IMPACTS OF MINERAL RIGHTS DEVELOPMENT ON RANGELANDS                                                     August 31, 2015

 

Introduction

Oil, gas and other mineral developments have existed on rangelands for many years with various impacts depending upon the scope of operations and level of professional management.  Evolving technology has spurred growth in mineral developments not only in numbers of wells but also in the sizes of individual operations, due mainly to shale oil and gas development, otherwise known as “fracking”    The number of acres and amount of water consumed for these operations in recent years has been rising.  As a result, there have been significant increases in damage to rangelands in terms of vegetation losses and reduced plant and animal diversity.  The potential long-term ecological damage from these practices is unclear but of great concern.  Concerted efforts are necessary to ensure successful reclamation.  Mineral developments that do not have their densities and spatial arrangements regulated and monitored appropriately have the potential to negatively impact short-term and long-term rangeland quality and production.

 

History

The strong property rights culture is a significant contributing factor to the proliferation of oil and gas drilling in the United States.  The 1862 Homestead Act gave 160 acres of land to any individual that would live on the property while conducting ranching or farming activities.[1]  Common law doctrines and state statutes have historically recognized the existence of sub-surface rights related to development by land owners even if they are not specified on property deeds.[2],[3]  Oversight of early mining activities in the U.S. was provided minimally by the U.S. Army.  The mining industry set up an ad hoc system of property rights and dispute resolution.[4]  Analyses of western mineral rights show that policies and procedures were developed quickly in response to resource discoveries which spurred rising land values and conflicts requiring resolution by courts.[5] 

 

The Mining Law of 1872 formalized prospector practices of staking claims for mineral development rights on public lands and continues as the impetus for governance of the industry today.  Consequently, the mining, oil and natural gas industries have operated pursuant to a perpetual philosophy that government and society have minimal interaction and only to aid further energy production.[6]  In accordance with the 1872 Mining Law, national public lands generally remain under federal ownership.  The Mineral Leasing Act of 1920 permitted companies to rent land as opposed to purchasing claims.  A basic royalty framework to divert a proportion of proceeds to the federal government was put in place as a result.  While mining companies objected, due to the prohibition on land purchases, this practice was relatively uncontroversial until the environmental movement began in the 1960’s.[7]

 

Shale gas development is a combination of hydraulic fracturing and horizontal drilling through the injection of water, sand and chemicals to force oil and gas from shale formations into production wells.[8]  Natural gas extrusions from fracking have resulted in dramatic price drops to consumers that average close to $200 per year since 2007 for the typical household.[9]  Rangelands comprise a significant amount of land uses in the western U.S. and have the potential to supply much of the oil, natural gas, biofuel and wind energy needed to meet demand.[10]  Accessible U.S. oil reserves in the ground are available for about the next 30-35 years and are split in the following proportions:  conventional, 20%; shale 58%; and off-shore 27%.[11]

 

Traditionally, oil and gas development has comprised a relatively small portion of the U.S. economy.  However, evolving technology has driven substantial increases in the numbers of mineral rights developments. The U.S. oil and gas-related sector of the U.S. economy historically accounts for about 2.5 percent of gross domestic product (GDP), but has been responsible for close to 10 percent and 20 percent of respective increases in overall GDP and industrial production.[12]  In recent years prior to 2007, revenue from leases in the form of royalties was about $2 billion annually which is split between state and federal governments.[13]  About 90 percent of 33,000 U.S. gas wells drilled in recent years are fracked.[14] A 2005 estimate is that the Rocky Mountain region could see 400,000 new natural gas wells within 15 years.[15]  A 2014 U.S. Energy Information Administration (EIA) report predicts that shale gas development could provide 50 percent of U.S. natural gas needs in 20 years.[16] 

 

