Fracking in Nebraska
Energy policy • Fracking policy • Public education • School choice • Public pensions • State budget • Ballot measures • Ballot access
|Fracking in Nebraska|
|Regulatory agency||Nebraska Oil and Gas Conservation Commission|
|Fossil fuels present||Oil and natural gas|
|Number of producing wells||13,705 active wells since 2004|
|Other state fracking pages|
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- 1 Fracking background
- 2 History
- 3 Production
- 4 Economic impact
- 5 Environmental impact
- 6 Socioeconomic impact
- 7 Geographical areas of activity
- 8 Departments, agencies and organizations
- 9 Natural gas use in Nebraska
- 10 News items
- 11 See also
- 12 External links
- 13 References
While there is some oil and natural gas activity occurring in Nebraska, an oil and natural gas boom, brought on by fracking, is not happening, and it not expected to happen. The Nebraska Oil and Gas Conservation Commission has over 20,000 registered wells, despite this, very little fracking is occurring in the state. In January 2013, however, Senator Norman Wallman introduced Legislative Bill 635 that would have required oil and gas companies to submit reports regarding the water used in their fracking operations. Companies would have been required to report "how much water was used, where the water came from and how much fracturing fluid was recovered." As of March 17, 2014, this bill had been indefinitely postponed.
- 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 recent and rapid growth and adequately protect the environment and human health. As with any type of energy extraction, either traditional or renewable, there are tradeoffs.
Oil was reportedly first discovered in southeastern Nebraska in 1883. The first producing well in Nebraska was discovered in 1940 in the southeastern part of the state. In 1949, a producing well was discovered in the western panhandle of the state. Two horizontal wells were drilled in Nebraska in 1998. As of February 2011, no permits had been issued for wells in the Niobrara shale formation, where fracking is quite common.
In 2004, 2,507,232 barrels of oil were produced in Nebraska. Production continued below that level until 2012 when production reached 2,513,356 barrels of oil. In 2013, the most recent year for which data are available, 2,778,396 barrels of oil were produced.
In 2004 in Nebraska, 1,498,780 MCF (1.5 BCF) of natural gas were produced. Production increased steadily until 2007, after which production sharply increased to 3,083,488 MCF. After 2008 production declined, reaching 949,694 MCF of natural gas in 2013.
From 2004 through 2013, 1,614 permits were issued for oil and natural gas extraction. Permitting peaked in 2008 when 327 permits were issued. In 2013, 185 permits were issued.
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 Nebraska. According to the PwC study, the oil and gas industry added $4.62 billion in total value in 2011, including direct, indirect and induced value. Of this $2.26 billion, or 2.6 percent of the state's total value added was direct, $952.8 million was indirect and $1.51 million was induced. In total, this accounted for 5.4 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. Nebraska has an oil and gas severance tax of:
- "3% on value for natural gas and non-stripped oil severed [and]
- 2% on value for stripped oil severed."
Of the revenue collected from this tax 1 percent goes to the Severance Tax Administration Fund. If the oil or gas activity occurred on state trust lands the remaining funds go to the Permanent School Fund. If the activity occurred on non-state trust lands a maximum of $300,000 is deposited in the State Energy Office Cash Fund. After which $30,000 goes to the Nebraska Public Service Commission for the Municipal Rate Negotiations Revolving Loan Fund, and the remainder goes to the Permanent School Fund.
In 2012, an oil or gas well worth $100,000 was expected to generate $4,000 in property and real estate taxes for a county in Nebraska.
The PwC study attributes 47,184 jobs, or 3.8 percent of employment in Nebraska in 2011, to jobs created directly or indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 14,280 people, or 1.2 percent of state total employment. Indirectly the industry employed 10,651 people and induced 22,252 jobs.
Direct, indirect and induced labor income, according to this study, was $2.69 billion, totaling 4.7 percent of Nebraska's labor income in 2011. Direct labor income from the mining sector was $1.2 billion, or 2.1 percent of the state's total. Indirect labor income totaled $577.4 million and induced labor income was $899.2 million.
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.
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 recent and 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 2014 on the potential impacts of fracking on drinking water, and is working on effective programs for managing these potential risks.
Because of the recent and 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 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.
Geographical areas of activity
There are four basins located in Nebraska: the Kennedy Basin, in the central northern portion of the state; the Denver-Julesburg basin, in the panhandle; the Central Nebraska (Salina) Basin, covering the center of the state to the Kansas border; and Forest City Basin, in the southeastern corner. The map in this section shows the oil and natural gas fields in Nebraska.
According to the director of Nebraska's Oil and Gas Conservation Commission, in 2012, oil and gas activity was occurring in the southern and central portions of Sioux County. This portion of the county is part of the Denver-Julesburg basin. In 2010, production was occurring in Kimball County and Hitchcock County. Most oil and gas production in the state occurs in the western panhandle, as does most fracking.
