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N.C. Department of Environment and Natural Resources

NC Department of Environment and Natural Resources
Guest - DENR Study

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Shale Gas

DENR Study

Session Law 2011-276 requires DENR, in cooperation with the Department of Commerce, Department of Transportation, Attorney General’s Office and Rural Advancement Foundation International, to conduct a study of the potential development of shale gas in North Carolina and make recommendations regarding the regulatory framework necessary for development of this resource. The study must address:

  • oil and gas resources present in the Triassic Basins and in any other areas of the state;
  • methods of exploration and production;
  • potential impacts on infrastructure and water resources;
  • potential environmental impacts;
  • potential economic impacts;
  • potential social impacts;
  • potential oversight and administrative issues associated with a regulatory program;
  • consumer protection and legal issues; and
  • other pertinent issues.

The study must be presented to the legislature by May 1, 2012.

NEW FINAL Report

Impacts on Landowners and Consumer Protection Issues - N.C. Department of Justice

*Addendum to North Carolina Oil and Gas Study under Session Law 2011-276

Recently, the U.S. Geological Survey (USGS) released its assessment of undiscovered oil and gas resources for five East Coast Mesozoic basins. Its assessment was released in a fact sheet entitled:“Assessment of Undiscovered Oil and Gas Resources of the East Coast Mesozoic Basins of the Piedmont, Blue Ridge Thrust Belt, Atlantic Coastal Plain, and New England Provinces, 2011” -- FS 2012-3075.

In reviewing the USGS’s assessment, DENR staff realized that in DENR’s report, North Carolina Oil and Gas Study under Session Law 2011-276, staff had used certain technical terms relating to the shale gas resource differently than the USGS uses these terms. In order to minimize confusion and to be consistent with USGS terminology, DENR has made changes to the language used in the North Carolina Oil and Gas Study under Session Law 2011-276.These changes affect pages 28 through 31 of the report, and only affect the terms “technically recoverable gas” and “original gas-in-place.” 

DRAFT Report

Public Meetings

Four public meetings on this issue were held in the Triassic Basin during the course of the study. The first public hearing took place on Monday, Oct. 10, 2011, in Sanford.  During this initial meeting, the draft plan of study was presented; the STRONGER process was discussed; and public comment was received as to how the study should be conducted. 

In addition to comment received at the Oct. 10 public meeting, written comment on the draft outline of the study was accepted through Oct. 18.

Three additional public meetings took place in March to discuss the draft report concluding the study. Draft findings and recommendations from the report were presented first in a public meeting held at the Wicker Center in Sanford on March 20, 2012, from 6:30 – 9:30 p.m. The second public meeting occurred on March 27, 2012, in the auditorium of East Chapel Hill High School in Chapel Hill from 6:30 – 9:30 p.m. These meetings were streamed live online at https://its.ncgovconnect.com/denr_shale_gas/Instructions on how to access the live stream 

The same information was presented at both meetings, and public comments were accepted at both meetings as well as via mail and email. 

A third meeting was hosted by Chatham County on Monday, April 2, from 6:30 - 8:30 p.m. Public comments were received at this meeting. 

Written comments on the draft report were accepted through April 2, in addition to any feedback received at the two public meetings. 

STRONGER Report

As one piece of the state’s shale gas study, DENR requested a nonprofit organization called State Review of Oil & Natural Gas Environmental Regulations (STRONGER) to perform a review of North Carolina’s oil and gas regulatory programs. The STRONGER review process brought together representatives from the state, the oil and gas industry, and public interest stakeholders to evaluate the state’s regulatory programs against STRONGER’s set of national guidelines. STRONGER’s review panel met in late October to gather information about the state’s processes, and issued a report in late February 2012. 

 

Plan of Study (printable)

Revised (12/6/2011) Outline of the Oil and Gas Study
Under Session Law 2011-2761

Executive Summary

Section 1 – Potential Oil and Gas Resources

A. Overview of the Triassic basins

  • Sanford sub-basin of the Deep River Basin
  • Dan River Basin
  • Durham and Wadesboro sub-basins of the Deep River Basin
  • Buried Coastal Plain basins

B. Estimates of technically recoverable gas

  • Sanford sub-basin
  • Dan River Basin
  • Uniqueness of the geology in these basins

C. Anticipated industry behavior

  • Rates of well drilling
  • Rates of gas extraction

Section 2 – Oil and Gas Exploration and Extraction

A. How hydrocarbons are generated and trapped in the Earth
B. Methods used to find hydrocarbons

  • Geophysical methods
    • Seismic reflection
    • Gravity and magnetics
  • Lithologic and geophysical logs
  • Organic geochemistry indicators

C. Methods to extract hydrocarbons

  • Conventional drilling and well treatment
  • Horizontal drilling
  • Hydraulic fracturing
  • Alternative fracturing techniques

Section 3 – Potential Infrastructure Impacts

A. Water supply

  • Existing water sources
  • Existing water use
  • Projected water demand (based on local water supply plans)
  • Expected additional water use for drilling and hydraulic fracturing, including cumulative impacts from multiple wells

B. Road and bridge infrastructure

  • Existing condition and effects of increased use
  • Safety considerations

C. Transportation methods

  • Pipeline availability

D. Wastewater treatment

  • Existing wastewater treatment capacity
  • Wastewater treatment needs associated with oil and gas activity (both industrial and domestic wastewater) 

