Fracking in Utah

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Fracking in Utah
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Regulation
Regulatory agency Department of Natural Resources; Division of Oil, Gas and Mining
Estate ownership Split[1]
Resources
Fossil fuels present Oil, natural gas and coal[2]
Fracking
Other state fracking pages
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Fracking in Utah depends on available energy resources, the location of these resources, applicable laws and regulations, politics, and the power of environmental and industry groups. Decisions by policymakers and citizens, including state and local governments and ballot initiatives, affect if and how fracking occurs in a state.

Fracking background

See also: Fracking

Hydraulic fracturing, or "fracking," is the process of injecting fluid--mostly water and sand, but with additional chemicals--into the ground at a high pressure to fracture shale rocks and release the oil and natural gas inside.

Recent technological advances in oil and gas drilling--horizontal drilling and hydraulic fracturing--have created a wealth of opportunities and challenges for states with fossil fuel reserves that can be accessed through the combination of these two technologies. The increased use of fracking has been an economic boon for many states, not only those with fracking, but also those with supporting industries, such as frac sand mining or associated machinery manufacturing.

Opponents of fracking argue that the potential negative environmental and human health impacts could be significant. Although wells have been fracked for over 65 years in the United States, concerns have been raised about whether federal, state and local regulatory agencies can keep up with the recent rapid increase in fracking activity, and adequately protect the environment and human health. As with any type of energy extraction, either traditional or renewable, there are economic, environmental and political tradeoffs.

History

The first reported discovery of oil in Utah occurred in 1850. Commercial production did not begin until 1948 when a well was drilled in the Uinta Basin that produced 300 barrels of oil per day. Natural gas was first discovered in the state in 1891 on the eastern shore of the Great Salt Lake. To date, the state has produced more than 1.2 billion barrels of oil and more than 6 trillion cubic feet of natural gas.[3][4]

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.[5]

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, Utah employed the following Oil and Gas Severance Tax on the marketed value of oil or natural gas:

  • 3 percent if oil is less than $13 per barrel
  • 5 percent if oil is above $15 per barrel
  • 3 percent if natural gas is valued less than $1.50 per MCF
  • 5 percent if natural gas is valued above $1.50 per MCF
  • 4 percent on the value of natural gas liquids

There are exemptions for stockpiles of oil or gas older than two years, stripped wells and during the first 6 months a development well is producing. Additionally, "[e]nhanced recovery projects receive a 50% tax reduction." Revenue from this tax is earmarked for the Uintah Basin Revitalization Fund (for oil or natural gas extracted from Ute land), and the Navajo Revitalization Fund (for oil or natural gas extracted from Navajo Nation land). Any remaining revenue go the general fund. If total revenue exceeds $27,600,000 the excess revenue is deposited in the state permanent trust fund.[6]
Utah also has an Oil and Gas Conservation Fee of $0.002 of the value of oil or natural gas. The revenue from this tax goes to the Oil and Gas Conservation Account of the General Fund.[6]

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 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.[7]

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 Utah (among the lower 48 states) was 12th in private royalty income in the nation. The study also found that for 2010:

  • Private oil revenue was $1,039 million
  • Private natural gas revenue was $645 million
  • Estimated royalty income was $210 million
  • Royalty income was 0.24 percent of state average income.[8][9]

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 Utah. 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.[13]

PricewaterhouseCoopers LLP (PwC), a research consulting firm, completed a study for the American Petroleum Institute about the economic impact of the oil and natural gas industry in 2011 in Utah. According to the PwC study, the oil and gas industry added $8.38 billion in total value to the state in 2011, including direct, indirect and induced value. Of this, $4.13 billion, or 3.4 percent of the state's total value added, was direct, $2.11 billion was indirect and $2.14 billion was induced. In total, this accounted for 6.9 percent of the state's total value in 2011.[13]

Employment

The PwC study attributes 79,605 jobs, or 4.9 percent of employment in Utah in 2011, to jobs created directly by, indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 23,560 people, or 1.4 percent of total state employment. Indirectly, the industry employed 24,725 people and induced 31,320 jobs.

Direct, indirect and induced labor income, according to this study, was $4.09 billion, totaling 5.3 percent of Utah's labor income in 2011. Direct labor income from the mining sector was $1.5 billion, or 1.9 percent of the state's total. Indirect labor income totaled $1.34 billion and induced labor income was $1.25 billion.[13]

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.[14][15] 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.[16]

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.[17] 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."[18][17]

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.[15][19]

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.[20] 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.[21] 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.[20][22]

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.[20][21]

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.[16][23]

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.[24][25]

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.[26][27]

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.[16]

Departments, agencies and organizations

The Division of Oil, Gas and Mining (DOGM) is an agency within the Utah Department of Natural Resources. Founded in 1955, the division's stated mission is "to promote the exploration, development and conservation of oil and natural gas resources in Utah, to foster a fair economic return to the general public for such resources, and to maintain sound regulatory practices to ensure environmentally acceptable activities." The division's responsibilities include:[28]

  • All operations for and related to the production of oil or natural gas including: drilling, testing, equipping, completing, operating, producing, and plugging of wells, and reclamation of sites.
  • The spacing and location of wells.
  • Operations to increase ultimate recovery, such as:
    • cycling of natural gas,
    • the maintenance of pressure, and
    • the introduction of natural gas, water, or other substances into a reservoir.
  • The disposal of salt water and oil-field wastes.
  • The underground and surface storage of oil, natural gas, or products.
  • The flaring of natural gas from an oil well.[29][30]

