Fracking in Wyoming

From Ballotpedia
Jump to: navigation, search

Fracking in Wyoming
Policypedia energy logo.PNG
Regulation
Regulatory agency Wyoming Oil and Gas Conservation Commission
Estate ownership Split[1]
Resources
Fossil fuels present Oil, natural gas and coal[2]
Number of wells drilled 1,086 in 2013[3]
Number of producing wells 34,426 in 2013[3]
Fracking
Other state fracking pages
AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming
Fracking in Wyoming 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.

Wyoming was ranked seventh in the nation for crude oil production and fifth in nation for natural gas production in 2013. Despite this, fracking has not yet lead to the wide-scale boom some predicted.[3][4]

The combination of horizontal drilling and fracking has however, led to increased oil production in the Powder River Basin formation, an area traditionally known for coal production. More than 590 wells have been drilled and completed in the basin since 2009. According to the U.S. Energy Information Administration, production from these wells "is entirely reliant on the application of current petroleum technology."[5]

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 oil well in the Wyoming Territory was drilled in 1883, marking the beginning of oil exploration efforts in the area. The first oil refinery in the state was built in 1895. Natural gas service in the state dates back to 1908 in Greybull. The first natural gas line in Laramie opened in 1933. The state's first interstate oil pipeline was constructed in 1938 and extended to Denver, Colorado. Although oil production began to diminish somewhat at the close of the 20th century, natural gas and coalbed methane production increased during that time.[6]

Production

The Wyoming State Geological Survey expects 2014 production to reach more than 66 million barrels of oil and 2 trillion cubic feet of natural gas. A February 2014 report stated that there were 17 oil and gas projects under development that were expected to result in 23,000 new wells.[7] In 2013, Wyoming ranked sixth in the nation for crude oil reserves and third for natural gas proven reserves.[3]

In 1981, the first year for which data are available from the U.S. Energy Information Administration (EIA), 130,563,000 barrels of oil were produced in Wyoming. This is the highest level of production for the years shown. After 1985 production declined until 2006, when 52,975,000 barrels of oil were produced. In 2013, the most recent year for which data are available, 63,230,000 barrels of oil were produced.[8]

The EIA has natural gas production data dating back to 1989, when 665,699 MMCF of natural gas were produced. Production increased for three years, dropped off for one year, and then increased almost every year from 1993 to 2009. Production peaked in 2009 when 2,335,326 MMCF (2.34 BCF) of natural gas were produced. In 2013, the most recent year for which data are available, 1.89 BCF of natural gas were produced.[9] Coalbed natural gas production accounted for 18 percent of natural gas production in the state in February 2014.[7]

Oil production in Wyoming.png
Natural gas production in Wyoming.png

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.[10]

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 $13.02 billion in total value to Wyoming in 2011, including direct, indirect and induced value. Of this, $3.03 billion, or 22.8 percent of the state's total value added, was direct, $2.5 billion was indirect and $1.49 billion was induced. In total, this accounted for 32.9 percent of the state's total value in 2011.[10]

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, Wyoming employed the following oil and gas severance tax:

  • "6% of fair market value for natural gas or oil.
  • 4% on stripper oil."

Of the revenue collected from this tax 1.5 percent goes to the Permanent Wyoming Mineral Trust Fund. The remaining revenue is split as follows:

  • 62.26 percent to the state general fund,
  • 15.05 percent to the water development account,
  • 4.33 percent to the highway fund,
  • 3.88 percent to counties,
  • 2.9 percent to the construction and maintenance fund,
  • 9.25 percent to cities and towns and
  • 2.33 percent to the capital construction account.

The state also has an oil and gas conservation fee of "Up to 8/10 of a mill ($0.0008) of oil and gas market value," which funds the Oil and Gas Conservation Commission.[11] Wyoming also collects a royalty for all petroleum produced on state lands, in addition to receiving half of federal royalty revenue, for oil and gas production on federal lands in that state. The state's royalty rate is 16 2/3 percent.[3]

According to the Petroleum Association of Wyoming oil and gas production contributed $1.9 billion to the state in tax revenue in 2013.[3] A study of the oil and gas industry in Wyoming by the Research and Planning division of the Wyoming Department of Workforce Services stated that the industry generated $532 million in severance taxes in 2012.[12]

Employment

The PwC study attributes 80,040 jobs, or 20.4 percent of employment in Wyoming in 2011, to jobs created directly or indirectly by, or induced from, the oil and natural gas industry. The industry directly employed 32,933 people, or 8.4 percent of total state employment. Indirectly, the industry employed 27,164 people and induced 19,943 jobs.