Section 4 – Potential environmental and health impacts

A. Constituents and contaminants associated with hydraulic fracturing

B. Groundwater impacts

  • Location of water supply wells (public and private)
  • Potential for contamination by constituents of fracturing fluids
  • Potential for methane release
  • Well construction standards
  • Spills and releases to groundwater
  • Potential public health impacts

C. Process wastewater

  • Disposal
  • On-site storage
  • Potential for recycling

D. Surface water impacts and stormwater management

  • Erosion and sedimentation issues during production and following reclamation of well pads
  • Post-development runoff
  • Environmentally sensitive site design
  • Surface spills and releases from the well pad
  • Spills and releases during transportation and storage
  • Potential public health impacts

E. Air quality impacts

  • Air emissions, including fugitive emissions and flaring
  • Greenhouse gases
  • Air quality permitting requirements
  • Potential public health impacts

F. Impacts on fish, wildlife and important natural areas

  • Threatened and endangered species
  • Location of parks, designated state nature preserves, other significant natural areas
  • Potential impacts to livestock from spills, releases and air emissions
  • Potential impacts to fish and wildlife , including fragmentation of habitat
  • Potential impacts to recreational fishing and hunting

G. Management and reclamation of drilling sites (including orphaned sites)

H. Management of naturally occurring radioactive materials (NORM) generated by the drilling and production of natural gas

  • Potential public health impacts

I. Potential for increased seismic activity

J. Solid and hazardous waste generated in the extraction process

  • Disposal methods
  • Potential public health impacts

Section 5 – Potential economic impacts

A. Estimate of jobs created

  • Temporary vs. permanent jobs
  • Type and quality of jobs
  • Industry use of local labor vs. imported labor
  • Ancillary job creation

B. The timing of leasing, drilling, production and post-production costs as compared to the realization of economic benefits

C. Impact on Existing Local Economy

  • Agriculture
  • Retirees
  • Wineries
  • Local food industry
  • Tourism
  • Others

D. Potential impacts to North Carolina energy consumers

  • Extraction vs. combustion of natural gas
  • Consideration of energy security
  • Available and necessary infrastructure to export natural gas

E. Fiscal impacts to local government

  • Roads and other infrastructure
  • Emergency services
  • Schools
  • Social services
  • Police and criminal justice

F. Additional state resources needed to provide regulatory oversight

  • Cost of implementing an oil and gas regulatory program
  • Increased natural resource management costs, including review of impacts to threatened and endangered species
  • Others

G. Comparison of existing bonding requirements to those in other oil and gas states

H. Comparison of existing severance taxes to severance taxes or royalty payments in other oil and gas states

I. Use of special assessments

J. Estimate of revenue generated by severance taxes or royalties at levels comparable to other oil and gas states

K. Fees for permitting of oil and gas exploration and extraction activities

  • Current environmental permitting fees in North Carolina
  • Fees in other oil and gas producing states

L. Recommendations for funding state regulatory oversight

  • Appropriate level of severance taxes or royalty payments
  • Recommendations for new or modified permit fees

M. Other recommended uses for oil and gas revenue

  • Improvement of water and wastewater infrastructure
  • Remediation of contaminated sites
  • Land and water conservation 

Section 6 – Potential social impacts

A. Impacts on nearby communities from drilling operations

  • Housing availability
  • Property values
  • Demand for social services

B. Impacts on quality of life within nearby communities, including impacts on:

  • Recreational activities
  • Commercial and residential development
  • Noise from construction and drilling operations
  • Visual impacts from construction and drilling operations
  • Crime rates

Section 7 – Proposed regulatory framework

A. Guidance for development of a regulatory framework

  • Coordination with existing and pending federal regulations
  • STRONGER standards for state oil and gas programs
  • State-by-state review of oil and gas programs, including enforcement
  • Other sources of recommended standards
  • Public comment
  • Existing state policy

B. Recommended policies to guide regulation of oil and gas development

C. Recommended regulatory framework

  • Public participation
  • Interagency coordination
  • Criteria for approval of exploration and development activities, including permit requirements
  • Scope and frequency of inspection
  • Compliance and enforcement procedures
  • Data management 

Section 8 – Consumer protection and legal issues

A. Landowner property rights under existing North Carolina law

B. Landowner rights and risks

  • Split estates
  • Impacts to landowners, including disclosure
  • Differences and similarities in approaches to protecting the rights of surface owners vs. those of mineral owners

C. Mineral leases and protection of landowners

D. Forced pooling

Section 9 – Recommendations and Limitations

A. Recommendations

  • Whether or under what conditions N.C. should allow hydraulic fracturing and horizontal drilling
  • Issues requiring further research
  • Baseline data collection
  • Additional recommendations (to be determined)

B. Limitations of the Study

Section 10 - Other Issues

Appendix

  • Session Law 2011-276
  • Summary of Public Comment
  1. Although the study language in Session Law 2011-276 speaks in terms of all of the state’s oil and gas resources, the study will focus on the shale gas resource that has been identified in the Triassic Basin. The study will note where any findings and recommendations may have broader application to other potential oil and gas resources.
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