kansas produced 780.1 trillion BTU of energy in 2011. Of that, nearly half came from natural gas. About 30 percent came from crude oil. Nuclear accounted for about one-tenth. Coal, biofuels and what the U.S. Energy Information Administration classifies as 'other,' which is "assumed to equal consumption of all renewable energies except biofuels."[36]

Where electricity comes from in Kansas[37]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 3 0.08% 0%
Coal-fired 2,121 53.53% 0%
Nuclear 875 22.08% 0%
Other renewables 849 21.43% 0%
Total net electricity generation 3,962 100% 0%
**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

This section displays the most recent stories in a Google news search for the term "Kansas + Fracking"

All stories may not be relevant to this page due to the nature of the search engine.

Kansas Fracking News Feed

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See also

External links

References

  1. Kansas Geological Survey, "Mineral rights and leasing," accessed July 24, 2014
  2. 2.0 2.1 U.S. Energy Information Administration, "Kansas Profile Analysis," updated December 18, 2013
  3. 3.0 3.1 Kansas Geological Survey, "Hydraulic Fracturing of Oil and Gas Wells in Kansas," accessed July 24, 2014
  4. Kansas Geological Survey, "A Brief History of the Kansas Oil and Gas History," accessed July 24, 2014
  5. 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
  6. 6.0 6.1 National Conference of State Legislatures, "State Revenues and the Natural Gas Boom: An Assessment of State Oil and Gas Production Taxes," June 2013
  7. Geology.com, “Mineral Rights,” accessed January 29, 2014
  8. All the data presented below are in millions of nominal dollars. The royalty income figures assume a 1/8th royalty rate.
  9. Social Science Research Network, "U.S. Private Oil and Natural Gas Royalties: Estimates and Policy Considerations," March 12, 2014
  10. IMPLAN, "IMPLAN€'s History of Expert Economic Data," accessed September 17, 2014
  11. REMI, "About Us," accessed September 17, 2014
  12. REMI, "Clients," accessed September 17, 2014
  13. 13.0 13.1 13.2 PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
  14. University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
  15. 15.0 15.1 Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
  16. 16.0 16.1 16.2 Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
  17. 17.0 17.1 Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
  18. International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 2013
  19. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  20. 20.0 20.1 20.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  21. 21.0 21.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  22. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  23. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  24. WOAI, "Research: Fracking Uses No More Water Than Traditional Oil Production," October 6, 2014
  25. Bureau of Economic Geology, "US Shale Reserves and Production Bureau Shale Gas Study," October 6, 2014
  26. U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
  27. Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
  28. Kansas Corporation Commission - Oil and Gas Conservation Division, "Home page," accessed July 24, 2014
  29. 29.0 29.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  30. Kansas Department of Health and Environment, "The Division of Environment Mission," accessed July 24, 2014
  31. Kansas Independent Oil and Gas Association, "Who we are," accessed July 23, 2014
  32. Independent Petroleum Association of America, "About IPAA," accessed July 16, 2014
  33. Independent Petroleum Association of America, "Cooperating Associations," accessed July 16, 2014
  34. Kansas Sierra Club, "Mission Statement," accessed July 24, 2014
  35. Kansas Sierra Club, "Fracking," accessed July 24, 2014
  36. U.S. Energy Information Administration, “State Energy Data System, Production,” accessed March 7, 2014
  37. U.S. Energy Information Administration, "Kansas Profile Overview," accessed March 6, 2014