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Tracking fracking in Indiana

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In a best-case scenario, hydraulic fracturing safely and efficiently maximizes production of oil and natural gas, freeing new, abundant energy resources locked in shale deposits beneath the Earth’s surface.

In a worst-case scenario, the process known as fracking taints the air, ruins groundwater and creates toxic byproducts from fluid pumped at high pressure to fracture geological formations.

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Fracking has been used in the oil and gas industry since at least the 1940s, but what’s changed and brought the practice into public consciousness is scale. The volume of fluid – a mix of water, sand and chemicals – and the pressure at which it’s pumped into wells have increased markedly, said Herschel McDivitt, director of the Indiana Department of Natural Resource’s Division of Oil and Gas.

Indiana hasn’t seen fracking booms comparable to those in Pennsylvania, New York, Texas and the Dakotas, but drilling companies have stepped up hydraulic fracturing in recent years in the southwestern part of the state. McDivitt said fracking is most commonly done here to recover methane from coal beds and in vertical oil wells.

“Actually it’s kind of exciting to see because it means operators are having some success in increasing productivity,” McDivitt said. “There’s nothing in the oil and gas business that stimulates interest as much as somebody having success.”

The laws in Indiana have kept pace in the past two years with the

rise in fracking. Operators now must file reports with Division of Oil and Gas after a well has been fracked. The reports must include such information as the amount and source of water used, the chemicals used, how much water was recovered, and what was done with the recovered water.\

shublak Shublak

“The General Assembly in the last two legislative sessions enacted bills to deal with coal-bed fracking and conventional oil and gas fracking,” said Mark Shublak, a partner at Ice Miller LLP in Indianapolis. Shublak has lobbied for the industry and represents CountryMark, a farmer-owned refinery and the largest oil and gas producer in the Illinois Basin, which includes southern Illinois, southern Indiana and western Kentucky.

“I do think the existing rules provide a comprehensive framework for the Division of Oil and Gas to take rulemaking to fill out the gaps of what is needed in the hyrdrofracking area,” he said.

Attorney William Illingworth is a partner in Jackson Kelly PLLC in Evansville and general counsel for the Indiana Oil & Gas Association.

He said laws enacted in the past two years represent a consensus that balanced industry needs with environmental protections. “It’s kind of our view that we’ve already done what needed to be done,” Illingworth said.

Shawn Gallagher, who operates Gallagher Drilling Inc. in Evansville, has been surprised at misconceptions about a practice that’s been used more than 60 years and one he believes has benefits, such as much lower natural gas costs, that have been unappreciated.

“It’s estimated that hydraulic fracturing has increased reserves from oil by about 30 percent and natural gas about 90 percent,” Gallagher said. “It’s had a very positive impact on our economy.”

Matt Stone, president of the Indiana Oil & Gas Association board of directors, said there’s also public misconception that drillers use the process haphazardly when the opposite is true. “If the fractured treatment doesn’t go where we want it, it would result in a lost hole,” he said.

McDivitt said he’s given presentations around the state regarding fracking. The public is curious in part because of concerns raised most notably in Pennsylvania, where large-scale operators drilling the Marcellus shale have poured millions of gallons of fracking fluid at a time into wells.

illingworth Illingworth

“That isn’t representative at all of what we’ve seen in Indiana,” McDivitt said. Wells here are much shallower and deposits of gas and oil are smaller.

As an illustration, McDivitt notes in his presentations that the largest fracking fluid volume per well to date in Indiana is 402,339 gallons, compared with as much as 10 million gallons at a time on the Marcellus shale. But the total volume of fracking fluid used annually in all operations in Indiana has soared from about 1 million gallons in 2008 to more than 4 million gallons in 2012.

The New Albany shale formation in southern Indiana holds the promise of abundant natural gas, but McDivitt explained it’s not proven cost-effective for operators to use hydraulic fracturing to capture it, and the differences in geology also present challenges. “If you can’t match the technology and the methods to what is needed” to produce natural gas, he said, “you go elsewhere.”

Opponents of fracking say the process has caused devastating environmental degradation and harmed public health where it has occurred on a large scale. A Pennsylvania health company announced this month that it received a $1 million grant for a comprehensive study of the health effects resulting from fracking there.

focus_fracking_map.jpgMcDivitt acknowledges concerns that come with fracking and notes it this way in his PowerPoint presentations: “The accelerated development has been brought into the marketplace so rapidly that traditional means for guarding against potential adverse impacts, whether real or perceived, have not kept pace with the expectations of those who could be impacted by the increased development.”

Still, he said laws enacted in the past two years give the Division of Oil and Gas latitude to adopt rules that would require additional regulations should the need arise. He noted that fracking reports are made available to the public on the division’s Web page and include all the disclosures the law requires. “Our intent is to make this information as available as we can,” he said.

But Rep. Matt Pierce, D-Bloomington, said he doesn’t believe laws passed recently go far enough. He introduced House Bill 1209, which would require operators to get advance DNR plan approval before fracking. Similar legislation has stalled twice in previous Statehouse sessions, and industry officials and Pierce agreed it’s unlikely the bill will get a hearing in the GOP-dominated Legislature.

Nevertheless, Pierce said he filed the bill because he’s heard from constituents who’ve seen news reports and documentaries regarding fracking elsewhere that depict health risks and scenes such as kitchen sink taps said to be made flammable due to natural gas seepage in water supplies after nearby wells were fracked.

“Obviously, people don’t want their tap water catching on fire and don’t want their water table contaminated,” Pierce said. “The important point is for the Legislature and the Department of Natural Resources to get out in front of it.”
 

Pierce_Matt.jpg Pierce

Pierce said he’s not heard of environmental issues arising from fracking in Indiana, but the state should take note of developments elsewhere. “Most of our laws and regulations are kind of geared to what you do after the fact when you have contamination,” he said. “States are really playing catch-up. … It’s better to have a proactive approach.”

But industry officials believe the regulations as they exist fit Indiana and offer environmental protection. Gallagher noted that most operators in Indiana are small, family-owned businesses with a handful of employees trying to responsibly maximize production, unlike the massive operations in Pennsylvania and elsewhere.

“We’re not apples and apples,” Gallagher said.•

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