Fracking in South Dakota

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Fracking in South Dakota
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Regulation
Regulatory agency Department of Environment and Natural Resources; Minerals and Mining Program; Oil and Gas Section
Estate ownership Split[1]
Resources
Fossil fuels present Oil and natural gas[2]
Number of wells drilled 2,081[3]
Fracking
Other state fracking pages
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Fracking in South 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.

Most oil and gas activity occurs in Harding County

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 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.

History

The first producing oil well in South Dakota was drilled in 1953. Commercial oil production began in 1954 in Harding County. Through 2010, Harding County had produced more than 44 million barrels of oil since production began. This accounted for nearly 90 percent of the state's total oil production.[4] Commercial gas production began in 1899 in Pierre. Most modern production (dating from 1977 to present) occurs in Harding County.[4]

Production

Oil production data for South Dakota is available as far back as 1983. In 1983 the state produced 89,840 barrels of oil. Production generally rose until it peaked for the dates shown in 1987 when 252,601 barrels of oil were produced. Since then production has generally declined, except for two bumps in production. In 2013, South Dakota produced 14,537 barrels of oil.[5][6][7]

Natural gas production has followed a similar trend in the state. In 1983 South Dakota produced 187,059 MCF of natural gas. Production sharply increased, reaching 449,478 MCF the following year. Production sharply declined until 1988 when production levels increased to 406,673 MCF of gas. After 1988 production generally declined, expect for a spike in 1997, during which 76,273 MCF of gas were produced. In 2013, South Dakota produced 1,643 MCF of gas, the least amount of gas produced any year since 1983.[8][9][10]

As of May 2014, South Dakota had issued eight permits for oil and gas drilling in the state. In 2013 South Dakota issued 22 such permits.[11]

Oil production in South Dakota
Natural gas production in South Dakota

Economic impact

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.[12]

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 South Dakota. According to the PwC study, the oil and gas industry added $1.46 billion in total value in 2011, including direct, indirect and induced value. Of this, $546.4 million, or 1.5 percent of the state's total value added, was direct, $380.1 million was indirect and $532.6 million was induced. In total this accounted for 3.9 percent of the state's total value in 2011.[12]

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, South Dakota employed a 4.5 percent Energy Minerals Severance Tax on oil and gas. This tax is divided equally between the County Trust and Agency Account and the general fund. The state also has a excise tax of $0.0024, known as the Conservation Tax on Severance of Energy Materials. The revenue from this tax funds the Environmental and Natural Resources Fee Fund.[13]

Employment

The PwC study attributes 22,471 jobs, or 3.9 percent of employment in South Dakota in 2011, to jobs created directly or indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 9,148 people, or 1.6 percent of total state employment. Indirectly, the industry employed 5,041 people and induced 8,281 jobs.

Direct, indirect and induced labor income, according to this study, was $857 million, totaling 3.5 percent of South Dakota's labor income in 2011. Direct labor income from the mining sector was $304.8 million, or 1.2 percent of the state's total. Indirect labor income totaled $232.2 million and induced labor income was $319.9 million.[12]

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.[14]

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 VOCs and methane. When natural gas obtained due to fracking 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.[15] During the extraction process, however, more 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."[16][15]

Some environmental groups have also 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]

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][20]

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.


See also
Local fracking on the ballot

Statewide fracking on the ballot

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.[21] 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.[22] 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.[21][23]

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.[21][22]

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. 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.[19][24]

Health

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.[25][26]

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. 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.[19]

Geographical areas of activity

Map of oil and gas wells and fields in South Dakota

Oil and gas activity occurs in mainly in Harding County, which can be seen in the top left of the map to the right. Harding County has 14 oil fields and three gas fields. There is also oil and gas activity in Custer, Meade, Butte and Perkins counties.[27][28]

Departments, agencies and organizations

  • The Minerals and Mining Program (a division of the South Dakota Department of Environment and Natural Resources) regulates the state's oil, gas and mineral industries, "Ensuring that the impacts from mineral exploration, mining, and oil and gas production in South Dakota to the environment are minimized and that affected lands are reclaimed and useable after the resources have been extracted." Specific responsibilities include issuing permits (for exploration, mining and drilling), inspecting and monitoring development activities and ensuring compliance with applicable laws and regulations.[29]
  • The South Dakota Department of Environment and Natural Resources (DENR) is the state agency responsible for environmental protection and natural resource management and regulation. The department's mission statement is as follows:[30]
The mission of DENR is to protect public health and the environment by providing environmental monitoring and natural resource assessment, technical and financial assistance for environmental projects, and environmental regulatory services; all done with reduced red tape, expanded e-government functions, and exceptional customer service to promote a prosperous economy while protecting South Dakota's environment and natural resources for today and tomorrow.[31]