Below are a list of all the counties that the Nebraska Oil and Gas Conservation Commission had listed as having oil or gas wells as of July 11, 2011.
- Banner County
- Chase County
- Cheyenne County
- Deuel County
- Dundy County
- Frontier County
- Furnas County
- Garden County
- Gosper County
- Harlan County
- Hayes County
- Hitchcock County
- Kimball County
- Lincoln County
- Morrill County
- Nemaha County
- Perkins County
- Red Willow County
- Richardson County
- Scotts Bluff County
- Sioux County
Departments, agencies and organizations
- The Nebraska Oil and Gas Conservation Commission was established in 1959. Its stated mission is to "foster, encourage and promote the development, production and utilization of natural resources of oil and gas in the state." The commission is the chief regulatory body for the oil and gas industry in Nebraska. The group is comprised of three members appointed by the governor. One member must have at least one year of experience in the oil and gas production industry. The other members of the commission must have resided in the state for at least three years.
- The Nebraska Department of Environmental Quality was established in 1971. The department was created as a result of the passage of the Nebraska Environmental Protection Act of 1971. The department's stated mission is "the protection of Nebraska's air, land and water resources." As of July 2014, the department's authorized staffing level was 217 full-time employees. The department's three divisions are: Water Management, Air Quality and Water Quality.
Natural gas use in Nebraska
- For more information on energy consumption in Nebraska, see "Energy policy in Nebraska"
In 2011, over two-fifths of Nebraska's energy consumption was in the industrial sector. Just under a quarter was consumed in the transportation sector. The residential and commercial sectors accounted for the remaining 35 percent of total energy consumption. Most of the energy used in the state is from coal, followed by petroleum, natural gas and biomass. Nuclear, hydropower and "other" renewables also contributed.
|Consumption of energy for heating homes in Nebraska|
|Source||Nebraska 2011||U.S. average 2011|
|Liquid Petroleum Gases (LPG)||7.8%||5%|
Nebraska produced 396.8 trillion BTU of energy in 2011. Biofuels accounted for nearly 70 percent of total energy production in Nebraska. Nuclear power accounted for nearly one-fifth. Crude oil, natural gas and what the EIA classifies as "other" renewable energies also contributed.
Electricity generated in Nebraska comes primarily from coal, which accounts for about two-thirds of the total. Nuclear energy accounts for one-fourth of the total electricity production. The remaining comes from petroleum, natural gas, hydropower and what the EIA classifies as "other renewables." In Nebraska, net electricity generation exceeds consumption, making the state an electricity exporter.
|Where electricity comes from in Nebraska|
|Type||Amount generated (MWh)||% of state**||% of U.S.**|
|Total net electricity generation||3,109||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.|
This section displays the most recent stories in a Google news search for the term "Nebraska+Fracking"
- All stories may not be relevant to this page due to the nature of the search engine.
- U.S. Energy Information Administration, "Nebraska Profile"
- Frac Focus, "National Hydraulic Fracturing Chemical Registry"
- The Chadron Record, "Landowners negotiate severed mineral interest laws," July 2, 2013
- U.S. Energy Information Administration, "Nebraska Profile Analysis," December 18, 2013
- Nebraska Oil and Gas Conservation Commission, "Production/Permit Statistics," accessed July 29, 2014
- Casper Star Tribune, "Across Nebrasaka border, oil hunt begins," July 15, 2012
- Note: the spelling error in title in the reference above comes directly from the news source.
- NewsNetNebraska, "Nebraska organizations debate fracking rules and regulations," May 2, 2013
- Legislature of Nebraska, "Legislative Bill 635," accessed August 8, 2014
- LegiScan, "Nebraska Legislature Bill 635 (In Recess)," accessed August 8, 2014
- American Oil and Gas Historical Society, "First Oil Well in Nebraska," accessed July 17, 2014
- Journal Star, "No fracking oil wells drilled yet in Nebraska," February 12, 2011
- 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
- Geology.com, “Mineral Rights,” accessed January 29, 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
- Nebraska Geological Survey, "Open Minds - Open Acres Should Open Open New Plays In Nebraska," accessed August 8, 2014
- News Net Nebraska, "Nebraska organizations debate fracking rules and regulations," May 2, 2013
- Nebraska Oil and Gas Conservation Commission, "Chapter 57, Revised Statutes of Nebraska, 1943," accessed July 17, 2014
- Nebraska Oil and Gas Conservation Commission, "Home page," accessed July 17, 2014
- Nebraska Department of Environmental Quality, "NDEQ Phone Numbers / Directory," accessed July 17, 2014
- Nebraska Department of Environmental Quality, "Agency Information," accessed July 17, 2014
- U.S. Energy Information Administration, “State Energy Data System, Production,” accessed March 7, 2014
- U.S. Energy Information Administration, "Nebraska Profile Analysis," December 18, 2013
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