Volume 39, Number 2
Originally Published: Fall 2014
By Robert F. Kennedy, Jr., Esq.
The proliferation of high-volume horizontal hydraulic fracturing, commonly known as fracking, to extract natural gas from previously unreachable shale deposits, has exploded as a potent policy debate over recent years. Fracking’s negative effects on surrounding communities have inflamed a grassroots political movement organized around opposition to fracking. This article reviews some of the common risks to communities associated with fracking, all of which can impact long- and short-term real estate values and availability.
Gas companies extract “frack gas” by injecting water, sand and chemicals deep underground to open seams in mile-deep shale formations to release trapped gas. Much of the fluid mixture returns to the surface as toxic wastewater, followed by the newly released gas and poisonous “produced water” formerly trapped in rock. Each well requires upwards of six million gallons of freshwater and generates hundreds of thousands to millions of gallons of wastewater.1
Fracking companies generally refuse to disclose the exact chemical mixtures of their fracking fluids. Special federal exemptions to environmental laws allow the gas industry to keep specific chemical mixtures secret. Most formulas include methanol, isopropanol and ethylene glycol.2
Fracking has revolutionized natural gas production in the United States, with 33 states now producing more than 25 trillion cubic feet (tcf) of gas annually.3 The shale gas boom could continue indefinitely as the U.S. boasts an estimated 665 tcf of recoverable shale gas—fourth in the world behind China, Argentina and Algeria.4
All of this production means that an increasing number of communities across the country are dealing with the effects of fracking in their backyards. The fracking process—from well drilling through wastewater disposal—can result in several negative effects including ground and surface water contamination, industrialization of rural, suburban or agricultural communities, air pollution, nuisance and dangerous truck traffic, chemical spills, extensive road damage, noise pollution, declines in neighborhood desirability associated with an influx of out-of-state workers and, in some areas, earthquakes. The risks of these impacts are exacerbated by regulatory
loopholes and an uneven patchwork of standards and enforcement that can vary from state to state. Recognizing these impacts and the risks associated with fracking, some banks are refusing to grant mortgages for homes with a drilling lease or gas well, and others are becoming increasingly concerned about the long-term investment risks associated with drilling leases and mortgages.5
Groundwater contamination is one of the most publicized issues affecting fracking communities, thanks to the images of tap water catching fire that were made famous in the documentary Gasland. Poisoned groundwater can destroy property values and make homes practically unlivable. Groundwater contamination often forces homeowners to find alternative water sources—often spending large sums of money to transport water from outside the contaminated watershed. Homes without potable water are almost impossible to sell at their prior value, leaving families trapped or with few options.
The risk of groundwater contamination is not limited to properties with drilling leases, but is borne by entire communities. For example in Dimock, Pennsylvania, nearby fracking activities have left several neighbors with unusable water contaminated by methane and other chemicals. State and federal investigations, litigation between homeowners and drilling outfits, and years of high profile contentious debate between gas companies, regulators and the public have exacerbated diminished quality of life and property values. In one recently settled case, homeowners were able to win enough from a drilling company to sell their property and move. The company resold the land at a much reduced price, with the condition that no residence would ever again be built there.6
Dimock is not the only Pennsylvania town to experience water contamination problems. A 2013 Scranton Sunday Times review of records from the Pennsylvania Department of Environmental Protection revealed instances of water contamination linked to oil and gas drilling affecting at least 161 homes, farms, churches and businesses between 2008 and 2012.7 A Duke University study of Pennsylvania drinking water wells found methane concentrations an average of six times higher for homes located less than one kilometer from natural gas wells.8
Similarly in Pavillion, Wyoming, a 2011 draft report by the Environmental Protection Agency found methane, benzene, glycols and alcohols associated with drilling fluid in water supplies. The report followed a three-year investigation by the Agency at the request of Pavillion residents.9 Under political pressure from the fracking industry, the Agency later declined to finalize the report and turned the investigation over to the State of Wyoming, which has put the study on ice.
A 2012 study published by the National Bureau of Economics Research analyzed the effects of shale gas development on property values in Washington County, Pennsylvania. Those researchers found that, “by itself, groundwater risk reduces property values by up to 24 percent.”10 Similarly, a more recent investigation by the same researchers found large negative impacts on property values for groundwater dependent homes in areas with shale gas development.11
Air Pollution and Climate
Air emissions caused by gas extraction are not just a global climate problem—gas drilling, production, transportation and processing all have local impacts that shrink property values.
Gas fracking releases hazardous air pollutants such as volatile organic compounds, benzene, and compounds that lead to the formation of ground-level ozone, or smog, all of which can negatively impact the health of local residents.
