Fracking in Mississippi
Energy policy • Fracking policy • Public education • School choice • Public pensions • State budget • Ballot measures • Ballot access
|Fracking in Mississippi|
|Regulatory agency||Mississippi State Oil and Gas Board|
|Fossil fuels present||Oil, natural gas and coal|
|Number of producing wells||5,732|
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- 1 Fracking background
- 2 History
- 3 Production
- 4 Economic impact
- 5 Environmental impact
- 6 Socioeconomic impact
- 7 Geographic areas of activity
- 8 Departments, agencies and organizations
- 9 Major organizations
- 10 Natural gas use in Mississippi
- 11 News items
- 12 See also
- 13 External links
- 14 References
- 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 to 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 that have fossil fuel reserves that can be accessed through the combination of these two technologies and the industries that support them. The increased use of fracking has been an economic boon for states, not only those with fracking but also those with supporting industries, such as frac sand mining or associated machinery manufacturing.
Those opposed to fracking argue that the potential environmental and human health impacts could be large. Although wells have been fracked for over 65 years in the U.S., concerns have been raised over the ability for federal, state and local regulatory agencies to keep up with the growth and adequately protect the environment and human health. As with any type of energy extraction, either traditional or renewable, there are tradeoffs.
The Jackson Oil and Gas Company, one of the first petroleum exploration companies in the state, formed in 1916. In 1923, upon the discovery of significant natural gas reserves in the Monroe Gas Field, the Mississippi Power and Light Company joined with two other utilities in generating electricity using natural gas. The Mississippi Oil and Gas Board was established in 1932 as the regulatory body for the state's oil and gas industry.
In 2000, 20,091,871 barrels of oil were produced in Mississippi. Production increased until 2002, after which there was a decrease, reaching a low of 17,198,288 barrels in 2005. After 2006, production sharply increased, reaching a high of 25,881,175 barrels in 2011, the most recent year for which data are available.
Meanwhile, natural gas production in Mississippi has generally risen across the time period shown. In 2000, the state produced 113.52 BCF of gas. Production then generally increased across the time period shown reaching a high of 469.96 BCF in 2011.
In 2013 the Mississippi State Oil and Gas Board issued 239 permits for oil wells and 13 natural gas well permits.
The use of fracking across the United States has had a huge economic impact on the nation, even in states where fracking isn't occurring. Oil and natural gas extraction affects not only the opportunities for growth for oil and gas companies, but entire supply chains. The large oil and gas reserves opened up by fracking have created many economic opportunities. These include capital investments (from both the U.S. and other countries), royalty and lease payments, and government fees and taxes. Fracking can also lead to increased employment in the mining (oil and gas) sector and supporting industries, such as the restaurant and housing sectors. Consumers have benefitted from the oil and gas extraction technique. These benefits include potentially lower oil and natural gas prices, which can result in increased pipeline building, machinery manufacturing and more.
Because much of the activity in these areas is recent, there is not a wealth of data. 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.
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 Mississippi. According to the PwC study, the oil and gas industry added $9.06 billion in total value in 2011, including direct, indirect and induced value. Of this, $5.12 billion, or 5.3 percent of the state's total value added, was direct, $2.04 billion was indirect and $1.89 billion was induced. In total, this accounted for 9.4 percent of the state's total value in 2011.
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, Mississippi employed the following oil and gas severance tax:
- "6% of production value for oil and gas at point of production
- 3% of production value for oil produced by enhanced oil recovery method
- Tax exemptions and reduced rates for oil or gas produced from discovery wells, development wells, and 2-year inactive wells."
Of the natural gas revenue collected, two-thirds goes to the state and the remaining one-third goes to the county in which the gas was produced. Of the oil revenue collected, two-thirds goes to the state and the remaining third goes to the county in which the gas was produced, for the first $600,000 collected. Of the next $600,000 collected, 80 percent goes to the state and 20 percent goes to the county. If the well produces over $1.2 million in tax revenue, 85 percent goes to the state and 15 percent goes to the county.
