Fracking in Mississippi

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Fracking in Mississippi
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Regulation
Regulatory agency Mississippi State Oil and Gas Board[1]
Estate ownership Split
Resources
Fossil fuels present Oil, natural gas and coal[2]
Number of producing wells 5,732[3]
Fracking
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Fracking in Mississippi 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 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.[4]

Production

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.[3]

In 2013 the Mississippi State Oil and Gas Board issued 239 permits for oil wells and 13 natural gas well permits.[5]

Oil production in Mississippi.png
Natural gas production in Mississippi.png

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.[6]

Map of oil and gas in Mississippi as of August 4, 2014

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.[7]

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."[8]

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.[8]

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.[9]

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.[10]

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.[11][12]

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.[16]

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.[16]

Employment

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.[16]

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.[17][18] 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.[19]

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.[20] 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."[21][20]

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.[18][22]

Earthquakes

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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.[23] 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.[24] 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.[23][25]

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.[23][24]

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.[19][26]

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.[27][28]

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.[29][30]

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.[19]

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:[31]
  • 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.[32][33]

Major organizations

  • 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."[34][35][36]

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.[2]

Consumption of energy for heating homes in Mississippi
Source Mississippi 2011 U.S. average 2011
Natural gas 30.6% 49.5%
Fuel oil 0.2% 6.5%
Electricity 54.7% 35.4%
Liquid Petroleum Gases (LPG) 12.6% 5%
Other/none 1.9% 3.6%

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.[37]

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.[2]

Where electricity comes from in Mississippi[38]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 1 0.03% 0%
Natural gas-fired 2,382 63.27% 0%
Coal-fired 572 15.19% 0%
Nuclear 697 18.51% 0%
Hydroelectric 0 0% 0%
Other renewables 112 2.97% 0%
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.[39] The Southern Natural Gas Company and Gulf South Pipeline Companies are the largest providers of natural gas in Mississippi.[40]

News items

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.

Mississippi Fracking News Feed

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See also

External links

References

  1. Mississippi's Official State Website, "Agency Profile - Oil and Gas Board," accessed July 16, 2014
  2. 2.0 2.1 2.2 U.S. Energy Information Administration, "Mississippi Profile Analysis," accessed July 16, 2014
  3. 3.0 3.1 Mississippi Oil and Gas Board, "Annual Production Report," accessed July 29, 2014
  4. Mississippi Independent Producers and Royalty Owners, "Oil and Gas Industry Milestones / Timelines," accessed July 18, 2014
  5. Mississippi State Oil and Gas Board, "MSOGB Permit Activity 2013", accessed August 4, 2014
  6. Mississippi State Oil and Gas Board, "Reporting," accessed August 4, 2014
  7. 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
  8. 8.0 8.1 National Conference of State Legislatures, "State Revenues and the Natural gas Boom: an Assessment of State oil and gas Production Taxes," June 2013
  9. John C. Stennis Institute of Government, "A Basic Overview of the Oil & Gas Industry in Mississippi," June 2013
  10. Geology.com, “Mineral Rights,” accessed January 29, 2014
  11. All of the above data are in nominal dollars. The royalty income figures assume a 1/8th royalty rate.
  12. Social Science Research Network, "U.S. Private Oil and Natural Gas Royalties: Estimates and Policy Considerations," March 12, 2014
  13. IMPLAN, "IMPLAN€'s History of Expert Economic Data," accessed September 17, 2014
  14. REMI, "About Us," accessed September 17, 2014
  15. REMI, "Clients," accessed September 17, 2014
  16. 16.0 16.1 16.2 PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
  17. University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
  18. 18.0 18.1 Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
  19. 19.0 19.1 19.2 Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
  20. 20.0 20.1 Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
  21. International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 2013
  22. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  23. 23.0 23.1 23.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  24. 24.0 24.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  25. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  26. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  27. WOAI, "Research: Fracking Uses No More Water Than Traditional Oil Production," October 6, 2014
  28. Bureau of Economic Geology, "US Shale Reserves and Production Bureau Shale Gas Study," October 6, 2014
  29. U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
  30. Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
  31. Mississippi Code of 1972, "Title 53, Chapter 1, Section 5," accessed July 18, 2014
  32. Mississippi Department of Environmental Quality, "History," accessed July 18, 2014
  33. Mississippi Department of Environmental Quality, "Mission Statement," accessed July 18, 2014
  34. Mississippi Independent Producers and Royalty Owners Association, "About Us," accessed July 18 2014
  35. Independent Petroleum Association of America, "About IPAA," accessed July 16, 2014
  36. Independent Petroleum Association of America, "Cooperating Associations," accessed July 16, 2014
  37. U.S. Energy Information Administration, “State Energy Data System, Production,” accessed February 18, 2014
  38. U.S. Energy Information Administration, "Mississippi Profile Overview," accessed February 5, 2014
  39. Mississippi Public Service Commission, "Annual Report ending June 30, 2012," accessed March 1, 2014
  40. U.S. Energy Information Administration, "About U.S. Natural Gas Pipelines," accessed March 1, 2014