Fracking in North Dakota

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Fracking in North Dakota
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Regulation
Regulatory agency North Dakota Industrial Commission; Oil and Gas Division
Estate ownership Split[1]
Resources
Fossil fuels present Oil, natural gas and coal[2]
Number of wells drilled 13,000 since 1951
Fracking
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Fracking in North Dakota 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

Oil well pumpjacks in North Dakota

The first reported discovery of natural gas in North Dakota occurred in the early 1900s in Bottineau County. Commercial production of natural gas began in 1929 in Bowman County. Oil was first struck in the state on April 4, 1951. Since the discovery of oil, over 13,000 wells have been drilled in North Dakota. The state has produced over 1.3 billion barrels of oil, making it the third largest producer of oil in the United States.[3]

Production

North Dakota has oil production data going back to 1951, when oil was first struck in the state. In 1951, 26,196 barrels of oil were produced from one well. Production has generally trended upward across the time period shown in the graph below, that is, until hydraulic fracturing increased production levels exponentially. This increase began around 2007, when 45.14 million barrels of oil were produced. By 2013, production reached 31.38 million barrels of oil. Since 1951, the amount of oil recovered daily, per well, has increased from 72 barrels to 83 barrels in 2013. Additionally, daily per well production has increased from the 26,196 barrels of oil recovered from one well in 1951, to 30,463 barrels per day from 10,301 wells in 2013.[4]

Natural gas is also produced in North Dakota, although it is not produced at nearly the same levels as oil is produced. Natural gas production data are available dating back to 1990 when 65,964,024 MCF, or 65.96 BCF, of natural gas were produced. Production was generally flat across the time period shown and didn't increase significantly until 2010. In 2010, 114.39 BCF of natural gas were produced. By 2013, natural gas production had reached 34.76 BCF.[5]

As of October 15, 2014, there were 150 active drilling rigs in North Dakota, according to the North Dakota Oil and Gas Division.[6]

Oil production in North Dakota.png
Natural gas production in North Dakota.png

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, North Dakota employed the following Oil and Gas Gross Production Tax:

  • "$0.1143 per MCF of gas."
  • "5% of gross value of natural gas or oil."

Of the revenue collected from this tax 30 percent goes to the State Legacy Fund. A formula dictates how the rest of the revenue is distributed to the Oil and Gas Impact Fund and political subdivisions within the state. One of these political subdivisions is the state general fund.[8]

Royalties and land sales

A rig worker in Williston, North Dakota

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.[9] 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 North Dakota (among the lower 48 states) was sixth in private royalty income in the nation. The study also found that for 2010:

  • Private oil revenue was $4,583 million
  • Private natural gas revenue was $173 million
  • Estimated royalty income was $423 million
  • Royalty income was 0.39 percent of state average income.[10][11]

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 North Dakota. 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.[15]

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 North Dakota. According to the PwC study, the oil and gas industry added $6.58 billion in total value in 2011, including direct, indirect and induced value. Of this $3.94 billion, or 7.4 percent of the state's total value added was direct, $1.4 billion was indirect and $1.23 billion was induced, totaling 12.3 percent of the state's total value in 2011.[15]

Employment

The PwC study attributes 64,006 jobs, or 12 percent of employment in North Dakota in 2011, to jobs created directly by, indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 27,937 people, or 5.2 percent of state total employment. Indirectly the industry employed 17,246 people and induced 18,822 jobs.

Direct, indirect and induced labor income, according to this study, was $3.83 billion, totaling 13.1 percent of North Dakota's labor income in 2011. Direct labor income from the mining sector was $2.16 billion, or 7.4 percent of the state's total. Indirect labor income totaled $941.5 billion and induced labor income was $734.6 billion.[15]

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.[16][17] 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.[18]

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.[19] 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."[20][19]

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.[17][21]

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.


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.[22] 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 returned to the surface is called wastewater, and contains large amounts of salt and other contaminants.[23] 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.[22][24]

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.[22][23]

Water

Pumpjack near Ray, North Dakota

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 2014 on the potential impacts of fracking on drinking water, and is working on effective programs for managing these potential risks.[18][25]

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 and 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.[26][27]

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.[28][29]

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.[18]

Departments, agencies and organizations

  • The Oil and Gas Division (OGD), an agency within the North Dakota Industrial Commission, regulates the state's oil and natural gas production industry. OGD's mission statement is as follows:[30]
Our mission is to encourage and promote the development, production, and utilization of oil and gas in the state in such a manner as will prevent waste, maximize economic recovery, and fully protect the correlative rights of all owners to the end that the landowners, the royalty owners, the producers, and the general public realize the greatest possible good from these vital natural resources.[31]

—North Dakota Industrial Commission, Oil and Gas Division

  • The stated goal of the Environmental Health Section (EHS) of the North Dakota Department of Health is "to safeguard the quality of North Dakota's air, land and water resources." The section is comprised of five divisions: Water Quality, Chemistry, Waste Management, Air Quality and Municipal Facilities. Specific section responsibilities include:
    • "Implementing strategies to address environmental impacts and problems associated with new developments."
    • "Administering a state hazardous waste management program."
    • "Administering a water quality management program for cleaning up targeted lakes and rivers."
    • "Protecting groundwater and drinking water aquifers."
    • "Controlling air, radiation and solid waste pollution."