In a study conducted by the Colorado School of Public Health, researchers found that residents living less than a half-mile from oil and gas wells face cancer risks that are 66 percent higher than for those living farther away.12 The Weather Channel—along with InsideClimate News and The Center for Public Integrity—recently unveiled the results of an eight-month investigation into emissions of air pollutants and related health impacts from fracking in the Eagle Ford Shale in southern Texas. Residents in communities surrounding fracking activities reported numerous health problems including aggravated asthma and other respiratory problems, migraines, nausea, nose bleeds and chest pains.13
Higher levels of smog caused by gas development can also lead to lifestyle changes as neighboring property owners avoid outdoors on high-smog days. In portions of rural Wyoming, smog is on par with that of Los Angeles14 and has increased health clinic visits in affected areas, according to the Wyoming Department of Health.15
Accelerating natural gas production could also have disastrous implications for climate change. Methane emissions associated with natural gas extraction, production, processing, transport and infrastructure can undercut the climate benefit of reductions in carbon dioxide from the use of natural gas, because methane is at least 72 times more potent as a greenhouse gas than carbon dioxide over a 20-year period.16 A number of recent studies have found that the amount of methane currently emitted into the atmosphere from the natural gas supply chain, from extraction through processing and distribution, has been consistently underestimated by regulators17 and is high enough, in combination with greenhouse gas emissions from other sectors, to push us toward the climate tipping point in the next 20–30 years. Increasing the use of natural gas could also delay transition to renewable energy sources necessary to stem climate change over the long term. These developments will have dramatic and widely distributed impacts on real estate value.
Changes in Community Character
A number of changes—from increased road traffic to an influx of out-of-state workers—can greatly affect the character and desirability of communities newly inundated by fracking. Fracking communities are struggling to accommodate these changes, with demands pushed to the limits for community services including hospitals, police, first responders and housing.
Transporting both the water and the waste requires large trucks to make thousands of trips—an estimated four thousand heavy truck trips per well18—which can snarl traffic and obliterate local roads. Most communities new to fracking are small and/or rural, and can have difficultly accommodating the increased traffic, much of which occurs on roads ill-suited for the continuous movement of large trucks. Increases in the number of traffic accidents have been reported, along with deterioration of local roads.19 Heavy truck traffic can also increase air pollution from truck emissions, dust and fine particulate matter.
Many communities also have seen a large influx of out-of-state workers with the necessary experience to work in fracking operations. This increase in workers also can strain community resources, particularly housing. Rental prices can soar, making it difficult for local families accustomed to paying much lower rents to pay more. Increases in transient workers have also been associated with increases in crime, including prostitution.20
Recent case studies from researchers with the MultiState Shale Research Collaborative provide insights into community changes as a result of the fracking boom.21
The researchers focused on four small, rural, generally poorer counties experiencing shale gas industry development: Carroll County, Ohio; Greene and Tioga counties, Pennsylvania; and Wetzel County, West Virginia. All four counties experienced increases in large truck traffic, along with road damages and a higher number of accidents. All four counties also saw an influx of out-of-state workers.
While the counties also gained some positive economic benefits and new jobs from gas drilling, the benefits varied, and three of them—Carroll, Greene and Tioga—faced additional costs for police, emergency services, road damage and social services. They also faced shortages of affordable housing and climbing rents, up to two to three times previous rents in Carroll County, for example. Both Greene and Tioga counties also saw increases in crime.22
Fracking and the disposal of fracking wastewater have also been linked to a rise in seismic activity in some parts of the country. Increases in earthquakes, particularly in areas ill-equipped to deal with them, can lead to injuries and property damage.
The U.S. Geological Survey has linked this practice of injecting fracking wastewater deep into underground disposal wells with increased seismic activity. Researchers found that earthquakes measuring 3.0 or higher in the central and eastern U.S. have increased dramatically since 2010. Prior to 2010, earthquakes of that size averaged approximately 30 per year, while from 2010 to 2013 they averaged more than 100 per year.23
In eastern Ohio, investigations conducted by the state’s Department of Natural Resources concluded that fracking itself was the likely cause of several small earthquakes in the area, likely because of drilling near a previously unknown microfault. This discovery led the state to issue new permit requirements for drilling near faults or areas of past seismic activity.24
The impacts presented in this article are merely a snapshot of the issues fracking communities across the country are facing. As shale gas development continues to industrialize and change the face of communities, expect continuing effects on housing, land use and neighborhood character.
