The shale revolution has turned the energy world upside down.
Finally, the United States may be nearing the long term goal of every
president since Richard Nixon becoming energy independent.
Net exporter of energy
According to the U.S. Energy Information Administration, the U.S.
will become a net energy exporter by 2020.
What's gone on the last few years has been nothing short of a miracle.
Western Pennsylvania, the new Saudi Arabia, of the United States.
But it's not at no cost.
Because you own the mineral rights, you essentially get very well paid to
take that environmental and personal risk.
While many have benefited,
There's hope for a long time that there wasn't.
Some say they have lost a great deal.
I've been hospitalized for drinking this water.
It took one sip.
My kidney fell, my spleen fell and was left with a 2mm ulcer in my
duodenum and then spent four days in the hospital.
With so much at stake in the fight for energy independence and protecting
our environment, should the U.S.
ban fracking?
In what became known as a shale revolution, hydraulic fracturing became
widely used across the U.S.,
both natural gas and oil can be extracted using this process.
About half the natural gas in the United States comes out of the same
wells that produce crude oil.
So in other words, you produce crude oil and natural gas comes along with
it. As of 2017, the U.S.
Energy Information Administration estimated there were about 2459 trillion
cubic feet of dry natural gas in the U.S.
Assuming the rate of production stays the same, that means the U.S.
has enough dry natural gas to last about 80 years.
The Marcellus Shale holds the largest natural gas reserve in North
America. In 2018, 6.2
trillion cubic feet of gas was produced in Pennsylvania alone.
That's nearly a third of total U.S.
consumption. What's gone on the last few years has been nothing short of a
miracle in terms of companies being able to reduce their cost and produce
crude gas, NGLs or whatever it is.
Far, far below what anybody thought they could do.
The real revolution, which was first in natural gas but then moved to oil,
was to combine horizontal drilling with fracking, and that then totally
revolutionized U.S.
oil production. The revolutionary breakthrough combined two existing
technologies. First is horizontal drilling.
Essentially drilling straight down and then turning at an angle to target
part of the shale formation.
The second is hydraulic fracturing or fracking.
This involves pumping water, sand and chemicals at high pressure into
shale formations to fracture the rock, allowing oil and gas trapped inside
to flow. From 2007 to 2018, natural gas production increased by nearly 60
percent. Prices dropped from almost $9 to $2.5
per BTU. Crude oil production grew from 5 to over 10 million barrels a
day, which led to a drop in imports by 40 percent.
That meant big energy savings for the everyday consumer.
In October 2019, the Council of Economic Advisers estimated the shale
revolution saves American families of four about $2,500 annually.
They claim nearly 80 percent of the total savings comes from a lower price
for natural gas.
Today, natural gas mining and extraction employs more than 162,000 workers
in the U.S. From 2004 to 2018, over 350,000 jobs were created nationwide.
And many of those jobs were based in places above the Marcellus Shale in
states like Pennsylvania.
In PA, the first unconventional well was drilled in Washington County in
2004. By 2009, there were 821 active wells in 2011,
1956.
There's a lot of hope in this area because people are doing well when you
can provide... This is Diana Irey Vaughn.
She's been the Washington County Commissioner for 24 years and a staunch
supporter of the gas industry.
We've heard from so many individuals who are leaseholders in the industry
how this has changed their financial future for generations to come.
There have been a number of farmers that have told us that if it had not
been for the leases, they probably would have been out of business.
With the downturn in the steel industry and the coal industry, there was
like this vacuum. And a lot of the people that I went to school with, they
have since moved away.
But now there's something filling that void there.
There are jobs. There's hope where for a long time, there wasn't.
This is Richard and Bonnie Moore.
They are farmers in Washington County in southwestern Pennsylvania.
This farm has been in Bonnie's family since the 1860s.
It's 185 acres just a mile and a half up the road.
Rich has a 90-acre farm that he inherited from his family.
In 2005, the oil and gas industry came knocking on the door.
Both farms, at least two range resources.
Everybody was excited.
About oh boy, we're going to have gas wells. And when Range came here and
drilled the wells, they told us everything that they would do.
And they did what they said.
It was really exciting for a lot of the people around here that owned
their mineral rights.
Bonnie and Rich didn't feel comfortable sharing how much they've made from
their gas leases.
But according to documents CNBC has analyzed, it's significant.
They've since bought two farms worth nearly 2 million dollars.
You have the ability to essentially pay someone for the environmental
risk, which is as much about the problems under the surface as about on
the surface, such as, for example, from all the trucks and all the guys
working on the oil that you don't really want those people around if you
have the choice or unless you're paid.
In the U.S., because you own the mineral rights, you essentially get very
well paid to take that environmental and personal risk.
Bryan Lakonich is also a Washington County resident with a gas lease.
They sold it as the new Saudi Arabia of the United States, western
Pennsylvania. Your kids aren't going to have to go to the Middle East to
fight wars again.
For having two boys of age, now 18 and 19.
It felt wonderful that we could be energy self-sufficient.
So when the company came to me with four people in my living room here and
said, hey, you're looking at 8 to 13 million dollars in the first three
years. I said, where do I sign?
Would you like to put it on my front porch?
Bryan's lessee is Chevron.
His contract included a $25,000 signing bonus and a royalty payment that
was $12,000 at its peak to now between $500 to $800 a month.
I used a nice few acre orchard here and I used to plant tomatoes, peppers
and vegetables here.
Every week or so, I'd go up on the pad and talk to them and hang out.
I was the cheerleader, you know, I wore my boots and my helmet.
That particular day I carried a camera.
Accurate date is 12/17/12.
And what you can see here is the frack ponds.