Ecological Impacts

There is evidence of negative environmental impacts from fracking.  Earthquakes have likely been caused by geologic flowback wells which are used to dispose up to 20,000 cubic meters of fracking wastewater per month.  Studies have shown that methane emissions from flowback in open tanks contribute to greenhouse gases.  This has been addressed to some extent by sealing these tanks.  There is disagreement on the amount of methane release with estimates ranging from less than one percent up to eight percent.  Consequently, it is unclear if shale gas can be considered a low-carbon fuel.  There is a small amount of evidence that fracking has caused groundwater contamination from methane gas.  It is unclear if this is caused by fracking itself or from leaking production wells.[17]

 

Water depletion, particularly in arid western regions, and contamination are the most serious threat from shale energy developments on rangelands and other areas.  The Energy Policy Act of 2005 exempts fracking from the Clean Water Act, Safe Drinking Water Act, and the Clean Air Act.  Fracking fluid is 99 percent water with chemicals such as hydrochloric acid, citric acid, potassium chloride and ethylene glycol making up the remainder.  A typical fracking well requires about 5 million gallons of water and up to double this amount in some cases.[18]  The U.S. EPA has found that water contamination is indeed a threat from fracking fluids.  Depletion of surface water can diminish water quality by lowering the ability to dilute any kind of contaminants.  However, the evidence of such impacts is small in comparison to the number of shale wells in existence.  This could be at least in part to the lack of pre, post and long term drilling studies in addition to the inaccessibility of some data.  Nevertheless, fracking has caused both surface and groundwater contamination from spills, discharges and inadequate treatment of hydraulic fluid and chemicals.[19]

 

Insufficient planning of oil and gas drilling developments can result in fragmented rangelands, alteration of predatory-prey associations, and threats to plant and animal species.  However, more research is needed in this area.[20] A tool has been created to methodically identify and compare impacts to ecosystems under alternate scenarios through the use of metrics.  This tool is the Integrated Social, Economic, and Ecological Conceptual (ISEEC) system developed by the Sustainable Rangeland Roundtable.  The ISEEC system applies unquantified general positive or negative ratings for the proposed mineral to be extracted in terms of the bio-physical or socio-economic impacts.  These relate mainly to energy and other goods produced; ecosystem service supply; and investments for extraction, service utilization and mitigation. There is no resulting net effect identified, rather the outcome can give an indication of obvious strengths and weaknesses for a particular proposition.   Despite the promise of the ISEEC system, further detailed analysis may be needed relative to site specific conditions and assumptions.  For example, electricity generation from biofuels and natural gas can result in greenhouse gas emissions that vary based upon the type of conversion technology.[21]

 

Ecosystem services are benefits provided to human health and the environment from forests.  There are four types with the first being provisioning services or outputs needed by people and other life forms.  These consist of wood, water, fiber, energy, food and genetic resources.  The other three are:  regulating, such as carbon sequestration affecting climate change; transitional, such as plant photosynthesis in addition to water/nutrient cycling; and cultural, such as the aesthetic, spiritual and recreational enjoyment of the natural environment.[22]   Oil and gas development in the U.S. has substantive impacts on ecosystem services.  The effects can be determined from high resolution satellite data of vegetation dynamics used along with oil and gas well information from industry, public and historic sources.  Satellite-derived net primary production (NPP) is a basic metric that determines a region’s ecosystems service performance.  NPP readings have been taken annually since 2000 and are used to measure carbon levels set by plants and collected as biomass.

 

Oil and gas activities remove plants and biomass due to the space needed for their operations.  In contrast to conventional methods, shale oil and gas developments have more environmental impacts as they require additional space for drill pads, roads, mining pits and disposal ponds.  The largest threat is groundwater contamination.  However, extraction techniques are improving to reduce the potential for environmental impacts.  From the NPP data, it is estimated that from 2000-2012, oil and gas development removed 4.5 teragrams (Tg) of carbon storage or 10 Tg of dry biomass throughout central North America.  The total amount lost in rangelands during this time equates to about five million animal unit months (AUM) or the amount of forage needed for one animal in one month.  This is more than one-half of annual grazing on public lands managed by the U.S. Bureau of Land Management (BLM).  Much of this could be long-lasting or permanent as reclamation generally does not keep pace with drilling activities.  Expressed another way, it is estimated that 3 million hectares (ha) or an area comparable to 3 Yellowstone National Parks has been taken up by oil and gas drilling infrastructure in North America with almost one-half occurring on rangelands.  These changing rangeland uses also has the effect of fragmenting migratory pathways which alters wildlife behaviors and existence while promoting invasive species.  This is comparable to the wide-scale changes that occurred during the dustbowl of the 1930s during the rapid expansion of agricultural activities.

