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Banks Reluctant to Lend in Shale Plays as Evidence Mounts on Harm to Property Values Near Fracking

Over the past several years, the fossil-fuel industry has been highly adept at publicizing the economic upshots of fracking: royalty checks, decreased prices for oil and gas, profits for investors. 

But the industry is far less eager to discuss the hidden costs of the current drilling boom – the longterm price of air and water pollution, the consequences of undermining a nascent renewable energy industry, the harms from accidents when moving and storing all the hazardous waste fracking produces. 

Add to that list of hidden costs one that is starting to grab more attention from bankers and the real estate industry: property values and mortgage problems. New research, for example, demonstrates that the vast majority of prospective buyers say they would decline to buy a home near oil and gas drilling.

As millions of Americans sign oil and gas leases granting the right to companies to extract fossil fuels from their land, they are realizing that these documents often conflict with their mortgages, which is leading to all manner of legal and financial headaches, and make it harder to sell homes on land whose oil and gas rights are leased.

Concern about these impacts is spreading in southern states like Texas, Alabama and Florida, according to a survey due for release in the next several weeks from the University of Dever. In northeastern states like Pennsylvania, fracking worries have prompted lenders to begin rejecting mortgage applications due to gas drilling – on neighboring property. In Colorado, real estate brokers describe keeping a long list of sellers in heavily fracked areas, but a paucity of buyers. 

Under the terms mortgage buyers like Fannie Mae and Freddie Mac require, “you cannot cause or permit any hazardous materials to be on your property and it specifically references oil and gas,” Greg May, vice president of residential mortgage lending at Tompkins Bank, told American Banker in an interview published Nov. 12. “That alone would make it a problem.”

The repercussions for the American real estate market could be enormous. More than 15.3 million Americans – roughly one out of every 20 people living in the U.S. – now live within a mile of an oil or gas well that was drilled since 2000, the Wall St. Journal recently reported

And that may be just the tip of the iceberg since shale gas and oil wells require ongoing drilling for them to stay productive. In 2010, for example, Pennsylvania regulators predicted a more than 10-fold increase in shale wells in their state over the next couple decades.

George W. Bush on Keystone XL: "Build the Damn Thing"

Make private companies happy. Don’t worry about the environment. Stop fretting about long-term sustainability. Forget renewables, property concerns, the safety of our water and air. Make private companies happy.

This was the 43rd president's message to the current administration at the DUG East conference held by the shale gas industry on Thursday.

With characteristic bluntness, George W. Bush spoke his mind on energy policy to several thousand oil and gas executives gathered in Pittsburgh at an exclusive luncheon on Wednesday.

“I think the goal of the country ought to be 'how do we grow the private sector?'” Mr. Bush said. “That ought to be the laser-focus of any administration. And therefore, once that’s the goal, an issue like Keystone pipeline becomes a no-brainer.”

“If private sector growth is the goal and Keystone pipeline creates 20,000 new private sector jobs, build the damn thing,” Mr. Bush said, prompting a burst of applause from the more than 4,000 oil and gas executives attending the conference.

In his candor, Mr. Bush also highlighted the essence of what burns bright but short in the fossil-fuel doctrine.

In emphasizing a get-it-now, don’t-worry-about-the-future approach to energy, he drove home why the Keystone XL pipeline has become such a lightning rod issue. The reason: it is symbolic of the overall short-sightedness of increasing our long-term addiction to oil rather than pushing with urgency toward renewable energy.

Coast Guard Proposal to Allow Barges to Haul Fracking Wastewater Draws Fire From Environmentalists

The U.S. Coast Guard released plans that would allow wastewater from shale gas to be shipped via barge in the nation’s rivers and waterways on October 30 — and those rules have kicked up a storm of controversy. The proposal is drawing fire from locals and environmentalists along the Ohio and Mississippi rivers who say the Coast Guard failed to examine the environmental impacts of a spill and is only giving the public 30 days to comment on the plan.

Three million people get their water from the Ohio River, and further downstream, millions more rely on drinking water from the Mississippi. If the Coast Guard's proposed policy is approved, barges carrying 10,000 barrels of fracking wastewater would float downstream from northern Appalachia to Ohio, Texas and Louisiana.

Environmentalists say a spill could be disastrous, because the wastewater would contaminate drinking water and the complicated brew of contaminants in fracking waste, which include corrosive salts and radioactive materials, would be nearly impossible to clean up.

The billions of gallons of wastewater from fracking represent one of the biggest bottlenecks for the shale gas industry.

