A careful look here in NC

A nice editorial appears in the Winston-Salem Journal commending state leaders to take the time to really figure out how to get the hydraulic fracturing issue correctly balanced with protecting water resources. The author(s) cite that with natural gas extraction,

…there is a lot of money. For landowners in several counties, there are huge mining-rights fees. For workers, there are many jobs, and for state and local governments, there’s the promise of tax revenues…

I pull this section out because the economic impact must be thoroughly assessed. Last week, I shared the calculation of a Clemson hydrogeologist that estimates the total value of natural gas in central North Carolina to be $2.5 billion. This calculation does not include any costs at all. At the Duke forum in January, Dr. Christopherson warned that many economic impact analyses do not incorporate costs, or do so to a very limited extent. The perception of huge revenues coming with natural gas often clouds over the costs, particularly the long-term costs.

  • Landowners may not own the mineral rights, which are recorded at the county register of deeds. Though it has been said before, it is worth repeating: consult a lawyer before signing a lease agreement, and definitely read the recommendations from RAFI.
  • The fees are currently set in the Session Law 2011-276, House Bill 242.
  • Tax revenues remain to be assessed. which is something included in the ongoing DENR study (see section 5 of the study outline).
  • The drilling crews employed to establish any fracturing wells will probably be from out-of-state like Oklahoma or Texas where they have far greater experience. The job development associated with gas extraction is part of section 5 in the study (see link above).
  • The indirect and induced jobs created from gas extraction is worth a close look based on the experience other states have had.

Folks at Cornell express the need to examine the range of costs on local communities so that they do not fall into the typical boom-bust economic cycle associated with mineral extraction. The draft of the DENR study will be available in the near future so that the public has time to review and provide clear, constructive feedback. This a relatively short timeframe, but through the public comment process, we have an opportunity to make this a ‘best fit’ from the ground floor.

The question I ask regarding the potential economic impact is: how could North Carolina (or any state for that matter) make the boom from mineral extraction a ‘win-win’ situation for the region and state, and plan appropriately to avoid the bust?



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