Sunday, July 17, 2016

The Fayetteville shale bust and lessons likely not learned

Posted By on Sun, Jul 17, 2016 at 8:00 AM

GLORY DAYS: An image from Southwestern Energy, once busy in the Fayetteville Shale. Not now.
  • GLORY DAYS: An image from Southwestern Energy, once busy in the Fayetteville Shale. Not now.

Good report in the Arkansas Democrat-Gazett
e by Jessica Seaman and Emily Walkenhorst on the Fayetteville shale bust.

Pay particularly close to attention to the matter-of-fact recitation of the state's failure to be an environmental watchdog. Belatedly, injection wells were stopped because of drilling-induced earthquakes. But chemical pollution got little attention.

With thousands of drilling and other facility sites, the Department of Environmental Quality didn't keep up. In a four-year period it found 500 environmental violations from just under 300 inspections, but made only NINE followup inspections.

Recent shakeups and layoffs have only further weakened an already weak environmental regulatory agency, particularly with a former energy company Republican, Becky Keogh, now in charge. Evidence mounts of an even stronger laissez faire view of environmental regulation.

Arkansas is left with waste pits, cratered roads and some pockets of boom (small school districts for example) now coping with bust. Some landowners, it's true, made a pot of money, though the royalty checks have dwindled.

When some said the negative fallout should be considered in setting a reasonable severance tax, the naysayers (think Jason Rapert and them) suggested the prosperity would never end.

Fact: A higher severance tax wouldn't have discouraged exploration in the boom years and it didn't prevent the exodus of the exploration companies when market forces dictated it was time to go. The tax was always a marginal issue, except in what it could have produced for lasting benefit in the state.

If gas prices rebound and drilling activity resumes, you can be sure the same people will argue against capturing a reasonable return on the resources permanently extracted from the state to offset the loss and damage that it does.

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