Oil/Gas Fees, Study to Balance Risk vs. Reward

The Senate Agriculture/Environment/Natural Resources committee gave the green light today for HB 242 “Nat’l Gas/Bonds/Fees/Studies,” a proposal attempting to establish higher fees for natural gas and oil exploration and drilling. The bond for drilling was set at $5,000, while drilling fees increased from $50 to $3,000, and abandonment charges rose from $15 to $450. Rep. Gillespie (R-McDowell), the bill’s sponsor, explained that drilling fees had not changed since 1945, and the increase matched those of other states. He did warn, however, that they may increase should state costs be more than expected.

Also included in the bill is a $100,000 study to be performed by the Department of Environmental and Natural Resources (DENR) to study the potential economic, environmental, and social impacts of onshore drilling in North Carolina, including the controversial hydraulic fracturing method (commonly referred to as fracking).

Fracking is one of several new ways to get at the ample resources remaining after natural pressure subsides. Funding for the study has already been approved in the current budget proposal, and would not be an additional appropriation.

During the meeting, Rep. Gillespie said the best estimate of the gas field beneath the surface to date would yield enough energy to power the whole state for forty years, and expanded across roughly 80,000 acres. He also added that  he personally would like the state to spend $2 million for the state to perform its own experimental drilling to determine the scope of the targeted field, rather than rely on what gas companies said.

Raising concerns over fracking in North Carolina was a representative from the organization Environment NC, who expressed fear about methane contamination in drinking water, and air contamination from drill sites, two nationally widespread concerns. The representative continued that the organization was firmly opposed to drilling, but was not opposed to the study put forth in the bill.

Gillespie himself shared Environment NC’s concern, elaborating on why he drafted the bill, “What you read on the blogs is scary to me, but I feel NC can do it correctly.” He emphasized that the study would ensure that NC citizens would be protected while benefiting from the natural resources beneath their feet. He went further to say that fees for quality tests of groundwater and air were included in the drilling fees.

Along with a unanimous vote to move the bill to the floor, Sen. Tillman  (R-Randolph) mentioned North Carolina’s ability to reduce dependence on foreign oil, something weighing very heavily on lawmakers across the nation. The study is due to be completed by May 1, 2012 by which time there was a general opinion among the members that more regulatory legislation would come forth.

Published by William Bejan and Andrew Blackburn