—South Dakota Department of Environment and Natural Resources

The department's Division of Environmental Services includes the following programs:[30]
  • Air Quality
  • Drinking Water
  • Ground Water Quality
  • Minerals and Mining
  • Surface Water Quality
  • Waste Management
  • Water Rights
  • Plans and Specifications

Major organizations

  • The South Dakota Oil and Gas Association (SDOGA) is a non-profit organization and trade group that represents the state's oil and gas industry. Founded in 2012, SDOGA is "dedicated to the responsible and environmentally sound exploration, development, and production of South Dakota's oil and natural gas resources."
  • The South Dakota Chapter of the Sierra Club is a statewide chapter of the Sierra Club, an environmental advocacy group founded in 1892. The organization's stated mission is "to explore, enjoy and protect the wild places of the earth; to practice and promote the responsible use of the earth's ecosystems and resources; to educate and enlist humanity to protect and restore the quality of the natural and human environment; and to use all lawful means to carry out these objectives." The national organization has voiced opposition to fracking.[32][33]

Natural gas use in South Dakota

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

In 2011, the industrial sector consumed the most energy in South Dakota (about 40 percent). Transportation was a distant second, accounting for about a quarter of energy consumption. Commercial and residential use accounted for the remaining third. Petroleum is the most used source of energy in South Dakota, followed by coal, natural gas, hydropower and other renewables. Prices for energy resources are slightly below the national average.[2]

Consumption of energy for heating homes in South Dakota
Source South Dakota 2011 U.S. average 2011
Natural gas 48.5% 49.5%
Fuel oil 3.4% 6.5%
Electricity 27.7% 35.4%
Liquid Petroleum Gases (LPG) 17% 5%
Other/none 3.5% 3.6%

South Dakota produced 249 trillion BTU of energy in 2011. Of that, over 50 percent came from biofuels and about 38 percent came from what the U.S. Energy Information Administration classifies as 'other,' which is "assumed to equal consumption of all renewable energies except biofuels." The remaining amount was in the form of natural gas and crude oil. South Dakota produced no energy from coal or nuclear power.[34]

Where electricity comes from in South Dakota[35]
Type Amount generated (MWh) % of state** % of U.S.**
Natural gas-fired 62 6.44% 0%
Coal-fired 262 27.23% 0%
Hydroelectric 354 36.8% 0%
Other renewables 284 29.52% 0%
Total net electricity generation 962 100% 0%
**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.

News items

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

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

South Dakota Fracking News Feed

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See also

External links

References

  1. South Dakota Codified Laws, "Title 43, Chapter 30A, Section 1," accessed July 29, 2014
  2. 2.0 2.1 U.S. Energy Information Administration, "South Dakota Profile Analysis," updated December 18, 2013
  3. State of South Dakota, "Search Online Databases," accessed August 4, 2014
  4. 4.0 4.1 South Dakota Department of Environment and Natural Resources - Mineral and Mining Program; Oil and Gas Section, "South Dakota Oil and Gas Development: Past, Present, and Future," January 22, 2010
  5. South Dakota Department of Environment and Natural Resources, "Production Data" accessed August 4, 2014
  6. One barrel of oil produces about 19 gallons of gas.
  7. U.S. Energy Information Administration, "Frequently Asked Questions," May 30, 2013, accessed March 18, 2014
  8. South Dakota Department of Environment and Natural Resources, "Production Data" accessed August 4, 2014
  9. One barrel of oil produces about 19 gallons of gas.
  10. U.S. Energy Information Administration, "Frequently Asked Questions," May 30, 2013, accessed March 18, 2014
  11. South Dakota Department of Environment and Natural Resources, "Oil and Gas Drilling Permits," accessed August 4, 2014
  12. 12.0 12.1 12.2 PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
  13. National Conference of State Legislatures, "State Revenues and the Natural gas Boom: an Assessment of State oil and gas Production Taxes," June 2013
  14. Geology.com, “Mineral Rights,” accessed January 29, 2014
  15. 15.0 15.1 Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
  16. International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 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. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  21. 21.0 21.1 21.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  22. 22.0 22.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  23. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  24. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  25. U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
  26. Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
  27. South Dakota Department of Environment and Natural Resources, "Maps," accessed August 4, 2014
  28. South Dakota Department of Environment and Natural Resources, "Oil and Gas Well, Test Hole, and Permit Locations with Field Boundaries, Harding County, SD," accessed August 4, 2014
  29. South Dakota Department of Environment and Natural Resources, "Minerals and Mining Program," accessed July 29, 2014
  30. 30.0 30.1 South Dakota Department of Environment and Natural Resources, "About Us," accessed July 29, 2014
  31. Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  32. Sierra Club South Dakota Chapter, "Home page," accessed July 29, 2014
  33. Sierra Club, "Dirty, Dangerous, and Run Amok," accessed July 29, 2014
  34. U.S. Energy Information Administration, “State Energy Data System, Production,” accessed February 25, 2014
  35. U.S. Energy Information Administration, "South Dakota Profile Overview," accessed February 25, 2014