Wednesday's news conference by Rep. Mitch Gillespie, a Marion Republican, was not the first word on hydraulic fracturing and natural gas exploration in North Carolina. It certainly won't be the last. But it was important because it set the stage for the discussion over energy exploration lawmakers will have this year.
Gillespie laid out the rough outline for a bill that he plans to run during the May legislative session that would pave the way for natural gas production through fracturing. Although there are some differences on the fine details, that approach seems to have the support of both House and Senate leaders.
For those who don't know, the shale beneath Lee and Chatham counties (and to a lesser extent, Rockingham County) contains deposits of natural gas. To get at those reservoirs, companies would need to use a combination of processes that many refer to as "fracking." Companies drill down to the layer they want and then turn their drills 90 degrees to drill horizontally. A combination of small explosions fractures the rock and water, chemical and grit are pumped into the fissures.
This process is controversial, with opponents saying that fracking in Pennsylvania, New York and Ohio has been associated with well water contamination and small earthquakes. Proponents point out fracking has been a part of oil and gas exploration for years -- although not quite at this scale -- and contend the process is safe if done properly.
In a report issued earlier this month, officials with the state Department of Environment and Natural Resources said that fracking could be done safely if a series of precautions were taken. While this upset fracking opponents, those who say natural gas could bring an economic boon to North Carolina took it as a green light to push ahead.
Enter the politics: Mostly liberal Democrats have aligned themselves with environmental advocates who say that fracking is dangerous. Among Republicans, the "drill baby drill" ethos prevails, but there have been differences of opinion over the past year between Gillespie and Sen. Bob Rucho, a Matthews Republican and the leading fracking proponent in the Senate. Rucho's camp has wanted to push faster and harder on fracking while Gillespie has been characterized as a "go slow" guy among Republicans.
I wrote yesterday here and here about the fact that the two now say they're on the same page despite using different language about the path forward. Gillespie still uses the word "study" a lot and Rucho says the time for study is over.
But taking at face value the House and Senate Republicans (as represented by Gillespie and Rucho) are mostly in agreement about what needs to be done, here are the notes from Wednesday that struck me as important:
- There's apparently a draft bill, but Gillespie isn't sharing it yet. He says it will be filed on the first day of session but be changing between now and then. Without some firm text, we're talking about concepts and bill drafters aren't always able to encode everything anticipated in legislative language.
- The consumer protection elements of what need to be done are still lagging. They were not part of the DENR report and Gillespie said that he would look for a report from the Attorney General's office before moving forward. The problem of historical mineral rights leases plus the problems associated with speculative leases signed more recently could be a huge problem.
- Among the known differences between the Rucho and Gillespie is how to approach the scientific study of state's shale gas area. What seems clear is that lawmakers don't want to shell out the $3 million or so test drilling would take. Gillespie said that one approach could be to ask a fracking company to do the test drilling in return for a rebate on fees charged later on down the road. I don't know how fracking opponents would view that sort of deal, since the company doing the testing would have a vested interest in opening up the state to drilling.
- Another remaining difference between the House and Senate camps is the timeline for proceeding. The more aggressive Senate position seems to push for having a regulatory framework in place by the end of 2014. Gillespie said that 2015 would be pushing it. The Senate, Gillespie said, seems to have come around to this slower pace, but it's something worth watching.
- If we build a regulatory framework, will anyone use it? Natural gas prices are depressed at the moment and the industry has more fertile areas to explore than North Carolina. If the state spends the time and money to roll out the welcome mat, will anyone trod upon it? I put those questions to Gillespie who said that "even though gas prices are low, there is strong demand across the globe." Opening the state to drilling, he said, is just a way of letting the free markets work.
- Both Gillespie and Rucho say the state will eventually create and oil and gas board, much like the public utilities commission, to oversee gas production. They say this board wouldn't take away DENR's ability to monitor fracking sites for environmental problems. However, the makeup of the board's membership is still a point of difference between the two. One can imagine fracking skeptics calling for a big presence of environmental regulators.
- Environmental groups praised the "go slow" approach lawmakers seemed to be espousing yesterday, but there is a fundamental difference between the greens and the GOP on this. Both Gillespie and Rucho are playing for an end game in which fracking is allowed in North Carolina. Environmental advocates still seem to be hoping to hold the line against the process.
“There’s no question that this controversial form of gas drilling poses threats to our water, our air, and our quality of life," wrote Elizabeth Ouzts, state director of Environment North Carolina. "Unfortunately, the legislative proposal presented today presumes that fracking can be conducted safely in the state, despite a 444-page study from state environmental regulators that suggests quite the opposite. Further study of fracking should focus on evaluating the size of the resource in North Carolina and whether extracting it is worth exposing our waters, our air, and the health of our citizens to inevitable increased pollution.”
Jane Preyer of Environmental Defense Fund sounded a similarly cautious note. "Current gas production practices impose unacceptable impacts on air, water, landscapes and communities," she said. "The public's right to clean water and clean air cannot be compromised. North Carolina will need strong rules and enforcement. We can learn from the experiences of other states, and we can do better."
- Rep. Pricey Harrison, a Greensboro Democrat who is closely associated with many environmental causes, stood with Gillespie at the news conference. She said during the newser that her presence endorsed parts of the Gillespie approach that went slow and the fact that the bill as conceived now wouldn't life the ban on horizontal drilling. However, she too different with Republicans on the ultimate end game.
"If it can be done safely and protect the environment, protect the public health ... If all those concerns can be met, I'm for it. But I haven't been convince yet and I haven't been convinced by DENR's study...I just want to tread safely and slowly because there's no rush, there really is no rush."
- Both Gillespie and Rucho said that Gov. Bev Perdue was on board with their plans. You may remember that Perdue vetoed S 709 last year, which was tangentially related to fracking, and has seemed skeptical of the process for much of her tenure. More recently, however, she has said that fracking and energy exploration generally could be part of helping to spark the state's economy.
In a statement yesterday, Perdue's office confirmed that she had met with Rucho and Rep. Mike Hager on the issue and she sounded tentatively supportive. She did stop short of handing the General Assembly a blank check.
"If done safely, fracking can be part of a larger energy solution to create jobs and help lower costs," Perdue Spokeswoman Chris Mackey said. "Before we permit anyone to “frack” in North Carolina, however, we must hear from all sides, address all issues, and develop a robust set of rules. During the meeting with Senator Rucho and Representative Hager, Governor Perdue made clear that those rules must put every necessary precaution into place to protect our drinking water and safeguard the health and safety of every single North Carolinian. The rules must also protect the interests of landowners and address the needs of county and municipal governments. The Governor is eager to work with her colleagues on both sides of the isle to create jobs and address the important issues raised in this industry.”
- As outlined by Gillespie, the ball will be in DENR's court after this summer. The agency would be charged with developing rules and laws that would govern fracking. In other states, there has been controversy over forcing companies to disclose the chemicals they use, how fracking waste water is collected and disposed of, compensation for repair roads damaged by large fracking trucks and more.
That's it for now. If you're inclined, take a listen to the video of Gillespie's news conference and let me know what you hear.