1. New York State Department of Environmental Conservation, “Revised Draft , Supplemental Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program,” Sept. 7, 2011, Chapter 5, pp. 93 and 99, http://www.dec.ny.gov/data/dmn/rdsgeisfull0911.pdf. ↩
2. U.S. House of Representatives Committee on Energy and Commerce, Minority Staff , “Chemicals Used in Hydraulic Fracturing,” April 2011, p. 6, http://democrats.energycommerce.house.gov/sites/default/fi les/documents/Hydraulic-Fracturing-Chemicals-2011-4-18.pdf. ↩
3. These numbers represent estimates of total marketable gas production in 2012, the most recent year for which data is available from the U.S. Energy Information Administration (EIA). EIA, Natural Gas Annual: 2012, Dec. 12, 2013, Table 2, p. 4, http://www.eia.gov/naturalgas/annual. ↩
4. EIA, “Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States,” June 13, 2013, Executive Summary, Table 6, http://www.eia.gov/analysis/studies/worldshalegas. ↩
5. Radow, Elisabeth N., “At the Intersection of Wall Street and Main: Impacts of Hydraulic Fracturing on Residential Property Interests, Risk Allocation, and Implications for the Secondary Mortgage Market,” Albany Law Review, Vol. 77, Issue 2, April 16, 2014, pp. 673–704, http://www.albanylawreview.org/Articles/Vol77_2/77.2.0673%20Radow.pdf. ↩
6. Legere, Laura, “Battleground Dimock property sold, deed bars owners from building home there,” State Impact Pennsylvania, Oct. 20, 2013, http://stateimpact.npr.org/pennsylvania/2013/10/20/battleground-dimock-property-sold-deed-bars-owners-from-building-home-there. ↩
7. Legere, Laura, “Sunday Times review of DEP drilling records reveals water damage, murky testing methods,” The Times Tribune (Scranton, Penn.), May 19, 2013, http://m.thetimes-tribune.com/news/sunday-times-review-of-dep-drilling-records-reveals-water-damage-murky-testing-methods-1.1491547. ↩
8. Jackson, Robert B. et al., “Increased stray gas abundance in a subset of drinking water wells near Marcellus shale gas extraction,” Proceedings of the National Academy of Sciences of the United States of America (published online before print June 24, 2013), http://www.pnas.org/content/early/2013/06/19/1221635110. ↩
9. U.S. Environmental Protection Agency, “Draft , Investigation of Ground Water Contamination near Pavillion, Wyoming,” Dec. 2011, http://www2.epa.gov/sites/production/files/documents/EPA_ReportOnPavillion_Dec-8-2011.pdf. ↩
10. Muehlenbachs, Lucija et al., “Shale Gas Development and Property Values: Differences Across Drinking Water Sources,” National Bureau of Economic Research, Working Paper 18390, Sept. 2012, http://public.econ.duke.edu/~timmins/w18390.pdf. ↩
11. Muehlenbachs, Lucija et al., “The Housing Market Impacts of Shale Gas Development,” National Bureau of Economic Research, Working Paper 19796, Jan. 2014, http://public.econ.duke.edu/~timmins/MST_AER_1_3_2014.pdf. ↩
12. McKenzie, Lisa M. et al., “Human health risk assessment of air emissions from development of unconventional natural gas resources,” Science of the Total Environment, Vol. 424, May 1, 2012, pp. 79–87, http://cogcc.state.co.us/library/setbackstakeholdergroup/Presentations/
13. Morris, Jim et al., “Fracking the Eagle Ford Shale: Big Oil and Bad Air on the Texas Prairie,” The Weather Channel, InsideClimate News, and Th e Center for Public Integrity, Feb. 18, 2014, http://stories.weather.com/fracking. ↩
14. Gruver, Mead, “Wyoming’s natural gas boom comes with smog attached,” Associated Press, March 9, 2011, http://www.nbcnews.com/id/41971686/ns/us_news-environment/%20%20%22#.U30GyyjeRe5. ↩
15. State of Wyoming Department of Health, “Associations of Short-term Exposure to Ozone and Respiratory Outpatient Clinic Visits – Sublette County, Wyoming, 2008-2011,” March 1, 2013, http://www.fossil.energy.gov/programs/gasregulation/authorizations/2013_applications/sierra_13-121-LNG/comments_delfin_13-147/exhibit_61_70.pdf. ↩
16. Intergovernmental Panel on Climate Change, “Climate Change 2013, The Physical Science Basis: Working Group I Contribution to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change,” 2013, Chapter 8, Table 8.7, p. 714, https://www.ipcc.ch/report/ar5/wg1. ↩
17. Miller, Scot M. et al., “Anthropogenic emissions of methane in the United States,” Proceedings of the National Academy of Sciences, Vol. 110(50), (published ahead of print Nov. 25, 2013), pp. 20018–20022, http://www.pnas.org/content/early/2013/11/20/1314392110. abstract; Brandt, A.R. et al., “Methane Leaks from North American Natural Gas Systems,” Science, Vol. 343, No. 6172, Feb. 14, 2014, pp. 733–735, http://www.sciencemag.org/content/343/6172/733. summary. ↩
18. New York State Department of Environmental Conservation, “Revised Draft , Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program,” Sept. 7, 2011, Table 6.62, pp. 6–303, http://www.dec.ny.gov/data/dmn/rdsgeisfull0911.pdf. ↩
19. Begos, Kevin and Jonathan Fahey, “AP Impact: Deadly Side Effect to Fracking Boom,” Associated Press, May 5, 2014, http://bigstory.ap.org/article/ap-impact-deadly-side-effect-fracking-boom-0. ↩