Fracking in West Virginia
Energy policy • Fracking policy • Public education • School choice • Public pensions • State budget • Ballot measures • Ballot access
|Fracking in West Virginia|
|Regulatory agency||Department of Environmental Protection; Office of Oil and Gas|
|Fossil fuels present||Oil, natural gas and coal|
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- 1 Fracking background
- 2 History
- 3 Production
- 4 Economic impact
- 5 Environmental impact
- 6 Socioeconomic impact
- 7 Departments, agencies and organizations
- 8 Major organizations
- 9 Natural gas use in West Virginia
- 10 News items
- 11 See also
- 12 External links
- 13 References
- 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.
The first reported discovery of natural gas in West Virginia occurred in 1815 near Charleston at a well drilled for salt. In 1859, near the Hughes River, oil was discovered at another well drilled for salt. This well produced 200 barrels per day in 1859 and encouraged further exploration. Oil production peaked in 1900 at 16 million barrels, though natural gas production continued to grow until 1917. Natural gas production declined from 1917 through 1934, at which point production began to increase. This increase in production lasted until roughly 1970.
The U.S. Energy Information Administration (EIA) has crude oil production dating back to 1981 in West Virginia, when 3,473,000 barrels of oil were produced. After a short increase, production steadily declined in the state, reaching a low of 1,226,000 barrels in 2001. Production reached 1,501,000 barrels in 2009, after which production sharply increased, reaching 6,386,000 barrels in 2013.
The EIA has natural gas production data for West Virginia starting in 1991, when 198,605 MMCF gas were produced. Production steadily increased across the years shown, until 2011 when a sharp increase occurred. In 2012, the most recent year for which data are available 539,861 MMCF of natural were produced.
Natural gas is produced from the Marcellus shale, which found in the northern end of the state. It is estimated that West Virginia's reserves of natural gas could be as much as 6 trillion cubic feet. Total proven natural gas reserves in the U.S. in 2011 were 334.067 trillion cubic feet.
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.
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, West Virginia employed the following oil and gas severance tax:
- "5% [of the] gross value of natural gas or oil
- Natural gas from wells producing less than 5,000 MCF per day and oil wells producing less than 0.5 barrels per day [are] exempt. Wells not producing marketable quantities for 5 consecutive years [are] exempt for up to 10 years."
Of the revenue collected, 90 percent is deposited into the general fund. The first $24 million of this 90 percent is directed to pay off debt on infrastructure bonds. The remaining 10 percent goes to counties and municipalities. Of this 10 percent, 75 percent goes to the oil or gas producing county, with the remainder going to all counties and municipalities on a population basis. When it comes to coalbed methane 75 percent of the first $4 million collected goes to the oil or gas producing county. The remaining 25 percent is equally distributed to non-oil and gas producing counties.
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.
Economic impact study
|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.
The following data are taken from a study done by PricewaterhouseCoopers (PwC), a research consulting firm, for the American Petroleum Institute about the economic impact of the oil and natural gas industry in 2011. According to the PwC study, the oil and gas industry added $5.76 billion in total value to West Virginia in 2011, including direct, indirect and induced value. Of this, $2.33 billion, or 3.5 percent of the state's total value added, was direct, $1.98 billion was indirect and $1.45 billion was induced. In total, this accounted for 8.7 percent of the state's total value in 2011.
The PwC study attributes 80,401 jobs, or 8.9 percent of employment in West Virginia in 2011, to jobs created directly or indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 35,925 people, or four percent of total state employment. Indirectly, the industry employed 22,374 people and induced 22,102 jobs.
Direct, indirect and induced labor income, according to this study, was $3.64 billion, totaling 8.8 percent of West Virginia's labor income in 2011. Direct labor income from the mining sector was $1.61 billion, or 3.9 percent of the state's total. Indirect labor income totaled $1.21 billion and induced labor income was $818.4 million.
Because of the sudden and unprecedented growth in fracking across the United States, getting high-quality, unbiased, state-specific information on the environmental impacts of fracking can be difficult. Most studies that would fit those first two qualifications are government studies that focus on the nation as a whole. As such, much of the information that follows in this section may only apply generally to the state. State-specific information has been added where possible.
As with any type of energy extraction, there are several areas of risk when it comes to air quality. 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. 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."
Some environmental groups have also raised concerns that methane could be leaked during the extraction process, resulting in unnecessary pollution. Most of this pollution occurs during the well completion phase. Fracking operations can also emit known carcinogens, which have been linked with increased rates of cancer.
A 2014 report from the U.S. Environmental Protection Agency found a decrease of 3.3 percent in overall greenhouse gas emissions and a 12 percent decrease in methane emissions from 2011 to 2012. Natural gas extraction is the second largest producer of methane, after cattle.