They pulled the liners out of them and left the polluted material right on
the ground. They pumped the other one out, pulled the liner, left the wet
soil, and they were in a rush to fill this in.
But what I found was a trash pump in that pit pumping water out of there
onto my own property.
This wasn't trucked out.
Here's your liners right there on the ground.
That's not permitted.
That's toxic.
They never restored to site, never so much water runoff that it came down
against my house and fractured the foundation and actually pushed this
house about three inches.
Bryan made these allegations in dozens of complaints he filed with the
Pennsylvania Department of Environmental Protection, or DEP.
I've had six years of water testing already.
Still, DEP and Chevron stand firm that the issue with Bryan's drinking
water is not a consequence of gas drilling on his property.
Chevron told CNBC that Bryan's water quality is about the same now as
before the wells were drilled and that the chemical composition of his
water is distinctly different than the water from their operations.
It also appears that DEP was aware of Chevron's alleged lack of oversight.
According to documents CNBC has reviewed, they issued Chevron at least two
violations three days prior to Bryan's photos.
One for discharge of pollutional material to waters of Commonwealth and
the other for improperly discharging topol water.
Chevron corrected these violations.
According to an appraisal ordered by Bryan's insurance company, the damage
to the house was partly due to the runoff from the drill site.
However, Chevron's own report, done by another company, did not find a
link. This is a sample from Bryan's house and showing that it's...
John Stolz is a professor of environmental microbiology at Duquesne
University. He's an outspoken supporter of renewable energy and ran for
Congress in 2017.
This is a summary of all his, with the exception of the two samples that
my group took, it just shows you the pre-drill sample and then the DEP
water samples. Clearly as the months go on, you can see that bromide is
consistently there.
Bromide is one of those things that you don't typically expect to find in
freshwater aquifer or a water source, groundwater source.
When we ran Bryan's samples in this analysis, it was clear to me at least
that they did share some of the characteristics that you see that are
characteristic of oil and gas brines.
So that's important to me because this is what Bryan is talking about,
that, you know, these wells on his property affected his source of water.
That's a responsibility of our Department of Environmental Protection.
When they look at pre-drill testing and testing is done afterwards, if
there's been an alteration in the quality of that water, then replacement
is required. Good morning your honors may please the court.
My name is John Smith.
This man is John Smith.
He's considered somewhat of a legend in Washington County.
He's been before the Pennsylvania Supreme Court three times.
The DEP has a limited set of parameters and what they're testing for.
So they're not going to the site and asking the company, the drilling
company, what did you use?
What did you release? They're coming with a preconceived set of parameters
that they're testing for.
Bryan says his nine year old son, Ryan, has struggled with his health
since he was three.
A toxicology report shows that his asthma, headaches, coughing, tinnitus
and leg pain could be linked to the water contamination.
They haven't figured out why he's incontinent.
The acute medical therapy is indicated in the exposure.
Certainly we agree with more DEP and EPA involvement to address this
exposure. Our main recommendation from a toxic, logical and exposure
perspective is to stay away from the exposure source and in parentheses
the house slight air and water as much as possible.
How do you stay away from your home?
I'd like to know.
Bryan, what are you doing about all of this?
What can you do about this?
The level of documentation that somebody is going to need to bring, for
instance, water contamination case there again, should be, should start
with the DEP that the DEP does itss job successfully, then they will
provide the necessary documentation.
Why the numbers are, in my opinion, relatively low is the way the DEP
deals with these issues, is that if your water is contaminated and you can
work out a deal with the will and gas industry, the DEP will not issue a
citation or will not issue a notice of violation for that water
contamination. Ultimately, at this point, I just want to get a buyout and
move my son away from here and myself so we can try to get better and have
a normal life.
What's the amount that you ask for?
100,000 a year for 6 years for the lack of use of my property and 70,000
to fix the house. What was their reaction when you said 670?
They reacted like that was fine.
They were going to take it back and give me an answer.
When folks see dollar signs behind stuff, they'll try and chase it all day
long. I would share with you that our industry is highly compliant, or
highly focused, and I think when it's all said and done with, you'll find
that most folks have been vindicated of any wrongdoing.
Clearly, the shale revolution's contributions are nuanced.
Abolishing the practice of fracking would have protected people like
Bryan, but also would have barred families like the Moores from profiting
off of their mineral rights.
Since renewables are not yet able to sustain American energy consumption,
banning fracking would take the U.S.
off the path to energy independence, and we would also return to importing
more energy. Consumers would likely pay a premium for importing oil and
natural gas, but would be protected from the potential environmental harm
caused by fracking.
We're really stuck right here and we've got to see it through.
Hopefully it doesn't kill us while we're doing it.
One state senator proposed a constitutional amendment to ban the
procedure, while others proposed adding a tax on the citizens to help
build out new infrastructure.
The Pennsylvania attorney general's office is pursuing a criminal
investigation of environmental crimes in Washington County, Pennsylvania,
as it relates to the oil and gas industry.
In an e-mail to CNBC, the AG's office did not confirm and declined to
comment. On the national level, in 2019, the Trump administration
announced plans to allow fracking on over a million additional acres of
public and private lands in California.
Presidential candidates Senators Elizabeth Warren and Bernie Sanders have
both publicly called for a nationwide ban on fracking.
However, former Vice President Joe Biden has said he would not ban
fracking and does not oppose new drilling on federal lands.
In a CNN town hall on climate change, Biden said he would examine existing
fracking sites to see if they are safe, but that states have control of
their lands. We could pass national legislation, but I don't think we
would get it done. The development of fracking has changed the debate on
energy in the U.S. forever.
While some have profited significantly, others have faced incredible
hardships. You know what Lincoln said?
You know, you can you can please some of the people some of the time, but
you can't please all of them all the time.