Fracking in Tennessee

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Fracking in Tennessee
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Regulation
Regulatory agency Department of Environment and Conservation; Board of Water Quality, Oil and Gas
Estate ownership Split[1]
Resources
Fossil fuels present Oil, natural gas and coal[2]
Fracking
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Fracking in Tennessee 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 and gas were discovered in Tennessee in the early 19th century, although commercial production of oil did not begin until 1866 (at the Spring Creek field in Overton County). The state's first million-barrel oil field was discovered in Scott County in 1969. State regulation of the oil and gas industry began in 1968.[3]

Production

In 2000, 346,332 barrels of oil were produced in Tennessee. Production was very volatile across this period. Production peaked for the years shown in 2001, when 386,428 barrels of oil were produced. Production reached its lowest point in 2010 when 256,505 barrels of oil were produced. In 2013, the most recent year for which data are available, 334,013 barrels of oil were produced.[4]

Natural gas production in Tennessee was much less volatile across the years shown. In 2000, 1,154,197 MCF (1.15 BCF) of natural gas were produced. Production then generally increased during the years shown, peaking in 2012 when 5,889,332 MCF (5.89 BCF) of natural gas were produced. In 2012, the most recent year for which data are available, 5,400,258.12 MCF (5.4 BCF) of natural gas were produced.[4]

Oil production in Tennessee.png
Natural gas production in Tennessee.png

Areas of activity

Map of producing wells in Tennessee in 2013.
Map of oil producing counties in Tennessee in 2013.
Map of natural gas producing counties in Tennessee in 2013.

In 2013, 11 counties in Tennessee produced oil. Morgan County led production, with 82,826.65 barrels of oil produced in 2013 from 333 producing wells. Natural gas was produced in eight counties in 2013. Anderson County led production, with over 2.36 BCF of natural gas produced from 326 wells.[4]

To the right are several maps illustrating the location of oil and gas production in Tennessee in 2013. First is a map showing the number of producing wells in Tennessee. Below that are two maps of the counties where oil and natural gas were produced.[5]

Permitting

The Tennessee Board of Water Quality, Oil and Gas issues oil and gas permits in the state. The table below has permitting data going back to 2003 when 285 oil and gas permits were issued. Permitting peaked in 2007 when 417 permits were issued. In 2013, the most recent year for which data are available, 147 permits were issued.[4]
Note: Click on a column heading to sort the data.

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.[6]

Taxes, fees and revenue

Severance tax revenue Tennessee.png

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, Tennessee employed a tax of "3% of [the] sale price of natural gas and crude oil." Of the revenue collected from this tax, one-third goes to the producing county. The remaining two-thirds goes to the state general fund.[7]

Tennessee collected $830,000 in severances taxes from the oil and gas industry in 2004. Revenue peaked in 2008, when $2,154,000 was collected. Revenue fell in 2009, after which revenue increased until 2013 when it reached $1,523,000.[4]

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.[8]

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.[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 Tennessee. According to the PwC study, the oil and gas industry added $8.92 billion in total value in 2011, including direct, indirect and induced value. Of this $2.6 billion, or 1 percent of the state's total value added, was direct, $2.67 billion was indirect and $3.66 billion was induced. In total, this accounted for 3.4 percent of the state's total value in 2011.[12]

Employment

The PwC study attributes 111,475 jobs, or 3 percent of employment in Tennessee in 2011, to jobs created directly or indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 34,461 people, or 1 percent of state total employment. Indirectly the industry employed 28,947 people and induced 48,068 jobs.

Direct, indirect and induced labor income, according to this study, was $5.09 billion, totaling 3 percent of Tennessee's labor income in 2011. Direct labor income from the mining sector was $1.23 billion, or 0.7 percent of the state's total. Indirect labor income totaled $1.64 billion and induced labor income was $2.18 billion.[12]

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.[13][14] 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.[15]

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.[16] 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."[17][16]

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.[14][18]

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 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.[19] 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.[20] 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.[19][21]

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.[19][20]

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.[15][22]

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.[23][24]

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.[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. 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.[15]

Departments, agencies and organizations

  • The Tennessee Department of Environment and Conservation (TDEC) is the state's "chief environmental and natural resource regulatory agency." TDEC is also responsible for managing the state's parks system and conservation programs. TDEC is charged with regulatory responsibility in the following areas:[27]
    • Air pollution
    • Solid and hazardous waste
    • Radiological health issues
    • Underground storage tanks
    • Water pollution, water supply and groundwater
As of fiscal year 2013, the department had some 2,900 employees. Of these, 56 percent were involved in parks and conservation activities, while the rest were involved in the department's environmental protection efforts. The department's fiscal year 2013 budget was approximately $357 million, more than half of which came from "dedicated fees and state parks revenue."[27]
  • The Tennessee Board of Water Quality, Oil and Gas is charged with rule-making authority over the state's oil and gas production industry. The board is comprised of 12 members:[28][29]
    • Department of Environment and Conservation (ex officio member)
    • Department of Health (ex officio member)
    • Department of Agriculture (ex officio member)
    • "One person representing the public-at-large"
    • "One person representing environmental interests"
    • "One person representing counties"
    • "One person representing agricultural interests"
    • "One person representing municipalities of the state"
    • "A small generator of water pollution representing automotive interests"
    • "One person representing manufacturing industries and has current full-time employment with a manufacturing concern in Tennessee and holds a college degree in engineering or the equivalent, and has at least eight (8) years of combined technical training and experience in NPDES permit compliance and management of wastewater or water treatment facilities"
    • "One person representing the oil and gas industry"
    • "One person representing oil or gas property owners"