The central and eastern United States have been experiencing an increase in earthquakes over the last few years, according to the U.S. Geological Survey (USGS), the government agency responsible for such data. Studies from the USGS have not found fracking directly responsible for this increase in felt earthquakes; however, the USGS is looking into regulations that would use seismic data to determine thresholds dictating when and where fracking can occur. There is a growing body of evidence suggesting that this growth in the number earthquakes has been caused by the increased use of injection wells to dispose of fracking wastewater. While fracking has been rarely known to cause earthquakes, there is an established scientific link between earthquakes and the disposal of fluids in deep, underground injection wells. Once a well has been fracked, the water that returns to the surface is called wastewater, which contains large amounts of salt and other contaminants. Some of this water can be recycled, but that water which can't be recycled is often stored in injection wells. These injection wells are generally considered the safest and most cost-effective place for wastewater remaining from fracking operations to be stored. Injection wells are located thousands of feet underground and are encased in cement. Multiple drilling wells often rely on one disposal well for storing their wastewater. The U.S. Environmental Protection Agency estimates there are 144,000 of these wells across the United States receiving 2 billion gallons of frack fluid per day.
Induced seismology, or man-made earthquakes, have been around for decades and can be caused by mining, damming rivers and injecting fluids into underground wells. Earthquakes are caused by injection wells as water is pumped into underground wells, causing the faults under the earth to slip. Even though scientists at the USGS have even been able to cause earthquakes on purpose by carefully injecting liquid into the earth, the link between injection wells and earthquakes is not fully understood. One of the largest concerns for scientists and regulators is that they do not have the tools to predict whether wastewater will cause seismic activity. These concerns are compounded by the lack of knowledge about where faults are located across the central and eastern United States. The USGS is just beginning to map these areas in more detail in order to understand the seismic risks. As of June 2014, these earthquakes have typically been small, two or three in magnitude on the Richter scale, but at least one scientist has raised concerns that earthquakes could grow in intensity if old injection wells continue to be used for storage.
When it comes to water protection and fracking there are four main areas of risk: the depletion of fresh water sources, spills and leaks of fracking fluid into water, mismanaged produced water and flowback, and stormwater pollution. Up to 10 million gallons of fresh water may be required to frack one well. Stormwater, flowback, produced water and wastewater can be harmful because they contain total dissolved solids and naturally occurring radioactive materials. Because of the recent and rapid growth in fracking there are still many uncertainties about the effects of fracking on water. There are studies that link fracking to groundwater contamination, but they remain controversial. The U.S. Environmental Protection Agency is releasing a report in 2014 on the potential impacts of fracking on drinking water, and is working on effective programs for managing these potential risks.
Because of the recent and rapid growth of fracking, little is known about the potential impacts to human health. Government agencies dealing with human health issues have raised concerns about some chemicals that can released during the fracking process, including VOCs. The Centers for Disease Control is working with the EPA and federal, state and local agencies to better understand potential impacts.
Fracking can also present challenges to communities. Increased oil and natural gas production happens in boom or bust cycles, and often these cycles disproportionately occur in rural communities. Increased oil and gas activity near homes has been traced to depressed home values. Large scale fracking booms can also lead to increases in crime, such as substance abuse, sex trade and domestic abuse. An influx of oil and gas workers also strains housing and traffic resources. This lack of housing can push oil and gas workers into 'man camps', or "clusters of mobile homes, RVs, and trucks" or into hotels. A fracking boom also puts heavy traffic on roads, which can strain infrastructure, increase traffic accidents, and increase the likelihood of oil spills. These changes can force local governments to respond by hiring more police, social workers, health care workers and emergency response personnel, thereby spending more funds on repairing roads and social programs. Currently, much of the tax revenue generated by the oil and gas industry goes to the federal and state government, making it difficult for local governments to respond to strains on their infrastructures.
Departments, agencies and organizations
- The Office of Oil and Gas is a division of the West Virginia Department of Environmental Protection. The office is charged with regulatory authority over all aspects of the state's oil and natural gas industry (including exploration, drilling, storage and production of oil and natural gas). The office's mission statement is as follows:
|“||To protect the public health, environment, and other natural resources through the regulation of oil and gas resource development, and the protection and restoration of abandoned oil and gas sites, while understanding the need for the development of additional oil and gas resources.||”|
—West Virginia Department of Environmental Protection; Office of Oil and Gas
- The West Virginia Department of Environmental Protection (WVDEP) implements and enforces both federal and state environmental regulations. WVDEP was first established by legislative order in 1992 as the Division of Environmental Protection. In 2001, the Division of Environmental Protection became the Department of Environmental Protection, a cabinet-level agency. The department contains four environmental regulatory divisions:
- Air Quality
- Mining and Reclamation
- Water and Waste Management
- Office of Oil and Gas
- The Independent Oil and Gas Association of West Virginia (IOGAWV) is a non-profit organization and trade group that represents the state's oil and natural gas industry. Founded in 1959, IOGAW's mission statement is as follows:
|“||IOGA’s purpose is to promote and protect the West Virginia Oil and Natural Gas producing industry through:
—Independent Oil and Gas Association of West Virginia
- IOGAWV 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."
