#Fracking
FRACKING:
WHAT TO EXPECT
This
publication attempts to prepare residents for the introduction of fracking for
natural gas in their community. It briefly describes the fracking process
followed by a discussion of the construction of a typical gas well for
horizontal drilling, community benefits, possible effects on the fresh water
supply, some health effects of natural gas production, and some legal
considerations for gas well leasing in Pennsylvania.
THE FRACKING PROCESS
Hydraulic
fracturing (fracking) has been around since 1949. It wasn’t until the 1980s
that hydraulic fracturing was combined with horizontal drilling. Fracking
itself is an early stage of natural gas production. Natural gas is primarily
methane.
An hydraulic well
site typically requires a three acre pad of cleared land. That is because of
the many trucks, tanks, collection pools, and equipment needed to frack. A
vertical hole is drilled often going at least a kilometer deep into the underlying
gas-bearing rock formation. Then a horizontal hole is drilled into the rock.
The holes are lined with pipes through which a solution of water, sand and
chemical additives are injected under great pressure in order to create
fissures in the rock. For a typical well this is repeated about 20 times over
two to three days.
After the
fracking process is complete, the downward pressure is released and the gas
rises to the surface where it is collected.
After the fracking is complete, “all the equipment is removed from the
site, leaving only the wellhead, the storage tanks, separators, and emissions
control. Production can last for years.” Production over time decreases as do
royalties if the price of gas remains stable.
CONSTRUCTION
OF THE GAS WELL HEAD
A three-acre parcel of land needs to be
cleared and leveled to make room for all the trucks needed for the fracking
process. The trucks include trucks to transport several 500-barrel tanks for
water storage and sand storage tanks. There are trucks needed to bring in
supplies, equipment, and parts. These include miles of iron pipes, up to 1.5 to
6 million pounds of sand, bentonite, and chemical additives. Several more
trucks are needed to produce the power for the hydraulic pressure (https://www.greeleytribune.com/news/fracking-101-breaking-down-the-most-important-part-of-todays-oil-gas-drilling/).
All of this
movement, construction, etc. results in increased heavy traffic over local
roads and the increased wear and tear on those roads. It may also result in
more dust flying through the air along those roads and more noise.
COMMUNITY
BENEFITS
A gas well
operating company may pay a municipality a percentage of the revenues from the
gas extracted from that municipality. They also pay a percentage to the
residents from whose property they extract the gas. That is typically 1/8 or
12.5% of the revenues.
POSSIBLE
EFFECTS ON DRINKING WATER SUPPLIES
Although the
vertical shaft of the well descends below the water table and is encased in
cement, the water that emerges from the well at various stages of the process,
can spill and soak into the ground. This water contains volatile chemicals and
may even carry radioactive ingredients. There is a possibility of ground water
being contaminated. If that ground water supplies a fresh water well, it is
possible that the well water will be contaminated.
If there are
cracks or other openings in the underground pipe and cement casing through
which the natural gas flows, especially at the water table level, some methane
(the primary constituent of natural gas) could migrate into water wells. The
gas in a water well is released as it flows out of the faucet. Methane is
odorless and explosive.
EPA's Study of Hydraulic Fracturing and Its Potential Impact on Drinking Water Resources “found scientific evidence that hydraulic fracturing activities can impact drinking water resources under some circumstances. The report identifies certain conditions under which impacts from hydraulic fracturing activities can be more frequent or severe…” For more information go to https://cfpub.epa.gov/ncea/hfstudy/recordisplay.cfm?deid=332990
HEALTH EFFECTS
According to Physicians for Social Responsibility, “many chemicals known
to be used in hydraulic fracturing fluid, as well as the volatile organic
compounds (VOCs) released during the gas drilling process, are extremely toxic.
The high toxicity of these chemicals, and the frequency with which they
pollute the air around fracking operations, are cause for concern”.
https://www.psr.org/wp-content/uploads/2018/05/fracking-and-air-pollution.pdf
According to National Resources Defense
Council, “With the increase in fracking activity, more and more studies
now document emissions of
airborne pollutants at and near fracking sites
that are known to cause cancer and harm the nervous, respiratory, and immune
systems…” (https://www.ndc.org/sites/default/files/fracking-air-pollution-IB.pdf)
The
Conversation.com: “The ‘fracking boom’ in several
different parts of the nation led to a new source of hydrocarbons to the
atmosphere, affecting abundances of both toxic benzene and ozone,
including in areas that were not previously affected much by such air
pollution.”
https://theconversation.com/how-has-the-us-fracking-boom-affected-air-pollution-in-shale-areas-66190
-Benzene: According
to the federal government Centers for Disease Control (CDC) “Benzene causes
harmful effects on the bone marrow and can cause a decrease in red blood cells,
leading to anemia. ... Long-term exposure” (exposure of a year or
more) “to high levels of benzene in the air can cause leukemia, cancer
of the blood-forming organs” (https://emergency.cdc.gov/agent/benzene/basics/facts.asp).
