North Carolina Lifts Fracking Moratorium

Published July 14, 2014

North Carolina Gov. Pat McCrory (R) signed into law a bill ending the Tarheel State’s moratorium on energy production via hydraulic fracturing.

Fracking to Begin in 2015
The governor’s action ends a 2012 moratorium on hydraulic fracturing—also known as fracking—that was imposed to provide time for fracking-specific regulations to be drafted. It also terminates a decade-old fracking ban.

The North Carolina Mining and Energy Commission continues to work on fracking regulations, which are scheduled to be finalized by January 1, 2015. They would go into effect in March 2015, with the first drilling permits becoming available on July 1, 2015.

Fracking is a method of extracting oil and natural gas deposits that are inaccessible by conventional drilling. The method has become increasingly common over the past decade and, together with the companion technology of horizontal drilling, has been largely responsible for the recent energy production boom in the United States.

Central North Carolina is home to the Deep River Basin, which stretches 150 miles from Durham to the South Carolina border. In 2012, the U.S. Geological Survey estimated the Deep River Basin contains 1.7 trillion cubic feet of natural gas. Though much smaller than the Marcellus Shale Formation that runs through Pennsylvania, West Virginia, Ohio, Virginia, Maryland, and New York, the Deep River Basin is still rich enough to make the Tar Heel State a substantial energy producer.

Trade Secrets Respected
The new law contains a trade secrets provision, which proponents hope will help attract drillers to North Carolina. The provision allows energy producers to retain their particular fracking formulas as proprietary secrets not available to competitors’ scrutiny. Fracking formulas typically contain 99 percent water and sand, with 1 percent or less of trace chemicals aiding in natural gas extraction.

“With respect to trade secrets, the law doesn’t mean drilling companies can hide their proprietary fracturing blends from state regulators,” said Jon Sanders, director of regulatory studies at the Raleigh-based John Locke Foundation. “That information is shared with the state geologist, the state health director, the Mining and Energy Commission, the Department of Natural Resources, and the Division of Emergency Management.”

Fracking Revenues Exceed Costs
In a related development, a recent study by a pair of researchers at Duke University in Durham, North Carolina concluded fracking boosts public financing of local governments through local taxes and other fees. The researchers, Daniel Raimi and Richard Newell of Duke’s Energy Initiative, published a study reporting oil and gas development from hydraulic fracturing has generally helped local economies and local government revenues. The local government revenue collected from fracking enterprises typically exceeds the costs of road maintenance, sewer expansion, and other government costs related to energy production and local population growth.

The researchers formed their conclusions after studying data from 10 states that have active hydraulic fracturing exploration and development.

Bonner R. Cohen, Ph. D., ([email protected]) is a senior fellow at the National Center for Public Policy Research.