 

Economic Impacts

Land use decision-makers predominantly do not consider larger-scale impacts of development activities.  The U.S. federal land management agencies are now taking steps to address this concern.  However, the vast majority of oil and gas developments occur on private land.  Other regulatory agencies at state/province and local levels generally do not have the capacity and authority to address large-scale impacts beyond their borders. [23]

 

Estimated direct/indirect costs to a typical ranch operation from oil and gas operations are often reimbursed sufficiently in the short-term, but not over extended periods when royalty payments are lacking and there is involvement by multiple drilling companies.  A 1985 study looked at the potential benefits for a typical rancher in New Mexico in terms of direct one time payments and non-cash services from mineral developments.  These total benefits were estimated at about $28,000 without including royalties which ranchers on public lands do not receive.  Direct annual costs were estimated at almost $6,000 due to various impacts.  Expected reductions in animal carrying capacity are 5 percent of this due to land lost to accommodate access roads, well pads, pipeline systems, storage, dumps and spills.  But this could easily double with up to 5 or more production companies operating on-site.  Comparably, additional annual feed costs could range from $445 to several times above this amount.  Rancher labor hours rise from monitoring needed to ensure cattle are protected from increased traffic, disposal areas, and other drilling activities.  Cattle deaths of up to about 3 percent can be expected with several drilling companies operating due to brine spills, oil contaminated water, and ingestion of over-flow plastic liner and other debris.  Minor reductions in livestock calving percentages and market weights can also be expected and can result in substantial monetary losses with larger herds.  Overall, these total direct annual costs are estimated at about $4,000.  Litter, noise, dust vandalism, and vehicular activity impose indirect costs which are subjective but nevertheless quantified at about $1,800 annually.  Consequently, an oil well exceeding 7 years in operation would result in negative benefits to the rancher.[24]

 

The spike in oil production from fracking may lower oil and natural gas costs over the short-term.  However, over the long-term they likely will increase as reserves are depleted and extraction becomes increasingly difficult.  Holechek and Sawalhah conclude that large-scale environmental damage from shale oil and gas development on rangelands is not the most significant issue.  Rather, the larger concern is an economic crisis that may occur due to overestimates of oil and gas availability from shale production and continuing reductions in conventional resources.[25]  As with past conventional minerals developments, fracking has the potential to significantly boost local economies with a range of new jobs.  Claims have been made that there are reserves of natural gas and/or oil to meet American demand for up to 100 years or more and allow for exports to reduce the trade deficit. The downside is that this assumes actual well production periods of 40 years.  This is contrary to typical shale gas well decline rates which range from 80-95 percent after 36 months.  Predictions by the EIA and others are that production from some of the larger deposits such as the Bakken Formation could peak as early as 2017.  Further, energy returned on energy invested (EROEI) rates are also declining.  Consequently, as the easier to reach deposits are tapped, it will become less economical and increasingly difficult to uncover additional amounts even though very large quantities still remain in the ground.[26] 

 

Consequently, the reality that availability of oil and gas is relatively finite together with continued reductions in rangelands from drilling, dictate that cattle ranchers can expect both higher energy costs and returns.  Surveys of New Mexico ranches found that prices for steer calves nearly doubled while ranching costs went up 68 percent during the period of 2004-2014.  Protein supplements and hay prices increased 116 percent and 75 percent respectively.  Vehicle operation and livestock hauling and fence costs all increased between 60-70 percent.  The U.S. beef cow herd is at its lowest numbers in more than 50 years due to climate, specifically drought and severe winters.  Herders are responding to these challenges by increasing efficiencies and decision-making savviness.  Recommended countermeasures include conservative stocking rates, highly adapted livestock, virtual fencing, and targeted grazing of forage resources.