Major organizations

  • The Tennessee Oil and Gas Association (TOGA) is a trade group comprised of individuals "involved in the exploration, development and production of oil and natural gas in Tennessee." Founded in 1971, TOGA states the following as its goals:[30]
  • To provide a common voice to speak for the interests of the oil and gas industry in the State of Tennessee;
  • To protect, promote, foster and advance the common interests of those engaged in the oil and gas industry in the State of Tennessee and other states;
  • To protect the industry against unfair, unjust or burdensome taxation, rules and regulations;
  • To promote the exploration, drilling, production, marketing, distribution and financing of oil and gas activities;
  • To collect and disseminate relevant geological and other data and information beneficial to the industry.[31]

—Tennessee Oil and Gas Association

  • Frack-Free Tennessee is an anti-fracking community organization based in Tennessee. The group has started an online petition against fracking addressed to the governor. As of July 2014, nearly 600 people had signed.[32][33]

Natural gas use in Tennessee

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

In 2011, around 28 percent of Tennessee's energy use was for transportation and industrial purposes, and one quarter was for residential purposes. The rest was used in commercial buildings for heating, cooling, lighting and other functions. Most of the energy used in the state is in the form of coal (used primarily for nuclear power generation), followed by petroleum and electricity.[2]

Consumption of energy for heating homes in Tennessee
Source Tennessee 2011 U.S. average 2011
Natural gas 33.4% 49.5%
Fuel oil .0.5% 6.5%
Electricity 59.0% 35.4%
Liquid Petroleum Gases (LPG) 4.5% 5%
Other/none 2.6% 3.6%

Tennessee produced more than 500 trillion BTU of energy in 2011. Almost 60 percent came from nuclear, just over 6 percent came from biofuels and nine percent from coal, natural gas and crude oil. The remaining 30 percent came from what the U.S. Energy Information Administration classifies as 'other' renewable energies.[34]

Tennessee is among the lowest ten natural gas producing states in the nation. Natural gas is supplied mainly by several interstate pipelines and comes primarily from Oklahoma, Texas, Louisiana, Kansas and Canada. Interstate pipeline companies move natural gas from the production area to local utilities and through to other states. The Tennessee Regulatory Authority (TRA) regulates the rates the multiple companies charge, the services they provide to the local distribution centers (LDCs) and the construction of new pipelines.[2]

Where electricity comes from in Tennessee[35]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 6 0.12% 0%
Natural gas-fired 207 3.98% 0%
Coal-fired 2,234 42.99% 0%
Nuclear 1,894 36.44% 0%
Hydroelectric 764 14.7% 0%
Other renewables 92 1.77% 0%
Total net electricity generation 5,197 100% 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 "Tennessee + Fracking"

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

Tennessee Fracking News Feed

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See also

External links

References

  1. Tennessee Code Annotated, "Title 66, Chapter 5, Part 1, Section 111," accessed July 21, 2014
  2. 2.0 2.1 2.2 U.S. Energy Information Administration, "Tennessee Profile Analysis," updated December 18, 2013
  3. Journal of the Tennessee Academy of Science, "The History and Development of the Oil and Gas Industry in Tennessee," July 3, 1987
  4. 4.0 4.1 4.2 4.3 4.4 Kayla Harris, "Email communication with Elaine Foust, PG, from the Tennessee Oil and Gas Program," July 30, 2014
  5. American Institute of Chemical Engineers, "Geology and Petroleum Resources of Tennessee and the Use of Fracking as a Drilling Tool," April 18, 2013
  6. 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
  7. National Conference of State Legislatures, "State Revenues and the Natural gas Boom: an Assessment of State oil and gas Production Taxes," June 2013
  8. Geology.com, “Mineral Rights,” accessed January 29, 2014
  9. IMPLAN, "IMPLAN€'s History of Expert Economic Data," accessed September 17, 2014
  10. REMI, "About Us," accessed September 17, 2014
  11. REMI, "Clients," accessed September 17, 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. University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
  14. 14.0 14.1 Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
  15. 15.0 15.1 15.2 Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
  16. 16.0 16.1 Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
  17. International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 2013
  18. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  19. 19.0 19.1 19.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  20. 20.0 20.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  21. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  22. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  23. WOAI, "Research: Fracking Uses No More Water Than Traditional Oil Production," October 6, 2014
  24. Bureau of Economic Geology, "US Shale Reserves and Production Bureau Shale Gas Study," October 6, 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. 27.0 27.1 Tennessee Department of Environment and Conservation, "Department Overview," accessed July 21, 2014
  28. Tennessee Department of Environment and Conservation, "Tennessee Board of Water Quality, Oil and Gas," accessed July 21, 2014
  29. Tennessee Code Annotated, "Title 60, Chapter 1, Part 2, Section 202," accessed July 21, 2014
  30. Tennessee Oil and Gas Association, "Association Goals," accessed July 21, 2014
  31. Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  32. Frack-Free Tennessee, "End Fracking in Tennessee (And Everywhere)," July 19, 2013
  33. MoveOn.org, "End Fracking in Tennessee," accessed July 21, 2014
  34. U.S. Energy Information Administration, “State Energy Data System, Production,” accessed February 18, 2014
  35. U.S Energy Information Administration, "Tennessee Profile Overview," accessed March 1, 2014