Of the 82 counties in Mississippi, 42 received oil or gas revenue in 2012. Severance taxes totaled $113,043,568 for the entire state in 2012. Oil taxes accounted for $98.4 million of this total and natural gas taxes accounted for $14.6 million. From 2010 to 2012 total severance tax revenue increased by 32 percent. The federal government received $10,330,338.67 in onshore oil and gas revenue in 2012. Offshore federal oil and gas revenue totaled $4,592,787 in 2012.
The PwC study attributes 97,768 jobs, or 6.6 percent of employment in Mississippi in 2011, to jobs created directly, indirectly, or induced, from the oil and natural gas industry. The industry directly employed 37,681 people, or 2.5 percent of state total employment. Indirectly the industry employed 29,499 people and induced 30,589 jobs.
Direct, indirect and induced labor income, according to this study, was $4.53 billion. This accounted for 7.4 percent of Mississippi's labor income in 2011. Direct labor income from the mining sector was $2.11 billion, or 3.4 percent of the state's total. Indirect labor income totaled $1.32 billion and induced labor income was $1.1 billion.
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.
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 Mississippi (among the lower 48 states) had the 11th highest private royalty income in the nation. The study also found that for 2010:
- Private oil revenue was $1,039 million;
- Private natural gas revenue was $259 million;
- Estimated royalty income was $214 million; and
- Royalty income was 0.24 percent of state average income.
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 and fracking, including air pollutants such as VOCs and methane. Although fracking produces fewer carbon emissions than coal-fired power plants, it produces more methane emissions during the extraction process and methane traps 20 times more carbon dioxide than other greenhouse gases. Some environmental groups have also raised concerns that methane could be leaked during the extraction process, resulting in unnecessary pollution. 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.
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.
The central and eastern United States have been experiencing an increase in 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. There is a growing body of evidence suggesting that this growth in the number 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 that returns to the surface is called wastewater, which contains large amounts of salt and other contaminants. 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 remaining from fracking operations 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 storing their wastewater. 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.
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 as water is pumped into underground wells, causing the faults under the earth to slip. Even though scientists at the USGS have even been able to cause earthquakes on purpose 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.
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. Up to 10 million gallons of fresh water may be required to frack one well. Stormwater, flowback, produced water and wastewater can be harmful because they contain total dissolved solids and naturally occurring radioactive materials. Because of the huge 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 2014 on the potential impacts of fracking on drinking water, and is working on effective programs for managing these potential risks.
Because of the huge 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 released during the fracking process, including VOCs. The Centers for Disease Control is working with the EPA and federal, state and local agencies to better understand potential impacts.
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. Increased oil and gas activity near homes has been traced to depressed home values. 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 'man camps', or "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. These changes can force local governments to respond by hiring more police, social workers, health care workers and emergency response personnel, thereby spending more funds on repairing roads and social programs. Currently, much of the tax revenue generated by the oil and gas industry goes to the federal and state government, making it difficult for local governments to respond to strains on their infrastructures.
Geographic areas of activity
The map to the right shows onshore oil and gas wells in Mississippi as of August 4, 2014. These wells are concentrated in the southern portion of the state, and near the northeastern corner of the state.
Departments, agencies and organizations
- The Mississippi Oil and Gas Board was formed in 1932. The board is charged with broad oversight and regulatory authority over the state's oil and natural gas industry. The composition of the board is as follows:
- The stated mission of the Mississippi Department of Environmental Quality is to "safeguard the health, safety, and welfare of present and future generations of Mississippians by conserving and improving our environment and fostering wise economic growth through focused research and responsible regulation." The department is responsible for pollution control; air, water and land quality; and geology. The department was formed in 1989 from the Department of Natural Resources.
- The Mississippi Independent Producers and Royalty Owners Association (MIPRO) was founded in 1989. It is comprised of individual oil, gas and mineral producers and royalty owners. The group "monitors, informs its membership, and provides input regarding proposed legislation and administrative regulation affecting its membership." MIPRO 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."
