University of Michigan's Technical Reports on Hydraulic Fracturing in the State

On September 5, 2013, the University of Michigan released seven technical reports concerning hydraulic fracturing. 

These Michigan-focused reports conclude the first phase of a two-year University project entitled Hydraulic Fracturing in Michigan Integrated Assessment. Public comment on these reports may be submitted through October 7, 2013.

A brief description of each report follows.

• Technology: In view of the currently low price of gas, the high price of drilling deep shales, and the absence of new discoveries, it is unlikely that there will be significant growth of the oil and gas industry in Michigan. Hydraulic fracturing has not found widespread application in Michigan, except for a few exploratory wells in the Utica/Collingwood shale where considerable reserves of natural gas are believed to exist.
• Geology and Hydrogeology: Currently there is minimal drilling activity within Michigan that qualifies as high-volume hydraulic fracturing. There are fewer than 60 existing permits or permit applications for hydraulic fracturing. However, there has been a recent increase in mineral rights acquisitions, suggesting anticipated potential growth in unconventional reservoir production via hydraulic fracturing potential growth in unconventional reservoir production via hydraulic fracturing. “Michigan is thus in a unique position to assess the future of high-volume hydraulic fracturing before the gas boom begins and learn from experiences in other states like Pennsylvania.’
• Environment and Ecology: Shale oil gas development, if not properly managed, could adversely affect water quality due to surface water and groundwater contamination as a result of

1. spills and releases of produced water, chemical, and drill cuttings, 
2. erosion from ground disturbances, or 
3. underground migration of gases and chemicals.

• Public Health: Possible environmental hazards include impaired local and regional air quality, water pollution, and degradation of ecosystem services. Possible hazards in nearby communities include increased traffic and motor vehicle accidents as well as road degradation and a strained healthcare system.
• Policy and Law: State regulations govern hydraulic fracturing. Michigan requires disclosure of the chemical constituents in hydraulic fracturing fluid within 60 days of well completion. Operators need not disclose trade secrets.
• Economics: Hydraulic fracturing may lead to greater disparity in property values. The gas extraction industry creates employment and income, but the effects are modest compared to other industries. This analysis suggests that Michigan may enjoy stronger job creation by encouraging the rework of existing as wells rather than by drilling new wells.
• Public Perceptions: A slight majority of Michigan citizens believe that the benefits of hydraulic fracturing outweigh the risks.

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This post was written by Barclay Nicholson (barclay.nicholson@nortonrosefulbright.com or 713.651.3662) from Norton Rose Fulbright's Energy Practice Group.

Ohio voters reject proposal to ban hydraulic fracturing in northeast Ohio

In February 2013, the City Council of Youngstown, Ohio agreed to include on its ballot a proposal to ban hydraulic fracturing within the city limits after an anti-fracking organization, Frackfree Mahoning Valley, collected sufficient signatures for a successful petition. The unofficial results of the election held on May 7, 2013 show voters rejected this proposal by a significant margin: 57 percent opposing the proposal vs. 43 percent supporting the proposal.

In Youngstown, the proposal resulted in an unusual alliance of interest groups united in their opposition to the ban. The local business community actively campaigned against the proposal and argued this prohibition and the litigation likely to arise from the ban would have prompted companies to reevaluate their decisions to invest and expand in the area. Likewise, organized labor opposed the proposal arguing the prohibition would have negatively impacted the economic recovery of the community.

This debate over hydraulic fracturing is increasingly on display in local level elections as anti-fracking organizations pursue similar proposals to ban or otherwise restrict operations within resource-rich eastern Ohio. In November 2012, voters in Mansfield and Broadview Heights approved proposals to amend their city charters to permit the regulation of injection wells capable of storing waste associated with hydraulic fracturing operations. In Athens, an organization named the Bill of Rights Committee is collecting signatures to put the issue on the upcoming November ballot as a referendum.

Ohio sits atop the gas-rich Utica Shale formation and will likely remain a key battleground for the legal and political struggle over hydraulic fracturing. State officials anticipate the development of this formation will generate much-needed tax revenue and employment opportunities for the region.

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This post was prepared by Ted Bosquez (tbosquez@fulbright.com or 724 416 0423) from Fulbright's Environmental Law Practice Group.

NYDEC Publishes Revised Proposed High-Volume Fracking Regulations

On Thursday, November 29, 2012, the New York Department of Environmental Conservation (NYDEC) published revised proposed regulations relating to high-volume hydraulic fracturing (wells using more than 300,000 gallons of water as the base fluid).

The NYDEC developed these revisions and additions after receiving more than 66,000 public comments (most against hydraulic fracturing) on the original proposals that were released on September 28, 2011.

The 30-day public comment period on the revised proposed regulations begins on December 12, 2012, and allows a 90-day extension for completion of the New York Commissioner of Health’s review of the draft Supplemental Generic Environmental Impact Statement.

The NYDEC advised that it would not take any final action or make any final decision regarding hydraulic fracturing until after the health review and the work from three outside experts—Colorado School of Public Health professor John Adgate, George Washington University School of Public Health and Health Services professor Lynn Goldman, and University of California Los Angeles Fielding School of Public Health professor Richard Jackson—is completed.

According to the NYDEC, “the proposed regulations are to apply to the use [of fracking] statewide,” with the initial targets being the Marcellus and Utica shale formations.

The revised proposals include additional reporting requirements for drillers who want to re-fracture an existing well and allow for public and private water treatment plants to accept fracking waste water.

The proposed revised regulations for high-volume hydraulic fracturing include requirements for blow-out preventer use and testing plans, detailed mapping, enhanced disclosure of chemical additives, and well pad siting setbacks.

The chemical disclosure must identify each chemical constituent intentionally added to the base fluid and its proposed concentration. 

There are also new well construction, site preparation, operational, and maintenance requirements.

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This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.