—Utah Department of Natural Resources; Division of Oil, Gas and Mining

The Utah Department of Environmental Quality (UDEQ) is the state's environmental protection agency. The department's stated mission is "to safeguard public health and [Utah's] quality of life by protecting and enhancing the environment." The department implements and enforces state and federal environmental laws and regulations. The department is comprised of the following regulatory divisions:[31]

    • Division of Air Quality
    • Division of Drinking Water
    • Division of Environmental Response and Remediation
    • Division of Solid and Hazardous Waste
    • Division of Radiation Control
    • Division of Water Quality

Major organizations

The Utah Petroleum Association (UPA) is a non-profit organization and trade group that represents the state's oil and gas industry. Founded in 1958, the association's mission statement is as follows:[32]

  • Promote the discovery, development, production, transportation, refining, conservation, and marketing of oil and gas in the State of Utah
  • Furnish opportunities for open discussion and lawful interchange of information
  • Provide education concerning all facets of the petroleum industry with particular reference to the state of Utah
  • Accumulate and disseminate information concerning the petroleum industry
  • Generally foster the best interests of the public and the industry
  • Add value through membership to participating companies[30]

—Utah Petroleum Association

The Utah 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." Both the national organization and the chapter have voiced opposition to fracking.[33][34]

Energy consumption

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

In 2011, the main consumer of energy in Utah was the transportation sector. The smallest amount of energy was consumed by the commercial sector. The industrial sector was the second largest consumer of energy in Utah during 2011. Almost half of the energy consumed by residents in homes is in the form of natural gas.[35]

Consumption of energy for heating homes in Utah
Source Utah 2011 U.S. average 2011
Natural gas 86.2% 49.5%
Fuel oil .2% 6.5%
Electricity 9.5% 35.4%
Liquid Petroleum Gases (LPG) 2.3% 5%
Other/none 1.9% 3.6%

Utah produced 1,128.7 trillion BTU of energy in 2011. More than 84 percent of that energy came from natural gas and coal.[36]

More than four-fifths of Utah’s electricity is generated from coal, and almost all of the coal used is mined from Utah with the rest coming primarily from Colorado. The next largest source of electricity in Utah is natural gas. Utah is a net generator of electricity, and thus exports electricity. Utah’s largest power generating station is owned by the Los Angeles Department of Water and Power.[37]

Where electricity comes from in Utah[38]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 2 0.05% 0%
Natural gas-fired 576 15.1% 0%
Coal-fired 3,094 81.1% 0%
Nuclear 0 0% 0%
Hydroelectric 45 1.18% 0%
Other renewables 80 2.1% 0%
Total net electricity generation 3,815 100% 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

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

Utah Fracking News Feed

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See also

External links

References

  1. Rammell Law - Oil and Gas Law Blog, "Utah Oil and Gas Surface Rights - Split Estates," January 6, 2014
  2. U.S. Energy Information Administration, "Utah Profile Analysis," updated December 18, 2013
  3. Utah History to Go, "The Growth of Utah's Petroleum Industry," accessed July 29, 2014
  4. Utah Geological Survey, "100 Years of Exploration," accessed July 29, 2014
  5. 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
  6. 6.0 6.1 National Conference of State Legislatures, "State Revenues and the Natural Gas Boom: An Assessment of State Oil and Gas Production Taxes," June 2013
  7. Geology.com, “Mineral Rights,” accessed January 29, 2014
  8. All the data presented below are in millions of nominal dollars. The royalty income figures assume a 1/8th royalty rate.
  9. Social Science Research Network, "U.S. Private Oil and Natural Gas Royalties: Estimates and Policy Considerations," March 12, 2014
  10. IMPLAN, "IMPLAN€'s History of Expert Economic Data," accessed September 17, 2014
  11. REMI, "About Us," accessed September 17, 2014
  12. REMI, "Clients," accessed September 17, 2014
  13. 13.0 13.1 13.2 PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
  14. University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
  15. 15.0 15.1 Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
  16. 16.0 16.1 16.2 Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
  17. 17.0 17.1 Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
  18. International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 2013
  19. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  20. 20.0 20.1 20.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  21. 21.0 21.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  22. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  23. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  24. WOAI, "Research: Fracking Uses No More Water Than Traditional Oil Production," October 6, 2014
  25. Bureau of Economic Geology, "US Shale Reserves and Production Bureau Shale Gas Study," October 6, 2014
  26. U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
  27. Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
  28. Utah Oil and Gas, "Welcome," accessed July 29, 2014
  29. Utah Oil and Gas, "What We are Responsible For," accessed July 29, 2014
  30. 30.0 30.1 Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  31. Utah Department of Environmental Quality, "Welcome to DEQ," accessed July 29, 2014
  32. Utah Petroleum Association, "About UPA," accessed July 29, 2014
  33. Utah Chapter Sierra Club, "Home page," accessed July 29, 2014
  34. Sierra Club, "Dirty, Dangerous, and Run Amok," accessed July 29, 2014
  35. U.S. Energy Information Administration, “Residential Sector Energy Consumption Estimates, 2011,” January 16, 2014
  36. “U.S. Energy Information Administration”, “State Energy Data System, Production,” accessed February 18, 2014
  37. U.S. Energy Information Administration, “Utah Profile Overview,” December 18, 2013
  38. U.S. Energy Information Administration, "Utah Overview," accessed February 15, 2014