KVNO News

Legislature Mulls Future Oil Regulation In Nebraska

By Fred Knapp, NET News

October 1st, 2015

Sen. John Stinner addresses the Legislature’s Natural Resources Committee in Sidney, Nebraska. (Photo by Fred Knapp, NET News)

A committee of the Nebraska Legislature is wrestling with who should be responsible for overseeing regulation of the oil industry in this state. It’s a task that has implications for oil, water, and possible earthquakes. And opinions on how it should be done are mixed.

It’s about 350 miles from Lincoln to Sidney, in western Nebraska’s panhandle. Western Nebraska is where oil production in this state is concentrated. And Sidney, not Lincoln, is where the state agency that oversees the industry is located.

Last week, members of the Legislature’s Natural Resources Committee traveled to Kimball to talk about whether that agency — the Oil and Gas Conservation Commission — should continue to do that job, which includes both promoting the development of the state’s oil and gas resources, and protecting the environment.

Sen. Ken Haar of Malcolm, which is near Lincoln, told committee members he doesn’t think the existing system is working.

“I believe the current Oil and Gas (Conservation) Commission is not providing the gold standard in protecting our valuable water, and must be either fixed or replaced by another agency,” Haar said.

But Loren Hoekema, who owns an oil field services company in Sidney, sang the commission’s praises.

“I think the commission works well. They’re very professional. You’ve got some great people sitting down there in front of you. Some extremely competent people. And as the old adage says ‘If it ain’t broke, don’t fix it,’” Hoekema said.

Hoekema went on to explain what he says is one of the commission’s advantages.

“The commission is funded from taxes levied on oil and gas production. So they aren’t dependent on the Legislature or the state for funding,” he said.

That’s true. The commission gets a little under $100,000 a year from the federal government. Most of the rest of its $900,000 budget is paid by companies that extract oil from beneath Nebraska’s soil.

The commission uses its budget to issue permits and keep track of oil well drilling, mediate between drillers and local landowners who receive payments for the minerals under their land, and watch over the disposal of wastewater from drilling, back into the earth in “injection wells.”

But that same self-funding mechanism is a problem in the eyes of Becky McMillen, who owns land in western Nebraska’s Scotts Bluff County.

“The ability to protect our resources should not be dependent on funding from the very industry that they regulate,” McMillen said.

The resource McMillen is most concerned about is water. Some local residents are upset about the commission’s approval of a plan, currently tied up in court, to dispose of wastewater from Wyoming and Colorado in western Nebraska’s Sioux County.

That water can include chemicals used in hydraulic fracturing, or fracking, to force oil from rock formations. Others say there has never been a drinking water well in Nebraska contaminated by such disposal, and the system works well.

In addition to concerns about water pollution, Sen. John Stinner of Gering mentioned another issue he thinks lawmakers should consider as they debate regulations on the oil industry: whether the disposal of such wastewater underground could trigger earthquakes.

In Oklahoma, where disposal of wastewater from fracking has increased in recent years, the energy and environment secretary’s office says the current rate of earthquakes is approximately 600 times historical averages. And the secretary’s website cites the Oklahoma Geological Survey as saying it’s “very likely” those earthquakes were triggered by the injection of wastewater into the earth.

But Dr. Matt Joeckel of the University of Nebraska-Lincoln, the state geologist, told the hearing in Sidney the link between injecting wastewater from oil drilling back into the ground, on the one hand, and increased earthquakes, on the other, has not been proven.

“How do we know that injection activity does induce seismicity. We actually don’t know for certain. And before you groan about that we don’t know for certain about too many things in science, do we?” Joeckel asked.

At a conference in Oklahoma this week, regulators released what they called a “primer” on the possible link between injection wells and earthquakes. The primer says very few earthquakes have been reported as caused by or occurring at the same time as wastewater disposal, and those earthquakes are generally small, with a magnitude of 4.0 or less. It also says you can reduce earthquakes by injecting less water and reducing the rate and pressure at which it’s injected.

That report was produced by StatesFirst, a group of state oil and water officials. Stinner of Gering says that same group will evaluate how Nebraska regulates its oil industry, and suggest changes if necessary. Stinner says that will be useful if the state gets more requests for large scale commercial injection wells to dispose of wastewater, like the one in Sioux County.

“Should we get additional requests or applications for wastewater, we’ll be prepared with a fairly robust process that’s been looked at by the experts, because there’s nobody that sits in the Legislature that can really tell if we’re doing it right if we’re doing it wrong. We’re posing questions as citizens pose questions. This is an answer. Bring in the experts. Have them look at it and make sure that we’ve touched on everything that we need to touch on,” Stinner said.

The Natural Resources Committee will hold another hearing on the Oil and Gas Conservation Commission’s future in Lincoln in December. Stinner says the StatesFirst report will be done in early January, and any legislation that’s required to implement changes can be introduced then.

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