States atop the Marcellus shale are brimming with the stuff. Traditionally, oil and gas wastewater is disposed by pumping it underground using wastewater disposal wells, but the underground geology of northeastern states like Pennsylvania makes this far more difficult than in states like Texas, and Ohio has suffered a spate of earthquakes that federal researchers concluded were linked to these wastewater wells. The volumes of water used by drillers for the current shale gas boom are unprecedented.

Could California's Shale Oil Boom Be Just a Mirage?

Since the shale rush took off starting in 2005 in Texas, drillers have sprinted from one state to the next, chasing the promise of cheaper, easier, more productive wells. This land rush was fueled by a wild spike in natural gas prices that helped make shale gas drilling attractive even though the costs of fracking were high.

As the selling price of natural gas sank from its historic highs in 2008, much of the luster wore off entire regions that had initially captivated investors, like Louisiana’s Haynesville shale or Arkansas’s Fayetteville, now in decline.

But unlike natural gas prices, oil prices remain high to this day, and investors and policymakers alike remain dazzled by the heady promise of oil from shale rock. Oil and gas companies have wrung significant amounts of black gold from shale oil plays like Texas’s Eagle Ford and North Dakota’s Bakken.

Shale oil, they say, is the next big thing.

“After years of talking about it, we’re finally poised to control our own energy future,” President Obama said in his most recent State of the Union address. “We produce more oil at home than we have in 15 years.”

But once again, the reality may be nothing like the hype. Consider California.

Fracking Coming to Washington D.C.'s Drinking Water?

Over the past several years, the battle over fracking has brought Congressional hearings, protests and huge industry money to Washington DC. But in recent months the topic has taken on a new, more local turn in the nation's capital as oil and gas companies push to drill in a national forest near in the city's backyard and an unusual cast of charaters are lining up to oppose it.

The fight is over access to drill for shale gas in the George Washington National Forest and officials from the Environmental Protect Agency, Army Corps of Engineers and the National Park Service have come out in opposition, even though some of these same federal agencies have in other contexts helped to promote expanded shale gas drilling.

The forest is one of the East Coast’s most pristine ecosystems, home to some of its last old growth forests.

Horizontal drilling, key to shale gas extraction, has never before been permitted in the George Washington National Forest. But as the U.S. Department of Agriculture Forest Service prepares a new 15-year plan, drillers are pushing hard for the ban to be lifted despite the industry’s long record of spills, air pollution and water contamination on public lands.

Flaws in Environmental Defense Fund's Methane Study Draw Criticism from Scientists

Perhaps the single most consequential and controversial issue at the center of the onshore natural gas drilling boom is the question of methane leaks. Natural gas is primarily made of methane, a powerful greenhouse gas, and if enough escapes into the atmosphere, these leaks could potentially make natural gas a worse fuel for the climate than coal.

In mid-September, researchers from the University of Texas published a study that was hailed by a triumphant oil and gas industry, which claimed it definitively showed that methane leaks from fracking are minimal. Major news outlets largely fed this excitement, proclaiming that the study showed EPA had dramatically overestimated methane leaks from the drilling boom.

But as the celebrations died down and more sober and rigorous analysis of the study has begun, scientists are finding that the University of Texas study is riddled with flaws.

The backers of the report cherry-picked the oil and gas wells included in the study, selecting smaller wells that had less capacity to leak and ones that used leak controls that are not currently used at many of the nation’s wells. The authors systematically ignored more recent federal research indicating that as much as 17 percent of natural gas – more than 10 times the estimate indicated by the UT study – leaks from gas fields, and overlooked serious methodological flaws that were pointed out in similar studies dating back as far as 1996.

As scientists have raised these concerns, the Environmental Defense Fund, one backer of the study which was 90 percent funded by the oil and gas industry, have tried to tamp down some of the media excitement surrounding the result and said that their research was misrepresented.

Shale Gas and Foreign Policy: A "Highly Uncertain" Gamble for America

The Obama administration has systematically ignored the environmental risks of fracking and on several occasions it has even suppressed science to pave the way for increased shale drilling, according to a recent report by the environmental group Earthworks. The report focuses on Karnes County, TX, in the heart of the Eagle Ford shale region, where state regulators found levels of airborne contaminants so high that inspectors evacuated themselves – but failed to fine the companies involved or warn residents living nearby.

From the regulators in Texas to the United States EPA, government agencies are running away from their own data showing that fracking pollution is harming communities,” said Jennifer Krill, Executive Director of Earthworks. “We are seeing a pattern from Karnes County TX to Dimock PA to Pavilion WY - where oil and gas is being produced, oil and gas impacts are being ignored.”

For the past several years the oil and gas industry has enticed Republicans and Democrats alike with promises that shale reserves can offer the U.S. renewed energy independence. The hope is that vast and newly-tapped supplies of domestic gas and oil will help shift the geopolitical balance, lessening American and European reliance on Russia and countries in the Middle East. This newly perceived leverage has even emerged recently as a bargaining chip in trade talks and negotiations with gas-importers like Japan.

