There was plenty of drama, intrigue, and even some comedy on July 2 when North Carolina's general assembly overrode Gov. Beverly Perdue's (D) July 1 veto of a bill that could lead to natural gas production from tight shales in the state.
The drama came when the House voted to override the veto by 1 vote. The comedy came when the vote was by a Democrat who said afterward that she pulled the wrong lever. The intrigue came when House Republican leaders refused to let her change her vote, and S. 820 effectively became law.
Perdue said after the override that she still felt the measure's protections weren't adequate. But the candidates vying to succeed her in November—Democrat Walter Dalton, the state's lieutenant governor, and Republican Pat McCrory—expressed support for the bill.
North Carolina's actions are interesting because there's no oil or gas production there. State lawmakers and others apparently think there could be, and want to see it done right.
Kenneth Taylor, chief of the state's geologic survey, said on June 5 that a recent US Geologic Survey assessment of five East Coast Mesozoic basins suggests that North Carolina's Deep River basin has mean undiscovered resources totaling 1,660 bcf of gas and 83 million bbl of natural gas liquids.
Researchers at Duke University's Nicholas Institute for Environmental Policy Solutions recommended in a November 2011 white paper that policymakers look at lessons other states have learned from tight shale resource development. A quick look at the new law suggests they tried to do just that.
Landowner protection
Part 5, for example, covers landowner and public protections. It establishes requirements for notifying landowners, addresses water contamination liability, outlines required lease terms (including a 10-year limit and a 12.5% minimum royalty rate), and requires developers to test water supplies within 5,000 ft of a wellhead at least 30 days before drilling begins and twice more in 2 years after production commences.
The provision also requires developers to disclose to landowners their responsibility to seek approval from lenders holding a mortgage or deed of trust on any surface property involved in the lease so its execution won't cause a foreclosure. Fracing opponents elsewhere have said many landowners aren't aware of this possibility and could run into trouble with their mortgage-holders once drilling commenced.
S. 820, now that it's law, tries to establish a modern oil and gas regulatory program in North Carolina. It authorizes a commission to propose rules for hydraulic fracturing and horizontal drilling, but prohibits issuing permits pending further legislative action.
Lawmakers who backed the measure didn't throw the doors wide open for these technologies. They simply tried to keep open minds.
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