Direct, indirect and induced labor income, according to this study, was $5.13 billion, totaling 21.3 percent of Wyoming's labor income in 2011. Direct labor income from the mining sector was $2.66 billion, or 11 percent of the state's total. Indirect labor income totaled $1.64 billion and induced labor income was $837.4 million.[10]

Studies

A study of the oil and gas industry in Wyoming by the Research and Planning division of the Wyoming Department of Workforce Services credited the oil and gas industry with employing 25,400 people in 2012. This represents a 5 percent increase over 2002 employment levels. Within this industry the average salary was $56,277, and total wages amounted to $1.4 billion.[7]

According to a report from the Petroleum Association of Wyoming the petroleum industry employed 25,000 people and had a payroll of $1.4 billion in 2013.[3]

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.[13]

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 Wyoming (among the lower 48 states) had the seventh most private royalty income in the nation. The study also found that for 2010:

  • Private oil revenue was $1,581 million.
  • Private natural gas revenue was $2,373 million.
  • Estimated royalty income was $494 million.
  • Royalty income was 1.9 percent of state average income.[14][15]

Environmental impact

Because of the sudden and unprecedented growth in fracking across the United States, getting high-quality, unbiased, state-specific information on the environmental impacts of fracking can be difficult. Most studies that would fit those first two qualifications are government studies that focus on the nation as a whole. As such, much of the information that follows in this section may only apply generally to the state. State-specific information has been added where possible.

Air

As with any type of energy extraction, there are several areas of risk when it comes to air quality. In the case of fracking, these risks include air pollutants such as 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.[16] 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."[17][16]

Some environmental groups have also raised concerns that methane could be leaked during the extraction process, resulting in unnecessary pollution.[18][19] 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.[20]

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.[19][21]

Earthquakes

Policypedia
Policypedia energy logo.PNG
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.[22] There is a growing body of evidence suggesting that this growth in the number earthquakes has been caused by the increased use of injection wells to dispose of fracking wastewater. While fracking has been rarely known to cause earthquakes, there is an established scientific link between earthquakes and the disposal of fluids in deep, underground injection wells. Once a well has been fracked, the water that returns to the surface is called wastewater, which contains large amounts of salt and other contaminants.[23] Some of this water can be recycled, but that water which can't be recycled is often stored in injection wells. These injection wells are generally considered the safest and most cost-effective place for wastewater 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.[22][24]

Induced seismology, or man-made earthquakes, have been around for decades and can be caused by mining, damming rivers and injecting fluids into underground wells. Earthquakes are caused by injection wells 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.[22][23]

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.[20][25]

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.[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. 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.[20]

Geographical areas of activity

Map of oil and gas in Wyoming in 2013

As of February 2014, much of the oil and gas activity in Wyoming was in the Powder River Basin. The increased oil production occurring in this basin is centered in Campbell and Converse counties.[7]

In 2013, 22 of Wyoming's 23 counties produced oil or natural gas. The only county without production was Teton County.[3] Campbell County was the leading producer of oil in Wyoming in 2012, followed by Park County and Sublette County. Sublette County produced 47.7 percent of the natural gas produced in Wyoming in 2012, Johnson County and Sweetwater County took 2nd and 3rd place for the most natural gas produced in 2012.[7]

The map to the right comes from the Wyoming State Geological Survey. Energy basins are denoted in light beige and the red lines delineate oil and gas development areas. The maps depicts two types of wells that were either spudded or permitted in 2013. Green dots mark horizontal wells, while vertical or directional wells are marked with a black dot.[7]

Departments, agencies and organizations

  • The Wyoming Oil and Gas Conservation Commission regulates the state's oil and natural gas industry. The commission identifies its most important functions as follows:[28]
  1. Processing permits and maintaining well records
  2. Performing field inspections
  3. Managing the Underground Injection Control Program
  4. Setting matters set for hearing
  5. Performing orphan well plugging
  6. Providing for website information[29]

—Wyoming Oil and Gas Conservation Commission

As of January 2013 the commission had 12 inspectors who were responsible for 3,100 wells each.[30]

  • The Wyoming Department of Environmental Quality (WYDEQ) is the state's environmental protection agency. The department was established in 1973 as a result of the passage of the Environmental Quality Act. WYDEQ is responsible for "monitoring, permitting, inspection, enforcement and restoration/remediation activities which protect, conserve and enhance the environment while supporting responsible stewardship of [the state's] resources." The department includes the following regulatory divisions:[31]
    • Abandoned Mine Land
    • Air Quality
    • Industrial Siting
    • Land Quality
    • Solid and Hazardous Waste
    • Water Quality

Major organizations

  • The Petroleum Association of Wyoming (PAW) is a non-profit organization and trade group that represents the state's oil and natural gas industry. The group was founded in 1910. PAW 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."[32][33][34]
  • The Wyoming 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.[35][36]

Natural gas use in Wyoming

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

In 2011, 58 percent of the energy consumed in Wyoming was in the industrial sector. Transportation accounted for one-fifth of the state's energy consumption; the rest was used mostly in residential and commercial buildings for heating, cooling, lighting and other functions. Most of the energy used in the state is in the form of coal, followed by natural gas and oil.[2]

Consumption of energy for heating homes in Wyoming
Source Wyoming 2011 U.S. average 2011
Natural gas 58.7% 49.5%
Fuel oil 0.5% 6.5%
Electricity 23.0% 35.4%
Liquid Petroleum Gases (LPG) 10.3% 5%
Other/none 7.5% 3.6%

