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This was supposed to be the era of drill derricks tapping into rich veins of natural gas under Lee County, the fulfillment of several combative years of legislative maneuvering and bureaucratic planning. Instead, five years after the legislature voted to legalize fracking, not a single well has been drilled or proposed. And some are convinced fracking remains a legal non-starter, just as the practice has been since 1940s, when the state banned drilling horizontally for oil and gas under a neighbor’s land.
Trapped in a legal black hole, North Carolina’s Oil & Gas Commission has yet to hold a meeting to discuss drilling permits or regulations. Its nine commissioners, most appointed last year by former Republican Gov. Pat McCrory and the Republican legislature, have not been sworn in. They await instructions from the N.C. Department of Environmental Quality, or DEQ, which is now overseen by Gov. Roy Cooper, a Democrat who in the past has voiced concerns about the risks posed by fracking and this month declared his opposition to offshore drilling.
The situation has sown confusion and frustration in a state that just several years ago had promised to become a national model for safe and responsible fracking.
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“It’s weird because you don’t know what’s going on,” said Lee County graphics producer Charles Taylor, an oil-and-gas commissioner nominated for a four-year term by McCrory on Dec. 29, two days before McCrory left office. “I haven’t heard anything from anybody. I do think somebody should tell us something at the end of the day.”
Cooper takes the position that the Oil & Gas Commission does not legally exist. Spokeswoman Noelle Talley said Cooper’s conclusion is based on the N.C. Supreme Court’s decision in January 2016 that the Oil and Gas Commission, along with the Coal Ash Commission, are unconstitutional. In that case, then-Gov. Pat McCrory had sued Republican legislative leaders, claiming only the governor had the legal authority to appoint commissioners.
Senate leader Phil Berger’s spokeswoman, Amy Auth, said Cooper is “wrong.” Auth said six months after the N.C. Supreme Court declared the Oil & Gas Commission unconstitutional, the legislature created a new Oil & Gas Commission giving majority representation to the Governor’s appointees. As constituted in July 2016, the nine-member Oil & Gas Commission has five gubernatorial nominees and four legislative nominees.
Aside from his legal opinion, Cooper philosophically doesn’t see the need for drilling for shale gas.
“North Carolina has abundant sources of energy such as natural gas and renewable energy,” Talley said by email. “Governor Cooper believes fracking within our state is unnecessary even though the law allows it.”
Fracking galvanized Republican lawmakers after they took control of the state legislature in 2011 and enthusiastically pushed for domestic energy production as a means of creating jobs during the painfully sluggish recovery from the 2008 recession. Opponents, who warned of chemical spills and drinking water contamination, had pinned their hopes on creating the strongest possible safeguards to prevent environmental accidents.
The result of the political clash over energy policy was 100-plus safety rules on well casings, property rights, water storage and other requirements that were adopted in 2015. Fracking is a shorthand term for hydraulic fracturing, a means of drilling for gas horizontally underground and breaking up shale rock formations to release natural gas trapped inside.
Beyond the handful of energy wildcatters who sniffed around here and moved on, there has been little interest in drilling permit applications in the state, and energy developers say it will likely be many years before the first drill is sunk in North Carolina’s Piedmont loam. Depressed global energy prices make it highly unlikely that energy speculators will try their luck in North Carolina’s virgin territory, which is believed to include at at least four counties, when drilling operators have a sure thing going in proven shale gas regions in Pennsylvania, Texas, Louisiana and elsewhere.
As a policy issue and scientific matter, however, shale gas exploration is still percolating. Two years ago, the N.C. Geological Survey took soil samples down to 1,477 feet deep in Stokes County and confirmed the existence of another shale gas deposit in the state, this one in the Dan River Basin, about 110 miles west of Raleigh. The Geological Survey’s October 2015 report says the underground soil sample “confirmed a total petroleum system.”
“We’ve proven it’s richer than we thought,” said State Geologist Kenneth Taylor in an interview. “If I worked for an oil company, this is the stuff that would be kept in-house as intellectual property.”
Meanwhile, Chatham and Lee counties, considered the epicenter of the state’s shale gas zone, have both passed moratoriums on shale gas drilling. Just this month Chatham officials extended their moratorium until August 2018, while Lee’s moratorium is set to expire in December, unless it’s also renewed.
Fracking advocates question the legality of local moratoriums and say such laws throw up obstacles to energy exploration here. A member of the Oil & Gas Commission, Jim Womack, said one of the commission’s functions is to hear citizen complaints about moratoriums and other local ordinances. The Oil & Gas Commission would also periodically review fracking safety standards in light of recent technological advances.
“DEQ is failing to do its due diligence in convening the commission so it can do its job,” said Womack, a former Lee County commissioner and a retired U.S. Army intelligence officer who was nominated to the Oil & Gas Commission in October 2015 by state Senate leader Phil Berger. “That’s the first and foremost problem: DEQ is not motivated politically to call the Oil & Gas Commission into action.”
Berger’s deputy press secretary, Shelly Carver, echoed Womack’s impatience.
“There is no reason this board shouldn’t meet and do the work they were appointed to do,” Carver said by email. “Sen. Berger has long supported shale gas exploration as a viable alternative to lower energy costs, attract energy sector jobs and push toward long-term energy independence.”
The legislature created the Oil and Gas Commission to one day replace the Mining & Energy Commission, the panel that had spent more than two years creating the state’s fracking safety rules. The Mining & Energy Commission was always intended to be disbanded, but the panel was sidelined in 2015 by Wake County Superior Court Judge Donald Stephens, because it was an executive branch board with most its members appointed by the legislature, in violation of the state constitution’s separation-of-powers clause. Stephens prohibited the Mining & Energy Commission from accepting permit applications until the N.C. Supreme Court ruled on McCrory’s lawsuit against the legislature.
Mary Maclean Asbill, a senior attorney for the Southern Environmental Law Center, further contends that the Mining & Energy Commission’s fracking rules aren’t legal because they were created by a body that was deemed unconstitutional by a state court.
Against this backdrop stands Southern Pines lumberman and real-estate investor J. Daniel Butler. He owns the mineral rights to explore and mine for shale gas beneath some 3,200 acres in Lee County. Butler’s holdings include two test wells drilled in 1998 that struck natural gas and were capped under pressure, providing evidence that shale gas sits below. What Butler doesn’t know is the extent of the energy resource, a question that can only be answered with further testing.
Butler said he is eager to assemble a team of investors, geologists and engineers to drill between three and five test wells to determine the extent of the natural gas trapped beneath Lee County. But he can’t proceed without an Oil & Gas Commission to review his application.
“We can’t do exploratory drilling without a permit,” Butler said. “We attempted to apply for a permit in the past and were told it would not be accepted.”
“As a taxpayer, I pay tax on this,” he said. “And I have taxation without the ability to produce something from my property.”