 

Social Impacts

Gas and oil drilling can be a substantive threat to social cohesiveness and human livelihood due to conflicts with other land uses in the same area.  Neighboring landowners are increasingly filing lawsuits based on nuisance, trespassing, and gross negligence for activities that have allegedly contaminated air, water, and property.  This is occurring in part as there are more opportunities for conflict with residential development creeping closer to rangelands, deserts and other open areas of minerals extractions.  Allegations include well water that becomes contaminated, foul tasting, discolored and even flammable.  Purported contamination includes the following chemicals:  benzene, arsenic, lead, iron, potassium, zinc, toluene, barium and methane gas.  Oil/gas operations release foul air emissions and noise that can be unsettling to inhabitants.  The impacts occur both to humans and animals alike resulting in an overall lower quality of life. 

 

Adjacent land owners tend to be more successful in litigation than the surface land owners where the actual drilling takes place.  Courts recognize that surface landowner rights exist but only to the extent that the mineral rights holder of the same property does not substantively infringe on their rights.[27]  Land owners and mineral exploration companies should develop agreements to ensure adherence to code of conduct standards for both anticipated activities and unforeseen events.[28]  Regulations should ensure processes are established to solicit comments from the public when applications are submitted for mineral developments.  Community meetings and input from neighbors further informs decision-making, helps to improve transparency, and can reduce the potential for litigation.

 

Reclamation

In most cases it is possible that rangeland taken out of production for minerals development can be fully rehabilitated.   However, severe saltwater and oil spills in addition to drought can be inhibiting factors.[29]  Rehabilitation often does not occur and results in prolonged periods of negative impacts.  Restoration plans are often inadequate due to insufficient regulatory provisions and the failure of bonding strategies in providing adequate financial assurances.  Environmental cleanup liabilities per project can range from $100,000 to more than $6,000,000.  Regulatory agencies should mandate the completion of performance-based site-specific reclamation plans to cover all direct and indirect costs of impacts on environmental resources.  These plans should include annually-reviewed financial assurances on professionally-based assessments of anticipated cleanup costs.  Reclamation can be deemed successful when one can clearly observe that a self-sustaining, robust and diverse plant community is established at densities adequate to stabilize soils and minimize erosion.  Erosion control is adequate when water infiltrates naturally without evidence of gullying, headcutting, slumping, and deep rilling.[30]

 

Reclamation plans including the following elements should be put in place prior to mineral development activities:  identify objectives; pre-disturbance baseline inventory; appropriate salvaging and stockpiling of soils; minimization of erosion and weeds; seedbed preparation; and continuous monitoring.  The inventory uses pictures, existing documentation and descriptions to identify existing wildlife and its habitat, forage production, water quality assurances, aesthetics, ecosystem functions, and landscape characteristics including the quality/type of soil and vegetation.  Activities on federal lands, needing federal approval, or using federal funds require compliance with Section 106 of the National Historic Preservation Act (NHPA).  Accordingly, an archaeological assessment and/or survey may need to be conducted to ensure pertinent resources are not disturbed.  If the potential for impacts on such resources exists, consultation is required with the state historic preservation office and relevant tribal interests.

 

Topsoil should be carefully removed to account for variations in depth based upon topography.  The topsoil should be piled in a convenient location with the following techniques applied to maintain quality:  roughened to increase surface area; surrounded by silt fencing or straw bails to further address erosion; seeded to minimize weeds and erosion, and to facilitate the creation of decomposition material.  After completion of the mineral development activity, back-grading and refilling should be close to the original contours.  Slopes should be minimized to reduce erosion and surface hydrologic functions should be reestablished.  In preparing the seedbed after topsoil has been reapplied, it should be deep-ripped again to minimize compaction to allow for 12-18 inches of rooting depth.  A properly compacted seedbed is exhibited by a 170-pound person leaving a footprint about one-half inch deep.  A deeper footprint is an indication that the soil is too loose or fluffy which can accelerate dryness and inhibit growth.