Wyoming produced 10,353 trillion BTU of energy in 2011. Of that, nearly three-fourths came from coal and just under a quarter came from natural gas. The rest accounted for less than one-half of one percent and came from crude oil, biofuels and what the U.S. Energy Information Administration classifies as 'other' renewable energies.[37]

Natural gas and petroleum generate only minor amounts of electricity, although some new natural gas-fired capacity is being built to replace aging coal units. Most power from natural gas and petroleum is generated and consumed at industrial facilities.[2]

Where electricity comes from in Wyoming[38]
Type Amount generated (MWh) % of state** % of U.S.**
Petroleum-fired 3 0.07% 0%
Natural gas-fired 42 0.93% 0%
Coal-fired 3,954 87.59% 0%
Nuclear 0 0% 0%
Hydroelectric 30 0.66% 0%
Other renewables 460 10.19% 0%
Total net electricity generation 4,514 100% 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 "Wyoming + Fracking"

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

Wyoming Fracking News Feed

  • Loading...

See also

External links

References

  1. U.S. Department of the Interior - Bureau of Land Management, "Split Estate Mineral Ownership," accessed July 30, 2014
  2. 2.0 2.1 2.2 U.S. Energy Information Administration, "Wyoming Profile Analysis," updated December 18, 2013
  3. 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 Petroleum Association of Wyoming, "Wyoming Oil and Gas Facts and Figures," June 2014
  4. Buffalo Bulletin, "Wyoming oil production continues to increase," November 13, 2013
  5. U.S. Energy Information Administration, "New petroleum technology revitalizes Powder River Basin oil production," September 15, 2014
  6. WyoHistory.org, "The Oil Business in Wyoming," accessed July 30, 2014
  7. 7.0 7.1 7.2 7.3 7.4 7.5 Wyoming Stage Geological Survey, "Wyoming's Oil and Gas Resources," February 2014
  8. U.S. Energy Information Administration, "Crude Oil Production," July 30, 2014
  9. U.S. Energy Information Administration, "Natural Gas Gross Withdrawals and Production," July 31, 2014
  10. 10.0 10.1 10.2 PricewaterhouseCooper LLP, "Economic Impacts of the Oil and Natural Gas Industry on the US Economy 2011," July 2013
  11. National Conference of State Legislatures, "State Revenues and the Natural gas Boom: an Assessment of State oil and gas Production Taxes," June 2013
  12. Wyoming State Geological Survey, "Wyoming's Oil and Natural Gas Resources," accessed August 29, 2014
  13. Geology.com, “Mineral Rights,” accessed January 29, 2014
  14. All of the above data are in nominal dollars. The royalty income figures assume a 1/8th royalty rate.
  15. Social Science Research Network, "U.S. Private Oil and Natural Gas Royalties: Estimates and Policy Considerations," March 12, 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. University of Oklahoma, "Hydraulic Fracturing and Water Resources," accessed March 15, 2014
  19. 19.0 19.1 Senate Committee on Energy and Natural Resources, "Written Testimony of Frances Beinecke," accessed March 2, 2014
  20. 20.0 20.1 20.2 Stanford Law School Student Journals, "Local Government Fracking Regulations: A Colorado Case Study," January 2014
  21. The Wall Street Journal, "Talk About Natural Gas: Cow Belches Top Methane List," February 26, 2014
  22. 22.0 22.1 22.2 U.S. Geological Survey, "Man-Made Earthquakes Update," January 17, 2014, accessed March 10, 2014
  23. 23.0 23.1 National Geographic, "Scientists Warn of Quake Risk From Fracking Operations," May 2, 2014
  24. National Public Radio, "How Oil and Gas Disposal Wells Can Cause Earthquakes," accessed June 2, 2014
  25. U.S. Environmental Protection Agency, "Natural Gas Extraction - Hydraulic Fracturing," accessed March 10, 2014
  26. 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. Wyoming Oil and Gas Conservation Commission, "2011 Annual Report," accessed July 30, 2014
  29. Note: This text is quoted verbatim from the original source. Any inconsistencies are attributed to the original source.
  30. Casper Star Tribune, "Resources councils call for more Wyoming oil and gas inspectors," January 30, 2013
  31. Wyoming Department of Environmental Quality, "Overview," accessed July 30, 2014
  32. Petroleum Association of Wyoming, "History," accessed July 30, 2014
  33. Independent Petroleum Association of America, "About IPAA," accessed July 16, 2014
  34. Independent Petroleum Association of America, "Cooperating Associations," accessed July 16, 2014
  35. Wyoming Chapter of the Sierra Club, "Welcome," accessed July 30, 2014
  36. Sierra Club, "Dirty, Dangerous, and Run Amok," accessed July 29, 2014
  37. U.S. Energy Information Administration, "State Energy Data System, Production," accessed February 25, 2014
  38. U.S. Energy Information Administration, "Wyoming Profile Overview," accessed February 26, 2014