The Barnett Shale is more than 7,000 feet below the surface and is comprised of dense non-permeable rock. According to Dr. Ken Morgan, a geologist at Texas Christian University, “Solid hard rocks that are 7000 feet down don’t subside. You have more than a mile of solid rock that holds it all up. Subsidence occurs when you have loose, soft materials like in Houston (sands, clays, etc.) but not in cemented hard rocks like the Barnett Shale.”
Ed Ireland’s Remarks to the Fort Worth City Council
I am Ed Ireland and am the Executive Director of the Barnett Shale Energy Education Council. My office is at 777 Taylor St., Suite 900 in Fort Worth.
As an economist, I would like to talk about the costs and benefits of regulation, specifically the proposed new and revised Fort Worth gas drilling ordinances. All regulations have costs. Some have benefits. Some regulations are justified on a cost/benefit basis, some are not.
Regulations are a tax. And if you want less of something, you tax it more. The City Council must carefully consider the costs and the benefits of any additional regulations on the development of the Barnett Shale natural gas assets that underlie the City of Fort Worth.
Why? Because the benefits of the Barnett Shale activity are enormous. A study by The Perryman Group released a few weeks ago stated that the Barnett Shale natural gas activity has generated 100,000 jobs and $11 billion in annual economic stimulus. For the state as a whole, including the Barnett Shale region, the total benefits over the 2001-2011 period were found to include $80 billion in output and over 710,000 person-years of employment. These statistics will not be repeated in the future if the operating environment becomes overly costly and unnecessarily over-regulated in the Barnett Shale.
Already, the rig count in the US is going up in every shale play in the U.S. except in the Barnett Shale where the rig count is going down and now is at an all time low of 58 rigs running. A few years ago there were almost 200 rigs here.
One of the driving forces regarding the safety of natural gas drilling in the Barnett Shale has been concern about air quality. The TCEQ has 6 continuous air monitors in and around Fort Worth. These monitors have conducted over 115,000 air tests and not one has ever signaled a problem.
The COFW’s own million-dollar study was summarized by the Star Telegram headline: “air quality study finds no major health threats.” Another conclusion of the study was that the 600-foot setback is protective of the public. So why more regulations now? If there are public safety considerations that require more regulations, that is one thing. But it appears that none of the proposed new city ordinances relate to safety.
The City of Fort Worth should be the shale energy capital of the world, and Mayor, I know that this is your vision, but it won’t happen if the regulatory environment here becomes too burdensome. If it becomes too costly to operate in the Barnett Shale, why would companies continue to have offices here? They can choose where to operate. If we start losing the base of companies like XTO, Chesapeake, Devon, EOG and Quicksilver and the dozens of smaller companies headquartered here, why would other companies want to locate in Fort Worth? They wouldn’t.
At least for now, the world is looking to Fort Worth as the shale capital. I spent today with a 30-person delegation from Poland who came here to learn more about the Barnett Shale. The Japanese will be here in a few weeks. The British were here a few months ago. Underlying this is a continuing flow of people from the Marcellus, Haynesville and Eagle Ford shales all looking to Fort Worth for leadership.
There is a lot at stake here. I ask you to carefully consider the costs versus the benefits of additional city ordinances regarding drilling and act accordingly.