The Future of Fracking in North Carolina
Photo by: Cole Hayes
Why North Carolina?
North Carolina is situated in the middle of a controversial debate about the extraction of natural gas, which can be used as an energy resource. Hydraulic fracturing, known colloquially as fracking, has been the center of discussion among community leaders, lawmakers, and activists as the North Carolina General Assembly continues to study the effects of this new technology used to extract natural gas from shale rock formations. The practice could soon come to central North Carolina’s Triassic basin, a rift valley that runs from Durham to Sanford. The basin is home to a large deposit of shale rock and runs beneath Durham, Orange, Wake, Chatham, Lee, Moore, Montgomery, Richmond, Anson and Union counties.
Description of Hydraulic Fracturing
Natural gas extraction from fracking occurs through drilling a well vertically and then horizontally into shale rock formations. Pressurized fracturing fluid, composed mainly of water, along with sand and chemicals, is then pumped into the well to fracture the rock. The natural gas is released, collected and stored. Though the prospect of obtaining more natural gas excites some, other citizens have raised concerns about potential earthquakes from the fracturing, increased water usage, and contaminated air quality. There is also concern that chemicals used in the process could potentially contaminate drinking water. While studies conducted by the Environmental Protection Agency revealed higher than normal amounts of methane in drinking water close to wells, the methane cannot be definitively linked to any one part of the fracking processes. Despite substantial arguments on both sides of the issue, the upcoming decision process has created the perfect environment for heightened public opinion and involvement as the General Assembly moves toward deciding the future of fracking in North Carolina.
Current Legislation
North Carolina General Statutes Sections 113-378 through 113-423 regulate oil and gas exploration and production, but do not address shale gas exploration and production—specifically horizontal drilling and hydraulic fracturing because of horizontal drilling’s potential to cross property lines. In 2011, Session Law 2011-276 charged the Department of Environment and Natural Resources (DENR), the Department of Commerce, the Department of Justice and the non-profit Rural Advancement Foundation International with studying the extraction of natural gas and oil reserves in North Carolina, specifically the controversial practice of hydraulic fracturing. The study was released on March 16, 2012, and outlines possible economic, societal, environmental, and infrastructural impacts. DENR ultimately recommended that hydraulic fracturing could be done safely in North Carolina so long as the proper precautions are in place. While the safety concerns and potential benefits are still up for debate, one certainty is the legalization of fracking in North Carolina will impact communities, local governments, and specific areas of the legal practice.
Impacts on the Law
Fracking will likely have a substantial impact on the legal practice because the process creates and maintains a massive footprint on the land itself. As such, if the practice begins, there will likely be an increase in the need for legal services to address environmental, real property, social, and governmental impacts.
Hydraulic fracturing requires particular infrastructure, which includes wells, gravel pads and storage impoundments—structures that could be in place for up to 20 years. In addition, the actual fracturing of rock requires millions of gallons of water, transported by tanker trucks that will drive on state and local roads. After this water is filtered through the well and shale rock, it returns to the surface where it must be stored. Those water storage impoundments will need to be worked into current zoning regulations.
Ryke Longest, director of the Duke Law Environmental Policy Clinic, has been studying hydraulic fracturing since early 2011. He predicts that if fracking is legalized, local governments will have to plan for increased water use, storage and use of chemicals required by the process, increased road traffic, interference with underground utilities and pipelines, and possible zoning issues with the placement of water impoundments. Longest has recommended to city managers and local government attorneys that the impoundments be treated and zoned as landfills. Another major issue surrounding the implementation of the fracking process is whether the power to create regulations concerning hydraulic fracturing will fall with state or local governments. Because the effects of fracking will be felt on a local and a communal level, Longest would prefer to see the specific regulations created and maintained by local governments, but still supported by the state. “Fracking,” Longest said, “can affect many aspects of human environment and should be dealt with locally and at the state level.”
Private firms and attorneys across the state could also see a change. One of the greatest necessities of hydraulic fracturing is land. As such, attorneys will be needed to help draft leases between oil and gas companies and landowners. The leases will need to be tailored to the unique nature of the land use, including royalties, easements, terms of use, and duration. Issues of eminent domain can also arise in situations where infrastructure such as pipelines and wells will need to be placed. The legal market in North Carolina may also see the emergence of boutique practices representing landowners in disputes that arise with gas and oil companies over land use. The disputes may not only be restricted to the use of the land, but over what is contained in the land. Charles Case, a partner at Hunton & Williams who specializes in environmental law, predicts the legalization of fracking could have an immediate impact on mineral rights. “We don’t have oil and gas laws like Texas and Louisiana do,” Case emphasized. “North Carolina will have to deal with issues such as who owns the gas and who is entitled to the proceeds.”
Longest ultimately noted that fracking would pull North Carolina into a small group of other states in the nation that contribute to the exportation of natural gas. “We have a global economy,” said Longest, “and that’s important because there are no local markets for this.”
At least there are no local markets yet. If North Carolina were to increase its production of natural gas, this production would in turn create the potential for local use . One such ripe market, Longest suggested, could be fuel for school bus fleets as most buses start and end the day in a fixed, grouped location for easy fueling.
Erin Wynia, policy analyst for the North Carolina League of Municipalities (NCLMP), sees the legal market currently adjusting to the legalization of fracking. “The potential for developing an onshore natural gas industry in North Carolina has already impacted the legal industry,” Wynia said. “For example, attorneys in private practice have advised clients entering into lease negotiations with energy exploration companies, and attorneys in environmental non-profit and academic settings have studied the issue and undertaken significant public education efforts.”
Wynia and the NCLM have also predicted similar impacts on local governments. “Based on the experiences of other states,” Wynia noted, “We expect to see local government operations affected, especially in the areas of water supply, public safety, emergency services, transportation, and stormwater control.” She noted local governments could look for increased revenue from “sharing of revenues from the hydraulic fracturing industry between the state and local governments or an increase in tax revenue from the population of workers that moves in to accept jobs in this industry.” The effects of fracking are, and will be, wide reaching.
What’s Next?
There has been no timeline set for the General Assembly decision on whether North Carolina will join the ranks of states that allow fracking. However, citizens and lawyers alike can expect continued dialogue, research, and public involvement to remain part of the decision-making process.
For more information, and to stay updated on current news about fracking, visit DENR’s website at www.ncdenr.gov.