The Obama administration has hailed the drilling boom, sending strong signals about its support for continued fracking. “The natural gas boom has led to cleaner power and greater energy independence,” President Obama said in his 2013 State of the Union address. “We need to encourage that.”

But banking on the continued shale boom is a major gamble, as productivity has already fallen in shale gas plays across the U.S.

What a Secretly-Negotiated Free Trade Agreement Could Mean for Fracking in the U.S.

A trade agreement being secretly negotiated by the Obama administration could allow an end run by the oil and gas industry around local opposition to natural gas exports. This agreement, called the Trans-Pacific Partnership, is being crafted right now – and the stakes for fracking and shale gas are high.

While the vast majority of the opposition to fracking in the US has focused on domestic concerns – its impact on air and water, local land rights, misleading information about its finances – less attention has been paid to a topic of colossal consequence: natural gas exports.

At least 15 companies have filed applications with the federal Department of Energy to export liquified natural gas (LNG). The shale gas rush has caused a glut in the American market thanks to fracking, and now the race is on among industry giants to ship the liquefied fuel by tanker to export markets worldwide, where prices run far higher than in the U.S.

As drilling has spread across the U.S., grassroots organizing around unconventional oil and gas drilling and fracking has grown to an unprecedented level in many communities. Public hearings and town halls from New York to California have been flooded with concerned scientific experts, residents and small business owners and farmers who stand to be impacted by the drilling boom.

Drilling advocates have become increasingly concerned about how grassroots organizing has expanded over the past 5 years. “Meanwhile, the oil and gas industry has largely failed to appreciate social and political risks, and has repeatedly been caught off guard by the sophistication, speed and influence of anti-fracking activists,” one consultant warned the industry last year.

Some of the most resounding setbacks the drilling industry has faced have come at the state or local level. Bans and moratoria have led drilling companies to withdraw from leases in parts of the country, abandoning, at least for the short term, plans to drill.

But when it comes to natural gas exports – which many analysts have said are key for the industry’s financial prospects –independent experts and local organizers may soon find themselves entirely shut out of the decision-making process, if the oil and gas industry has its way.

Fracking Main Street: New Report Shows Social Costs for Rural Communities

What’s it like living in a small town that’s gone from rust belt farmland to fracking boomtown?

First, residents often say, there’s the traffic.  Communities have been unexpectedly flooded with heavy tractor trailers that locals say turn 10 minute commutes into hour-long ordeals, choke back roads and decimate pavement so badly that in some areas, drilling companies are barred from entering until they agree to pay for road repairs. “The traffic here is horrendous,” Towanda, PA resident Joe Benjamin told NPR.

Others often describe the impacts on the social fabric – a “wild west” atmosphere that brings with it increased crime and public health problems.

But these reports have been largely anecdotal, with little to quantify how big these impacts are or how much of it is due to fracking. Until now.

A new report by Food and Water Watch examines the social impacts of fracking, comparing traffic, crime and sexually transmitted infections in rural Pennsylvania counties. Using a decade worth of county-level data, they compare the differences between counties with substantial fracking and without, and how these counties have changed over time, from before the boom until after it set in.

“Pennsylvania’s natural gas boom has brought thousands of new gas wells, a number of transient workers and a host of social problems,” the report says. “This study is the first detailed, long-term analysis of the social costs of fracking borne by rural Pennsylvania communities.”

FWW documented sharp differences in traffic accident rates, petty crimes, and sexually transmitted infections. According to the report:

Never-Released Energy Department Report Predicts Increasing Domestic Conflicts over Water, Energy

Last summer, the United States experienced the worst drought since the Dust Bowl in the 1930s.

At the same time, the country was experiencing one of the biggest onshore drilling booms in history, powered by one of the most water-intensive extraction technologies ever invented: hydraulic fracking.

The tension between these two realities could not be clearer.

This year, as the drilling industry drew millions of gallons of water per well in Arkansas, Colorado, Oklahoma, Texas, Utah and Wyoming, residents in these states struggled with severe droughts and some farmers opted to sell their water to the oil and gas industry rather than try to compete with them for limited resources.

Even the Atlantic coast's mighty Susquehanna River faced record lows last year, leading regulators to suspend dozens of withdrawal permits – the majority of which were for fracking Pennsylvania’s Marcellus shale.

Researchers for the Federal Department of Energy saw problems like this coming, according to thousands of pages of documents about the topic provided to DeSmog, but their recommendations and warnings were consistently edited and downplayed and the final version of their report has yet to be released.

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