The head of one of the gas companies rushing to exploit the Fayetteville shale said in Little Rock last week that the cumulative investment over the next 10 years might quintuple earlier estimates and reach $75 to $100 billion.
That's good economic news. But Aubrey McClendon, CEO of Chesapeake Energy, fresh off acceding to imposition of a modest gas severance tax in Arkansas, warned that future investments could depend on “stability of the regulatory environment.”
That's a thinly veiled threat. The gas industry will be severely displeased if other costs rise. The state's protection of the environment and workers should not be overly zealous, in other words. And, please, let no do-gooder legislator attempt to close the accounting loopholes that further reduce the severance tax's marginal impact on operating costs.
If Arkansas's past is any guide, the industry has little to worry about. The legislature all but abandoned workers compensation protection years ago. The state Department of Environmental Quality is business-friendly and understaffed. It will be further limited by Gov. Mike Beebe's recent budget reductions.
The environmental community doesn't expect much from DEQ. Jack Blackstone, executive director of the Arkansas Wildlife Federation, told Stephens Media in a recent Earth Day feature, “They're like a doormat to any business that wants to come into this state.”
Blackstone likes Beebe, but he told Stephens Media he was disappointed none of the new severance tax was earmarked for environmental protection. The gas drilling is producing massive amounts of waste water that will need to be cleaned up, he said.
Massive equipment, use of chemicals and deep holes in the earth add up to an equation fraught with environmental risk for even the most diligent operator. You do not have to ascribe ill motives to gas companies to predict that mistakes will be made and environmental damage will occur. Our hopes must be that mistakes will be caught and corrected quickly with a minimum harm to the environment and citizenry.
A Wyoming activist wrote a timely op-ed in last Sunday's New York Times on issues that should be at the forefront of Arkansas legislative thinking, not laughed out of the room as a legislative committee did recently when a lawmaker proposed an innocuous resolution urging better coordination of state environmental oversight.
Wyoming has enjoyed a boom in natural resource exploration, including gas drilling. Alexandra Fuller wrote in the Times that the boom hasn't been without negative consequences. Drilling rigs are closely spaced, in some cases threatening prime public land and wildlife habitat. Tests have found many water wells polluted by drilling chemicals that leaked into the water table. Air pollution has become a problem. A grass roots movement has taken hold in Wyoming. It doesn't oppose drilling, but it works against a day when, the minerals depleted, Wyoming is left as a polluted hole in the ground.
Money doesn't buy happiness either. An environmental activist in Wyoming has written that the state is experiencing a surge in the use of crystal meth. Drug abuse and domestic abuse treatment centers have more business than they can handle. The state's suicide rate leads the nation and Wyoming also has a high on-the-job death toll.
I'm not ready to roll out similarly dire predictions for Arkansas. But if state government continues to act as if new gas exploration is a one-dimensional news story measured solely in greenbacks, the odds for adverse effects increase.
Happy Earth Day.