Fracked Into a Corner?

Hydraulic fracturing and horizontal drilling have given us a natural gas boom—and a whole lot of questions.
Illustration by Thomas Fuchs

When the novelist and longtime Vermont resident Annie Proulx came to the Texas Panhandle to research a book, she was struck by how thoroughly exploited the land was, both above and below. Here is how she described it: “There were nodding pump jacks . . . to the left and right, condensation tanks and complex assemblies of pipes and gauges, though such was the size of the landscape and their random placement that they seemed metal trinkets strewn by a vast and careless hand. . . . Beneath the fields and pastures lay an invisible world of pipes, cables, boreholes, pumps, and extraction devices, forming, with the surface fences and roads, a monstrous three-dimensional grid.” A Texan passing through that same landscape might not have even noticed the ubiquitous signs of our state’s most profitable industry, so familiar are we with its various hallmarks. The truth, however, is that most of us don’t have any more idea than your average Vermonter how any of these devices actually work, because most of us live far from places like the Panhandle or the Permian Basin. Or at least that’s how it was until around eight years ago, when Fort Worth and its suburbs began to be inundated with rigs drilling for natural gas in the underlying Barnett Shale formation. Before long there were gas wells operating near busy intersections, near schools, even near Cowboys Stadium, and we were all talking about casings and cement jobs and flares and above all, hydraulic fracturing, or fracking. For a big slice of urban Texas, the oil patch was suddenly right outside the front door. 

Fracking, in which huge quantities of water laden with sand and chemicals are forced into tiny cracks in hard shale to free the oil and gas embedded inside, is not new. What is new is combining this technology with advanced horizontal drilling methods. Shale drillers can now make a drill bit turn ninety degrees and drill horizontally through a gas-bearing formation for a mile, or even two, before turning on the fracking pumps. This technique, developed over decades by legendary Houston oilman George Mitchell, has made previously irretrievable Barnett Shale gas a serious moneymaker. The Eagle Ford Shale play, in South Texas, looks even more promising. Shale gas is driving a radical reordering of America’s energy mix, wherein natural gas, which produces half of the carbon dioxide and virtually none of the mercury, sulfur dioxide, or soot that coal produces, is poised to replace dirtier fuels and, supporters say, provide a bridge to a cleaner, more independent energy future. 

Despite Mitchell’s groundbreaking work, there might never have been a shale gas boom in Texas without two controversial policy decisions, one in Austin and one in Washington. In 2003 the state legislature took a temporary severance tax rebate (called the high-cost gas exemption) for fracked wells and quietly made it permanent. The idea was that companies needed to be incentivized to spend the extra money required to extract the state’s hard-to-reach gas reserves. In 2005 Congress exempted fracking from regulation under the Safe Drinking Water Act, declaring, in essence, that fracking posed no threat to the nation’s water supply. The boom was on. 

In retrospect, both of these decisions look shortsighted. As the shale gas boom accelerated—moving from fewer than 1,000 producing wells in the Barnett Shale in 2000 to more than 15,000 today—the amount of money the state was giving away in severance tax rebates quickly zoomed into the billions. Of course, if the boom had never occurred, there would have been no severance tax to collect in the first place, nor would we have seen the general boost to the economy—and associated gains in sales and property tax revenues—that came with all that drilling. But a rebate that might have made sense in 2003, when natural gas prices were low, made no sense at all by 2005, when gas prices spiked and drillers were making money hand over fist. The near universality of the rebate, meanwhile, meant that even the staunchest opponents of fracking were in effect paying for it to be done, in some cases in their own neighborhoods. When the Legislature briefly considered rescinding the rebate last session, producers testified that drilling would end without it, and the proposal was shelved. 

As it happens, shale gas drilling has all but stopped in Texas anyway, because the price of gas has plummeted in response to the glut produced by the boom. If the tax rebate really was the impetus for the boom in Texas, then it must also be blamed, at least in part, for the glut, which means it may go down as one of the most ham-fisted market interventions of all time. The glut caused gas prices—and thus, wholesale electricity prices—to plunge, and lower energy bills mean lower rates of return for utilities. One victim has been Dallas’s Energy Future Holdings, which is now struggling to remain solvent. Low electricity prices have also discouraged the construction of new power plants, which has some industry leaders worried about the state’s capacity to grow.

But while the gas business may be in the toilet, fracking is far from dead. This is because the shale in both North Texas and South Texas also holds a great deal of oil. Which brings us to Congress’s decision to declare fracking safe. This move was predicated chiefly on a 2004 Environmental Protection Agency study that even the study’s author has since labeled a flimsy basis for permanently exempting the practice from regulation. Fracking’s supporters, among them Kathleen Hartnett White, the former head of the Texas Commission on Environmental Quality, like to claim that in decades of fracking there has never been a proved case of an aquifer’s being contaminated. In fact, this is not true: as the New York Times reported last year, in 1987 the EPA concluded that an aquifer in West Virginia had been polluted by fracking fluids, and the study’s authors complained that nondisclosure agreements in settled lawsuits prevented them

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