How crucial is relatively cheap natural gas to the state's economic recovery?
That question came up repeatedly yesterday, as New Jersey lawmakers took action on a package of bills aimed at halting the practice of hydraulic fracturing, a controversial process that produces natural gas by injecting large volumes of water into wells dug in Marcellus Shale formations.
In adopting a bill (A-3653) that would impose a moratorium in New Jersey on the practice, also known as "fracking," the Assembly Environment and Solid Waste Committee stopped short of a total ban on the drilling technology that many environmentalists had sought. The committee also passed a resolution urging Delaware, Pennsylvania and New York (although it already has a moratorium in place) to halt the practice.
The move to stop fracking in New Jersey is more symbolic than substantive, since no drilling for natural gas is occurring here. But the legislative action is indicative of the increasingly contentious nature of the practice, the subject of several front-page articles in The New York Times. Foes say the practice could contaminate the Delaware River, the source of drinking water for 15 million people in the region.
The issue also is before the Delaware River Basin Commission, an intra-state agency in the process of adopting new rules governing drilling within the basin’s watershed, 36 percent of which is underlain by Marcellus Shale.
The discovery of rich natural gas deposits in the basin has triggered a wave of exploration that has driven down natural gas prices, and helped spur a recovery from the deep recession of the past two years. The explosive growth of fracking, however, has alarmed opponents, who note there have been tens of thousands of wells drilled in Pennsylvania alone.
"Fracking is a man-made disruption to the environment, many times on large-scale proportions," said Assemblywoman Connie Wagner (D-Bergen), the bill’s sponsor. "We’ve already seen a number of eco-casualties from this practice in surrounding states. It would be irresponsible to leave the door open for this practice to be pursued in New Jersey."
But energy and chemical industry lobbyists defended the drilling technology, saying the extraction of natural gas from the Marcellus Shale would generate billions of dollars in revenue for financially strapped governments in the region.
Ed Waters, director of government affairs for the Chemistry Industry Council of New Jersey, said its members' ability to create and retain jobs in the state relies on cheap, readily available supplies of natural gas. "If we don’t have that cheap supply of natural gas, we can’t compete in the global markets," he told the committee.
Beyond reducing costs for industries that rely on natural gas for their operations, the steep decline in natural gas prices also has led to a drop in electricity prices for both New Jersey consumers and businesses.
Ray Keating, chief economist for the Small Business & Entrepreneurship Council, warned that the moratorium and related bills sends the wrong message to the business community, which already views New Jersey negatively because of its regulatory climate. "What is the signal New Jersey is sending to investor and the business community?" asked Keating.
Assemblyman Peter Barnes (D-Middlesex) replied that the signal lawmakers are trying to send is that the state cares about clean water and a clean environment. Lawmakers are concerned with a technology that involves injecting huge amounts of water into shale deposits to bring natural gas to the surface, a process that generates wastewater that contains toxic chemicals such as benzene and naturally occurring radioactive elements.
Still, the debate moved the chairman of the committee, Assemblyman John McKeon (D-Essex) to comment that lawmakers got the essential point: "Cheap fuel is good for business," he said.
David Pringle, campaign director for the New Jersey Environmental Federation, also expressed concerns about the technology. "You cannot inject 9 billion gallons of water into 15,000 wells and think there isn’t going to be an environmental impact," he said. He also disputed assertions that a moratorium on drilling in the Marcellus Shale would have any significant impact on natural gas prices.
While generally supportive of the bill, many of the opponents of fracking urged that the moratorium be extended to 20 years, instead of to 2012 as the bill currently envisions. They also want lawmakers to decide when and if the moratorium should be lifted instead of the commissioner of the state Department of Environmental Protection (DEP).
Yesterday’s action marks the first salvo in the fight to stop the practice. On Thursday, the Senate Environment and Energy Committee is scheduled to act on a pair of bills aimed at stopping fracking, including one (S-2576) that would prohibit the practice.