Energy firms gone, but their impact lingers

Lawrence Bengal, director Arkansas Oil and Gas Commission

As large equipment sits idle in cow pastures of the Fayetteville Shale in north-central Arkansas, some locals worry that years of natural-gas drilling there will have lasting consequences for the land and environment.

Drilling in the Fayetteville Shale began in the mid-2000s and came to a halt in December.

"We're left with hundreds of drilling sites," said Kathy Golding, who lives in the Heber Springs area. "What happens in the future?"

Energy companies streamed into the area and began hydraulic fracturing, a high-intensity drilling technique known as fracking, to extract natural gas from in the dense shale rock.

Initially, "many people didn't know what was taking place," said Buck Layne, president of the Searcy Chamber of Commerce.

"There were a few people in town that knew about the gas business," he said. "Most people in the area were just learning on the fly."

Fracking involves pushing water, sand and chemicals underground at a high pressure to break apart the rock and release natural gas and oil. To extract the gas from the Fayetteville Shale, companies also used horizontal drilling to expand the reach of the wells.

Many now worry that fracking can contaminate water or create excessive air emissions that contribute to global warming.

And there is the matter of earthquakes. Small earthquakes in recent years have shaken communities near oil patches across the United States, and many scientists believe they are linked to oil and gas drilling activity.

In Arkansas, drilling in the shale has generated dozens of environmental problems, including oil spills and eroded reserve pits that contain drilling fluids, according to a state agency.

The bulk of the problems -- recorded by the Arkansas Department of Environmental Quality -- involved the three largest companies drilling in the formation and were found between 2008 and 2010, the height of the Fayetteville Shale boom. Only a handful of the problems led to formal action by the department.

The Arkansas Public Policy Panel, which reviewed the department's inspections in the shale between July 2006 and August 2010, found more than 500 violations of water and other environmental regulations resulting from just under 300 inspections.

The panel also said that only 528 inspections were conducted during that four-year period, despite the prevalence of thousands of wells, compressor stations and other facilities in the shale formation. Only nine follow-up inspections were conducted, and inspection reports did not detail the outcomes of the reported violations.

Energy companies say they took steps to minimize the effect to the environment.

Southwestern Energy, one of the leading operators in the shale, works to protect its employees and the environment, said George Sheffer, the company's vice president of operations for the Fayetteville Shale.

The company has a water conservation program in place to recycle 100 percent of the water it uses in the shale, and is working to lower methane emissions, he said.

"We knew this area -- pretty much the foothills of the Ozarks -- was a pristine natural area," Sheffer said.

How well state agencies responded to fracking in Arkansas is a matter of perspective.

Industry and many community leaders say the state effectively monitored the activity. Others, including some environmentalists, disagree, saying regulations struggled to keep up with the speed of the gas exploration.

Residents' views tend to vary depending on their opinions of fracking and their personal experiences during the boom days.

"The reason I became concerned in the beginning was the gold-rush aspect of the opening up of the Fayetteville Shale," said Debbie Doss, a member of Arkansas Citizens First Congress, who has studied the environmental effects of the drilling. The organization describes itself as a watchdog group that works for "progressive changes in state policy."

"I think most of the damage in our area, environmentally, was due to moving in so quickly and the unpreparedness of the state to deal with all of that activity suddenly descending on us," she said.

Many people familiar with the state's regulation of the natural-gas drilling activity say fracking was in its infancy when it was introduced in Arkansas.

When the companies moved in to drill in the shale, the state's regulatory agencies suddenly had to manage a rapidly developing drilling technique that had never been used in the state, they said.

"It was different from the Arkoma, from southern Arkansas," said Danny Games, who was hired by Chesapeake Energy, one of the main operators in the shale, in 2008. He now is deputy director of the Arkansas Economic Development Commission.

"It just brought about, literally and figuratively, a new set of rules because of the horizontal drilling and the ability to reach more gas from one well head," Games said.

At the beginning of the Fayetteville Shale boom, drilling moved quickly, and the technology and operations weren't as sophisticated as they eventually became, said Department of Environmental Quality Director Becky Keogh.

"The good news is ... I think the technology and the level of confidence and competence in the field has increased, so we don't see as many issues," said Keogh, who previously worked in the shale for BHP Billiton LTd. after it bought Chesapeake Energy's assets in 2011. She joined the department in early 2015.

"It did settle down," Doss said. "We managed to work with the Oil and Gas Commission and [Department of Environmental Quality], and regulations were improved. But I think primarily it was a thinning-out process of which companies were going to be successful in the shale."

The Arkansas Oil and Gas Commission did not respond to multiple requests for an interview by the Arkansas Democrat-Gazette.

Instead, Director Lawrence Bengal sent the newspaper an email saying, "There are currently no active drilling rigs in the Fayetteville Shale, with the last new well being drilled in the Fayetteville Shale area in December 2015."

Some changes were made in response to issues raised during the shale exploration. Some new inspectors were hired. Noise limits were instituted for compressor stations.

In July 2011, the Oil and Gas Commission enacted a moratorium on wastewater injection wells in the area in response to earthquakes that were rattling homes in Faulkner County.

Lawyer Scott Poynter filed three federal lawsuits involving earthquakes. He alleged that the tremors cracked sidewalks, foundations and swimming pools, and caused dishes and picture frames to fall at residences.

Poynter represented 35 households in cases filed against the energy companies, but the cases were dismissed after mediation in 2013 and 2014. It's unclear if there was a settlement.

The Arkansas Geological Survey believed the earthquakes were related to injecting the wastewater, which came from fracking operations, into the ground. After the Oil and Gas Commission's moratorium, the earthquakes diminished.

Companies and residents disagree over whether the injection of wastewater caused the earthquakes.

A recent report by the U.S. Geological Survey linked the increase in earthquakes in central and eastern parts of the United States to the rise in the wastewater injections.

The report said parts of Arkansas -- mainly Faulkner, Cleburne and Van Buren counties, where companies previously drilled and injected wastewater -- have a 2 percent chance of an earthquake that is a magnitude 5.0 or stronger.

It also noted that Arkansas is one of the few states that tightened injection well regulations after earthquakes increased.

"It was a problem here in Arkansas. ... The state at that time was able to make that connection," Doss said.

"Arkansas did the right thing," she said. "And you can see the difference in what Arkansas has done and what Oklahoma has done. There are still lots and lots of serious problems in Oklahoma that we just don't have."

Drilling activity in the Fayetteville Shale began to slow in 2012 when an oversupply of natural gas on the market caused prices to fall. The drilling rig count in the shale dropped from a high of 60 in 2008 to zero.

Many of the oil-field service companies that provide equipment and labor to drill and extract natural gas have either gone out of business or moved out of state.

The larger operators -- Southwestern Energy, BHP Billiton and XTO Energy -- have significantly scaled back their presence in the shale formation. Instead of drilling new wells, they are focused on maintenance and well completion activities.

With many of the companies gone now, the communities are left to deal with the impact, Golding said.

"All of a sudden you wake up, and they are gone," she said.

SundayMonday on 07/17/2016