 

Most native seeds should be planted in the fall to activate them before the ground may freeze.  However, timing varies by region and year and seeding can be possible in early spring with sufficient rain levels.  Some shrubs and forbs can be broadcast over snow in winter for successful germination. Monitoring ideally should occur for an extended period as it can take 3-4 years for some species to germinate or proliferate.  Weeds will be prevalent and may need to be sprayed to control noxious types.  However, the broadcasted seed should start to takeover with time.  Additional erosion controls may be necessary if gullying and runoff is apparent.  A quick method for identifying the general success of seed germination is to take steps in a line and note evidence of growth in front of your toes with each step.[31]

 

Conclusion

High-quality rangeland ecosystems and diverse productivity, including minerals development, can co-exist with moderate numbers of strategically placed oil and gas operations that are monitored through effective regulation.  However, energy demands will continue to escalate with depletion of non-renewable resources and population growth.  Consequently, the traditional laissez-faire and fragmented approach to government involvement likely will need to be altered and reassessed periodically to ensure ecological, economical and social interests are balanced and protected.  Improvements in the viability of other renewable energy sources such as wind, solar and biofuels will be necessary.  Rangeland ecosystem health depends in part on natural plant and wildlife diversity with expansive continuous habitat.  The rising numbers of oil and gas developments, and to a greater extent fracking, will likely increase the threat and occurrences of negative impacts to these resources.  These developments need to be well segregated from livestock production areas on rangelands to minimize danger to animal health.  Fracking can exacerbate water shortages on rangelands, particularly in arid regions, due both to large quantities needed for processing purposes and the increased potential for contamination. Upon completion of minerals development activities, immediate restoration of rangelands via mandated planning and financial assurances is critical to restoring ecosystem functionality.

 

References

[1] Vaughn, Jacqueline.  2007.  Conflicts Over Natural Resources, A Reference Handbook.  ABC-CLIO, Santa Barbara, Cal. 11.

[2] State of Michigan, Department of Environmental Quality. 2015.  Mineral Rights.  https://www.michigan.gov/documents/deq/ogs-oilandgas-mineral-rights_257977_7.pdf.

[3] Mott, Rebecca.  2013.  Who Owns the Mineral Rights on my Property?  Oil & Gas Law Report.  February 7. http://www.oilandgaslawreport.com/2013/02/07/who-owns-the-mineral-rights-on-my-property/.

[4] Vaughn, 13.

[5] Libecap, Gary D. 1986. Property Rights in Economic History: Implications for Research. Explorations in Economic History, 23, 227-252. http://www.colorado.edu/ibs/EB/alston/econ4524/readings/Libecap,%20Property%20Rights%20in%20Economic%20History.pdf.

[6] Vaughn.  Citing Klyza, Christopher M.  Who Controls Public Lands? Mining, Forestry, and Grazing Policies 1870-1990.  Chapel Hill: University of North Carolina Press.

[7] Vaughn, 19-21.

[8] Grace Communications Foundation.  Natural Gas Fracking – Introduction.  http://www.gracelinks.org/191/natural-gas-fracking-introduction

[9] The Economic Benefits of Fracking.  2015.  Brookings.  March 23.  http://www.brookings.edu/blogs/brookings-now/posts/2015/03/economic-benefits-of-fracking.

[10] Kreuter, Urs P., et al.  2012.  Framework for Comparing Ecosystem Impacts of Developing Unconventional Energy Resources on Western U.S. Rangelands.  Rangeland Ecology & Management. 5: 433-443.

[11] Holechek, Jerry L. Mohammed N. Sawalhah.  2014.  Energy and Rangelands: A Perspective.  Rangelands. 36, 6: 36-43.

