Commentary: Fracking not worth risk in Florida
The Florida Legislature is considering Senate Bill 462 and House Bill 237 which could determine the future of well stimulation treatments — hydraulic fracturing (or fracking) and other similar techniques — in Florida.
As veterans of the oil and gas industry and beneficiaries of the superb environmental conditions of South Florida, we support a ban.
To remind us all, fracking is an extraction technology that employs large amounts of freshwater and a “cocktail” of toxic chemicals to extract oil and gas.
South Florida has encountered numerous droughts and water emergencies in the last few years and our population continues to grow. We can’t risk inadequate water supplies or contamination from the chemicals.
The subsoil conditions in Florida strongly suggest that migration of toxicity to aquifers is a substantial risk even if there are no accidents or spills, and national data suggests that more than 10 percent of all fracking procedures result in spills. National data also suggests that well water drawn from within one mile of a fracking well contains above-acceptable toxicity. We simply cannot risk this.
In addition, tourism and development of homesites to attract new residents are two of our largest businesses. Pollution of the Everglades or even a temporary concern about water contamination could do great harm to our economy for a long time.
Given the environmental and economic risks to Florida, one would think that there must be an urgency to extract this oil and gas, or at least a substantial profit to be made from doing so. This is not the case. The fracking process is still relatively expensive compared with conventional oil drilling. Where fracking is currently in use, it is typically where there are proven reserves, allowing the operator to recover more reserves, with better economies of scale. This isn’t true in Florida.
Current global oil pricing (and projections by leading energy analysts) suggests that this situation will continue for the foreseeable future as energy demand per capita is dropping in the developed world. This means fracking in Florida is likely to be marginally profitable for an extended period.
Fracking can produce oil or gas. Both require transportation to refineries or processors — typically by pipeline, sometimes by rail, and, as a last (and most expensive) resort, by truck. Florida currently has limited usable pipelines or rail. It seems unlikely that such infrastructure will be economically or politically acceptable. Therefore, transportation cost will reduce the economic value of reserves — and burden our roads with potentially harmful truck traffic and additional demands for development in the Everglades. (When “associated” gas is extracted with oil in a region without gas pipelines, like Florida, the gas is flared and completely wasted, contributing to climate change.)
Fracking is risky. Regulatory authorities typically demand high permit fees (to support monitoring expense) and insurance or bonds with large indemnity amounts and multiyear availability. This isn’t currently true in Florida — and it is doubtful whether the quality and quantity of reserves in Florida would attract responsible exploration contractors who could afford those risk costs.
There is no national demand for additional oil and natural gas at this time. The U.S. will be a net exporter of natural gas by the end of this year. Should we risk Florida’s tourist and environmental future without any overriding need or demand?
Fracking hasn’t proven itself safe for Florida, a sensitive environment with unique characteristics and an environmentally driven economy.
We support a ban on fracking.
Hall is former chairman and CEO of Ashland Oil Inc. and Hushon is former president and CEO of El Paso Energy International.
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