Natural Gas Extraction

Background

Natural gas is a gas consisting primarily of methane. Before natural gas can be used as a fuel, it must undergo extensive processing to remove almost all materials other than methane.  Natural gas heats 50% of U.S. homes and generates one-fifth of America's electricity. 

Oversight

There is little federal oversight of natural gas extraction. The Energy Policy Act of 2005 exempted Hydrofracturing from federal regulation under the Safe Drinking Water Act.  Although several bills have been proposed in the U.S. Congress to overturn this exemption, none have obtained successful passage.

State by state laws differ on the regulation of drilling activity. Generally, state regulators require driller operators to obtain permits. In addition, they are required to obtain discharge permits for waste water. 

Local government control is very limited in states like Pennsylvania, where they can not pass any local ordinances that would impede on oil or gas production.

State Regulations

• Arkansas
• Colorado
• Louisiana
• New Mexico
• New York
• Ohio
• Pennsylvania
• Texas
• West Virginia

Drilling Activity

According to the industry, the decision of whether or not to drill a well depends on a variety of factors, not the least of which are the economic characteristics of the potential natural gas reservoir. The exact placement of the drill site depends on a variety of factors, including the nature of the potential formation to be drilled, the characteristics of the subsurface geology, and the depth and size of the target deposit.  

See Map of US Gas Shale Basins

According to Oil & Gas Financial Journal (2/1/2010), the top 5 U.S. gas shales are 

• Marcellus (Ohio, New York, Pennsylvania, West Virginia)
• Haynesville (Louisiana, Texas)
• Fayetteville (Arkansas)
• Woodford (Oklahoma, Texas)
• Barnett (New Mexico, Texas)

Impacts of Drilling

Natural gas extraction imposes heavy costs on our communities: air pollution; pipelines, drilling pads and wastewater pits scarring our landscapes; heavy rigs damaging our roads; billions of gallons of water taken from our streams; and operational errors contaminating our land and water.

Hydrofracturing relies on a variety of chemicals, which are used to create and maintain the fractures.. A variety of additives may be involved including: hydrochloric acid, gelling agents, ammonium, potassium, sodium salt, hemicellulase, silica flour, biocides, methanol, sodium thiosulfate, and others.  The Occupational Safety and Hazard Administration (OSHA) requires that material safety data sheets be assembled for each chemical used, the proportion of each chemical additive need not be disclosed under propitiatory intellectual property laws. In addition, the Energy Policy Act of 2005 exempted Hydrofracturing from Federal Regulation under the Safe Drinking Water Act.

Learn more about the impacts of drilling at landandwater.org.

Policy Issues

Drilling on Conserved Lands

Drilling is impacting privately owned land under easement and protected properties in close proximity to drilling activity.  Drilling on protected lands can jeopardize the conservation efforts of land trusts and other organizations.  

State and federally protected lands are our greatest public asset, protecting our highest quality streams, providing public recreation, supporting tourism, and providing a sustainable timber supply. It is critical to exercise balance and restraint in considering opening additional lands for drilling. Before leasing protected forests, we must evaluate the impacts of current gas leases on water and air quality, wildlife, public recreation, including hunting, fishing and wildlife watching, and the general health of our forests.

Extraction Tax

Most major natural gas producing states have passed some form of tax on natural gas extraction with the exception of Pennsylvania where a tax is currently proposed and New York where a moratorium is currently in place on new drilling while the state finalizes its Environmental Impact Statement on hydro fracturing. Money raised from a natural gas extraction tax could be used to offset the costs to natural resources and communities directly impacted by drilling activity as well as invest in watershed restoration and protection, habitat conservation, public access to outdoor recreation, and conservation of natural space and farmland. 

Severance taxes are viewed as a basic cost of doing business in most other states, and, while the revenue from such taxes can provide profound benefits to communities, the impact on industry is insignificant in comparison to other factors.  

• Arkansas
• Louisiana
• Texas
• Oil & Gas Mineral Services - Understand Severance Taxes by State
• "Current Taxes and Incentives at the State Level for Oil & Gas Production in Louisiana and Surrounding States" (2009). 

Additional Resources

Drilling Has Consequences Website

U.S. Department of Energy. Modern Shale Gas Development in the United States: A Primer, April 2009. 

Shaleshock.org

NCLS. State Energy  Revenues Update. http://www.ncsl.org/default.aspx?tabid=12674

Wood, Michael and Sharon Ward. "Responsible Growth: Protecting the Public Interest with a Natural Gas Severance Tax". PA Budget and Policy Center, April 2009.

PA Department of Environmental Protection Fact Sheet "Landowners and Oil & Gas Leases in Pennsylvania".