-Ozone: In
spite of what you may have heard, there is a demonstrated link between ground
level ozone and childhood asthma (https://www.healio.com/pediatrics/allergy-asthma-immunology/news/online/%7Bf4dd3d7e-7155-4242-a515-643a393a84d0%7D/inner-city-residence-linked-to-pediatric-asthma-morbidity-not-prevalence).
According to the EPA, “exposure to ozone is linked to a wide range of health
effects, including aggravated asthma, increased emergency room visits and
hospital admissions, and premature death” (https://www.epa.gov/controlling-air-pollution-oil-and-natural-gas-industry/basic-information-about-oil-and-natural-gas).
GAS DRILLING AND PA LAW
MINERAL RIGHTS:
What does PA
state law say about drilling for natural gas? There are provisions relating to
private property owners who own their mineral rights and those who don’t. The
PA Department of Environmental Resources estimates that 95% of PA landowners
own the mineral rights under their property. If you own the mineral rights and
you choose to lease those rights to a natural gas production company, state law
requires the company to pay you a royalty of at least one-eighth (12.5%) of the
revenue generated by the gas taken from your property. If you own your mineral
rights, the company may offer an upfront payment. Both the upfront payment and
the royalties are taxable income.
The DEP recommends that landowners negotiate the positioning of the well
site, access road, etc. Also, negotiable before the well site is created is a
reasonable price for damage to trees, land, etc. DEP advises landowners to have
the drilling company analyze all water sources near the proposed gas well head
prior to drilling.
How do you know if you own the mineral rights to your property? You can
check your property deed. If the deed says ownership is “fee simple,” it means
you own the surface and mineral deposits. If the deed says "oil and gas
excepted and reserved," you may not own the mineral rights.
If
you don’t own the mineral rights, those rights may be owned by a private
company. The Oil and Gas Act of 1984 obligates the landowner to allow the owner
of the mineral rights to access the natural gas under the property. The company
is allowed to build an access road and clear a well pad on the property. The
company is supposed to discuss the best access road and well site locations
with the property owner and to reimburse for any damage done. The company,
however, determines the damage amount. The landowner can sue for more in civil
court.
Even if a property owner does not own the mineral rights under their
property, the company that does own them can legally remove trees from that
property for an access road and/or drilling site. The DEP recommends hiring an
attorney if a company wants to drill and you don’t own the mineral rights.
OTHER LEGAL RECOMMENDATIONS regarding
offers to lease your mineral rights:
1.
Determine
if there are Other Family Members Who Have Been Contacted.
2.
Determine
Exactly “Who” You’re Talking To
·
A contract leasing agent/broker
·
An employee of the oil company
·
An entrepreneur/middleman
3.
If You Have Multiple Tracts of Land, Demand
Separate Oil and Gas Leases for Separate Tracts.
4.
Gather
(and review) Your Lease Paperwork prior to negotiations.
5.
Research
Current Wells in the Vicinity.
6.
Be Courteous and Honest.
7.
Consider
Whether You’d Like to Create a New Business Entity.
8.
Don’t rush
into signing anything or responding too readily unless you don’t care about
getting the best terms.
9.
Don’t
focus on the lease bonus payment and royalty percentage alone. The surface use
of your land may be more important.
10.
Don’t sign
anything until the deal is thoroughly discussed, negotiated, and understood.
11.
Learn what
is happening in your area and the possibility of force pooling.
12.
Don’t hire
a lawyer too early in the process.
13.
Don’t
assume the well on your property will be viable.
14.
Don’t Warrant (guarantee) the Mineral
Title in a gas or oil lease.
15.
Consider
the effects of unrestricted water use if that is in your oil or gas lease.
For more detailed info refer to
sources https://www.mineralweb.com/owners-guide/lease-proposals/oil-and-gas-leasing-top-10-things-to-do/ and https://www.mineralweb.com/owners-guide/lease-proposals/oil-and-gas-leasing-top-10-things-to-do/.
POOLING:
What is “pooling?”
Governor Tom Corbett signed into law Senate Bill 259. This Act allows land
owners with older gas and oil leases to be combined (pooled) with adjacent land
owners who have leased their lands for horizontal oil and gas drilling in
the Marcellus and Utica shale regions. If your property has an old lease for a
vertical oil or gas well, a gas production company may acquire that lease and
combine it with leases from adjacent properties for the purpose of horizontal
drilling unless your lease explicitly forbids it. The company does not have to pay you for the
lease on your property and will pay you royalties based on the rate in your original
lease. If your property is pooled, how much you get in royalties depends on the
amount of produced gas the operator decides is attributable to your lease.
Prepared by Richard
Geiger
2/17/2019
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