[12] Plumer, Brad.  2013. The U.S. oil and gas boom has had a modest economic impact – so far.  Washington Post. April 23.  http://www.washingtonpost.com/news/wonkblog/wp/2013/04/23/the-oil-and-gas-boom-has-had-a-surprisingly-small-impact-on-the-u-s-economy/

[13] Vaughn, 33.

[14] Prud’homme, A. 2014. Hydrofracking: What Everyone Needs to Know.  Oxford University Press.

[15] Vaughn, P. 41. Referencing Lay, Jennie. 2005 “Congress Bets on Oil Shale.”  High Country News, 37, no. 23(December 12): 8-9.

[16] U.S. Energy Information Administration.  2015.  Annual Energy Outlook 2015 with Projections to 2040.  April 14.  http://www.eia.gov/forecasts/aeo/index.cfm.

[17] Stephenson, Mike.  2015.  Fracking for Shale Gas – The Science Behind the Risks.  March 23.  Elsevier.  http://www.elsevier.com/connect/fracking-for-shale-gas-the-science-behind-the-risks.

[18] Holechek, Jerry L. Mohammed N. Sawalhah.  2014.  Energy and Rangelands: A Perspective.  Rangelands. 36, 6: 36-43.

[19] U.S. Environmental Protection Agency.  2015.  Assessment of the Potential Impacts of Hydraulic Fracturing for Oil and Gas on Drinking Water Resources (External Draft).  Office of Research and Development, Washington, DC. June.  http://www2.epa.gov/sites/production/files/2015-06/documents/hf_es_erd_jun2015.pdf.

[20] Jankowitz, Rachel. 2007. Oil and Gas Development Guidelines, Conserving New Mexico’s Wildlife Habitat and Wildlife. New Mexico Department of Game and Fish. August: 21.

[21] Kreuter, Urs P., et al.  2012.  Framework for Comparing Ecosystem Impacts of Developing Unconventional Energy Resources on Western U.S. Rangelands.  Rangeland Ecology & Management. 5: 433-443.

[22]  Grebner, Donald L. Pete Bettinger. Jacek P. Siry. 2013. Introduction to Forestry and Natural Resources. Elsevier, Inc. Academic Press, Boston. 151-156.

[23] Allred, Brady W., et al.  2015. Ecosystem Services Lost to Oil and Gas in North America.  Science.  April 24: 401-402.  http://www.sciencemag.org.ezproxy.proxy.library.oregonstate.edu/content/348/6233/401.full.pdf

[24] Fowler, John M.  Jeff Witte.  1985.  Oil and Gas Activity on Ranch Operations and Rangelands.  Rangelands. 7:1.

[25] Holechek.

[26] Heinberg, Richard. 2013. Snake Oil, How Fracking’s False Promise of Plenty Imperils Our Future. Post Carbon Institute, Santa Rosa, CA. 66, 100-113.

[27] Mazzone, Michael J.  2011.  Changing Times Bring Conflict with Surface Owners.  December.  http://www.aogr.com/web-exclusives/exclusive-story/changing-times-bring-conflict-with-surface-owners

[28] Association of Mining and Exploration Companies. 1999. Code of Conduct for Mineral Exploration on Pastoral Leases.  www.amec.org, http://www.amec.org.au/download/Code%20of%20Conduct%20for%20Mineral%20Exploration%20on%20Pastoral%20Leases.pdf

[29] Fowler, 37.

[30] Kuipers & Associates.  2005.  How to Improve Oil and Gas Reclamation and Reduce Taxpayer Liability.  Western Organization of Resource Councils, www.worc.org,  http://www.worc.org/userfiles/file/Filling%20the%20Gaps.pdf.

[31] Norton, Jay. Calvin Strom.  2013. Reclamation Considerations for Oil and Gas Lease Contracts on Private Lands. University of Wyoming Extension. April.  http://www.uwyo.edu/wrrc/_files/docs/b1242.pdf.