Natural gas use in Mississippi
- For more information on energy consumption in Mississippi, see "Energy policy in Mississippi"
In 2011, roughly one-third of Mississippi’s energy use was for industrial purposes, and another third was for transportation. The remaining third was used for residential and commercial needs. Most of the energy used in the state is in the form of electricity. Natural gas is the second most common source of energy, used primarily for electricity production and industrial purposes.
|Consumption of energy for heating homes in Mississippi|
|Source||Mississippi 2011||U.S. average 2011|
|Liquid Petroleum Gases (LPG)||12.6%||5%|
Mississippi produced 440.8 trillion BTU of energy in 2011. Of that, 32 percent came from crude oil, 25 percent came from nuclear generation, and 23 percent from natural gas. The remaining 20 percent came from coal, biomass and what the U.S. Energy Information Administration classifies as 'other' renewable energies.
Electricity produced and consumed in Mississippi comes primarily from natural gas, which produces 60 percent of the total. Little of the natural gas used in Mississippi is produced there. Natural gas is imported through pipelines in the southeastern part of the state. These pipelines provide most of the gas used in electricity production.
|Where electricity comes from in Mississippi|
|Type||Amount generated (MWh)||% of state**||% of U.S.**|
|Total net electricity generation||3,765||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.|
In Mississippi, there are seven private natural gas utilities and 34 municipal utilities. The Southern Natural Gas Company and Gulf South Pipeline Companies are the largest providers of natural gas in Mississippi.
This section displays the most recent stories in a Google news search for the term "Mississippi + Fracking"
- All stories may not be relevant to this page due to the nature of the search engine.
- U.S. Energy Information Administration, "Mississippi Profile"
- Frac Focus, "National Hydraulic Fracturing Chemical Registry"
- Mississippi's Official State Website, "Agency Profile - Oil and Gas Board," accessed July 16, 2014
- U.S. Energy Information Administration, "Mississippi Profile Analysis," accessed July 16, 2014
- Mississippi Oil and Gas Board, "Annual Production Report," accessed July 29, 2014
- Mississippi Independent Producers and Royalty Owners, "Oil and Gas Industry Milestones / Timelines," accessed July 18, 2014
- Mississippi State Oil and Gas Board, "MSOGB Permit Activity 2013", accessed August 4, 2014
- PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
- National Conference of State Legislatures, "State Revenues and the Natural gas Boom: an Assessment of State oil and gas Production Taxes," June 2013
- John C. Stennis Institute of Government, "A Basic Overview of the Oil & Gas Industry in Mississippi," June 2013
- Geology.com, “Mineral Rights,” accessed January 29, 2014
- All of the above data are in nominal dollars. The royalty income figures assume a 1/8th royalty rate.
- Social Science Research Network, "U.S. Private Oil and Natural Gas Royalties: Estimates and Policy Considerations," March 12, 2014
- University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
- Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
- Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
- The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
- U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
- National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
- National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
- U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
- U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
- Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
- Mississippi State Oil and Gas Board, "Reporting," accessed August 4, 2014
- Mississippi Code of 1972, "Title 53, Chapter 1, Section 5," accessed July 18, 2014
- Mississippi Department of Environmental Quality, "History," accessed July 18, 2014
- Mississippi Department of Environmental Quality, "Mission Statement," accessed July 18, 2014
- Mississippi Independent Producers and Royalty Owners Association, "About Us," accessed July 18 2014
- Independent Petroleum Association of America, "About IPAA," accessed July 16, 2014
- Independent Petroleum Association of America, "Cooperating Associations," accessed July 16, 2014
- U.S. Energy Information Administration, “State Energy Data System, Production,” accessed February 18, 2014
- U.S. Energy Information Administration, "Mississippi Profile Overview," accessed February 5, 2014
- Mississippi Public Service Commission, "Annual Report ending June 30, 2012," accessed March 1, 2014
- U.S. Energy Information Administration, "About U.S. Natural Gas Pipelines," accessed March 1, 2014
State of Mississippi
|State executive officers||
Governor | Lieutenant Governor | Attorney General | Secretary of State | Treasurer | State Auditor | Superintendent of Education | Commissioner of Insurance | Commissioner of Agriculture and Commerce | Executive Director of Environmental Quality | Executive Director of Employment Security | Chairman of Public Service Commission |