- The West Virginia Chapter of the Sierra Club is a statewide chapter of the Sierra Club, an environmental advocacy group founded in 1892. The group'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 group has voiced opposition to fracking.
Natural gas use in West Virginia
- For more information on energy consumption in West Virginia, see "Energy policy in West Virginia"
In 2011, roughly 38 percent of West Virginia’s energy use was for industrial purposes, 23 percent for transportation and another 23 percent for residential use. The final 15 percent was used for commercial purposes. Most of the energy used in the state was in the form of electricity, used primarily for industrial, residential and commercial purposes, followed by coal and natural gas.
|Consumption of energy for heating homes in West Virginia|
|Source||West Virginia 2011||U.S. average 2011|
|Liquid Petroleum Gases (LPG)||4.5%||5%|
West Virginia produced 3,820.8 trillion BTU of energy in 2011. Of that, 87 percent came from coal and just over 11.5 percent came from natural gas. The remaining 1.5 percent came from what the U.S. Energy Information Administration classifies as 'other' renewable energies.
The state has over 4,000 miles of pipeline, making it an important hub for the region during winter months when homes need heating. Natural gas shipped from Ohio and Kentucky comes through West Virginia to Pennsylvania and Virginia. An important addition to the natural gas infrastructure of the state is the Appalachian-to-Texas Express Pipeline (ATEX), which will bring liquid natural gas from the Appalachian region to Texas for consumer plastics production.
|Where electricity comes from in West Virginia|
|Type||Amount generated (MWh)||% of state**||% of U.S.**|
|Total net electricity generation||6,520||100%||0%|
|**Note: Because the U.S. Energy Information Administration (EIA) does not include all of a state's energy production in these figures, the EIA totals do not equal 100 percent. Instead, we have generated our own percentages.|
This section displays the most recent stories in a Google news search for the term "West + Virginia + Fracking"
- All stories may not be relevant to this page due to the nature of the search engine.
- U.S. Energy Information Administration, "West Virginia Profile"
- Frac Focus, "National Hydraulic Fracturing Chemical Registry"
- West Virginia Surface Owners' Rights Organization, "Home page," accessed July 30, 2014
- U.S. Energy Information Administration, "West Virginia Profile Analysis," updated December 18, 2013
- West Virginia Geological and Economic Survey, "History of WV Mineral Industries - Oil and Gas," updated July 16, 2004
- U.S. Energy Information Administration, "Crude Oil Production," July 30, 2014
- U.S. Energy Information Administration, "Natural Gas Gross Withdrawals and Production," July 31, 2014
- U.S. Energy Information Administration, "Dry Natural Gas Proved Reserves," accessed February 18, 2014
- 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
- National Conference of State Legislatures, "State Revenues and the Natural gas Boom: an Assessment of State oil and gas Production Taxes," June 2013
- Geology.com, “Mineral Rights,” accessed January 29, 2014
- IMPLAN, "IMPLAN's History of Expert Economic Data," accessed September 17, 2014
- REMI, "About Us," accessed September 17, 2014
- REMI, "Clients," accessed September 17, 2014
- PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
- Cooperative Institute for Research Environmental Sciences,, "New study: U.S. power plant emissions down," January 9, 2014
- International Energy Agency, "Redrawing the Energy-Climate Map," June 10, 2013
- University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
- Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
- Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
- The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
- U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
- National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
- National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
- U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
- U.S. Department of Health and Human Services, "Garfield County," March 13, 2008, accessed March 10, 2014
- Centers for Disease Control, "Review of Federal Hydraulic Fracturing Research," April 26, 2013, accessed March 10, 2014
- West Virginia Department of Environmental Protection - Office of Oil and Gas, "Our Mission," accessed July 30, 2014
- Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
- West Virginia Department of Environmental Protection, "Citizen's Guide," accessed July 30, 2014
- Independent Oil and Gas Association of West Virginia, "About IOGAWV," accessed July 30, 2014
- Independent Petroleum Association of America, "About IPAA," accessed July 16, 2014
- Independent Petroleum Association of America, "Cooperating Associations," accessed July 16, 2014
- West Virginia Chapter of the Sierra Club, "About," accessed July 30, 2014
- Sierra Club, "Dirty, Dangerous, and Run Amok," accessed July 29, 2014
- U.S. Energy Information Administration, “State Energy Data System, Production,” accessed February 18, 2014
- Enterprise Products Partners L.P., "Home," accessed March 4, 2014
- U.S. Energy Information Administration, "West Virginia Profile Overview," accessed February 5, 2014
State of West Virginia
|State executive officers||
Governor | Lieutenant Governor | Attorney General | Secretary of State | Treasurer | State Auditor | Superintendent of Schools | Commissioner of Insurance | Commissioner of Agriculture | Director of Natural Resources | Commissioner of Labor | Chairman of Public Service Commission |