Major organizations

  • The North Dakota Petroleum Council (NDPC) is a non-profit organization and trade group that represents the state's oil and gas industry. Founded in 1952, NDPC represents more than 500 companies. The group's stated purpose as follows:[32]
To provide governmental relations support to the more than 500 companies it represents who are involved in all aspects of the oil and gas industry including oil and gas production, refining, pipeline, mineral leasing, consulting, legal work, and oil field service activities in North Dakota, South Dakota, and the Rocky Mountain region.[31]

—North Dakota Petroleum Council

NDPC 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."[33][34]
  • Dakota Resource Council (DRC) is a non-profit environmental advocacy group. Founded in 1979, the group's stated mission is "to protect North Dakota's land, air, water, rural communities and agricultural economy." DRC has expressed concerns over "fracking blowouts that threaten our state's water resources," as well as the disposal of fracking waste.[35][36]

Natural gas use in North Dakota

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

In 2011, over half of North Dakota’s energy use was in the industrial sector, and just less than one quarter was used for transportation. The rest was used in residential and commercial buildings for heating, cooling, lighting and other functions. Most of the energy used in the state was in the form of coal (used primarily for industrial electricity), followed by fuel oil and natural gas.[2]

Consumption of energy for heating homes in North Dakota
Source North Dakota 2011 U.S. average 2011
Natural gas 41.2% 49.5%
Fuel oil 4.2% 6.5%
Electricity 38% 35.4%
Liquid Petroleum Gases (LPG) 13.5% 5%
Other/none 3% 3.6%

North Dakota produced 179 billion cubic feet of natural gas in 2012. About two-fifths of that production was burned for home heating. Natural gas production has surged since 2006 because of the Bakken Shale development. North Dakota has the infrastructure for liquid natural gas, including several interstate pipelines that allow for inexpensive natural gas prices.

Where electricity comes from in North Dakota[37]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 2,000 0.07% 0.01%
Coal-fired 2,297,000 78.64% 0.13%
Hydroelectric 117,000 4.01% 0.04%
Other renewables 496,000 16.98% 0.25%
Total net electricity generation 2,921,000 100% 0.07%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

News items

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

North Dakota Fracking News Feed

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See also

External links

References

  1. North Dakota Business, "Mineral Rights: The Basics," January 1, 2013
  2. 2.0 2.1 U.S. Energy Information Administration, "North Dakota Profile Analysis," December 18, 2013
  3. North Dakota Energy Forum, "North Dakota Oil and Gas History," accessed July 25, 2014
  4. North Dakota Oil and Gas Division, "North Dakota Annual Oil Production," accessed October 15, 2014
  5. North Dakota Oil and Gas Division, "Historical monthly gas production and sales statistics," accessed October 15, 2014
  6. North Dakota Oil and Gas Division, "North Dakota Drilling and Production Statistics," accessed October 15, 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. National Conference of State Legislatures, "State Revenues and the Natural Gas Boom: An Assessment of State Oil and Gas Production Taxes," June 2013
  9. Geology.com, “Mineral Rights,” accessed January 29, 2014
  10. All the data presented below are in millions of nominal dollars. The royalty income figures assume a 1/8th royalty rate.
  11. Social Science Research Network, "U.S. Private Oil and Natural Gas Royalties: Estimates and Policy Considerations," March 12, 2014
  12. IMPLAN, "IMPLAN€'s History of Expert Economic Data," accessed September 17, 2014
  13. REMI, "About Us," accessed September 17, 2014
  14. REMI, "Clients," accessed September 17, 2014
  15. 15.0 15.1 15.2 PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
  16. University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
  17. 17.0 17.1 Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
  18. 18.0 18.1 18.2 Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
  19. 19.0 19.1 Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
  20. International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 2013
  21. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  22. 22.0 22.1 22.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  23. 23.0 23.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  24. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  25. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  26. WOAI, "Research: Fracking Uses No More Water Than Traditional Oil Production," October 6, 2014
  27. Bureau of Economic Geology, "US Shale Reserves and Production Bureau Shale Gas Study," October 6, 2014
  28. U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
  29. Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
  30. North Dakota Oil and Gas Division, "Home page," accessed July 24, 2014
  31. 31.0 31.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  32. North Dakota Petroleum Council, "The Association," accessed July 25, 2014
  33. Independent Petroleum Association of America, "About IPAA," accessed July 16, 2014
  34. Independent Petroleum Association of America, "Cooperating Associations," accessed July 16, 2014
  35. Dakota Resource Council, "Oil and Gas," accessed July 25, 2014
  36. Dakota Resource Council, "About," accessed July 25, 2014
  37. U.S. Energy Information Administration, "North Dakota Profile Overview," accessed February 5, 2014