Natural gas exploration using hydraulic fracturing, aka fracking, may be moving forward in North Carolina. Gov. Bev Perdue recently changed her mind and supports it, with limitations. A new report says it’s safe with the right restrictions and will create jobs. The General Assembly is ready to authorize it.
A bipartisan vote in the General Assembly supported natural gas exploration by passing the Energy Jobs Act in 2011. However, Perdue vetoed it citing constitutional questions about entering into compacts with surrounding states. She also cited a commitment to renewable energy including oil and gas production and offshore wind resources. The Senate voted to override her veto but the House hasn’t yet garnered the necessary votes.
In the meantime, the General Assembly passed House Bill 242, instructing the Department of Natural Resources with the Department of Commerce and the Consumer Protection Division of the Justice Department to study the impacts of fracking and to hold at least two public hearings. The bill also increased the bond required to drill and the fees for drilling and established protections for landowners’ leases. The governor signed H.B. 242 into law June 23 of last year, then vetoed the Energy Jobs Act a week later, creating some confusion over whether she supported fracking.
The study and a draft report were released to the Environmental Review Commission on March 22. It includes DENR’s analysis of environmental, public health, and infrastructure impacts, along with Commerce’s analysis of the potential economic impacts.
The study is somewhat limited because we can’t determine the extent and richness of North Carolina’s shale gas resources until the operation is underway. Even so, state geologists say there is a rich supply in the Sandhills — enough to supply North Carolina’s needs for 40 years. The study covers 59,000 acres of the total in the Triassic basin of 785,000 acres.
Fracking requires large amounts of water and sand, and this has raised environmental concerns. DENR found our water supply is adequate, though the timing of the water withdrawals from the basin would need to be managed to offset other users’ needs. Any chemicals used in the process require close monitoring. Methane releases may be caused by the proximity of the water supply to production sites and remedied with proper planning. Data from other states suggest fracking doesn’t cause earthquakes. In short, the report says that with the right protections in place, fracking can be done safely.
Based on data from other states with successful fracking operations (Wyoming, Pennsylvania, New York, and Texas), Commerce estimates that in the first year of operation, Sanford would see 858 new jobs and sustain an average of 387 jobs annually over the seven-year time period studied. With a healthy fracking operation, North Carolina’s economy would grow $453 million from all the new economic activity and by 2019 drilling operations would boost the state’s economy by $292 million.
Meantime, the Consumer Protection Division was expected to produce a study on property rights, consumer protection in contracts and mineral leases, and payment of royalties.
But the final report, scheduled to be submitted to the General Assembly by May 1, is not complete. Division representatives have been asked to give an explanation at the Environmental Review Commission meeting April 26.
The right measures need to be in place before issuing permits, and more studies need to be done to ensure everything is done right, but natural gas exploration in North Carolina is moving forward. For those of us who want reliable and affordable energy, this is very good news.
Becki Gray is vice president for outreach at the John Locke Foundation.