State geologists have confirmed that initial observations of the Walnut Tree core sample drilling show 323 feet of organically rich material, some of which bubbled when covered with soapy water.
“That is a field indication of gas being in the rock,” said State Geologist Dr. Kenneth B. Taylor, noting that the organic rich Walnut Cove Formation was located at depths between 98 feet and 423.7 feet.
The initial findings were discussed during a meeting of the Energy Exploration Committee of Energy Policy Council last Wednesday during which Taylor provided a presentation on the possibility of the state participating in a consortium with oil and gas companies to develop a more comprehensive understanding of the state’s fossil fuel potential.
The meeting, held in Raleigh, was not recorded, but a lawyer with the Southern Environmental Law Center, Brooks Rainey Pearson, shared notes from the meeting with several media outlets.
Pearson said that during the meeting, which included Taylor, State Geologist Dr. Jeff Reid, and Secretary of Commerce John E. Skvarla, Texas Bureau of Economic Geology Representative Eric Potter provided a presentation on consortiums.
According to Pearson, Taylor recommended a two-year consortium under which the members would be formed in the first year and research conducted in the second year. She said there was also discussion of the state providing partial funding for the consortium, with emphasis being placed on trying to get that funding included in the biennium budget currently being created by the General Assembly.
“The purpose of the meeting seemed to be to educate the committee on how a consortium works and also to determine what it would take to get the legislature to put money in the budget for this,” said Pearson. “We do not know of any state where the state ponies up money for a consortium. In other states the industry pays for this kind of thing. It is interesting that in North Carolina the industry is not rushing to investigate our resources and it is the state that is trying to woo the industry here.”
Pearson said the room “lit up” when the Walnut Tree core samples were discussed, noting that Skvarla encouraged members of the meeting to notify Jeff Warren, Senior Policy Advisor to the Senate President Pro Tempore, of the findings as soon as possible.
“They seemed to think this might be something that would get the industry interested,” she said.
But on Tuesday, Taylor said while the samples from the Walnut Tree community were encouraging, they may not be enough to attract some industries to the area to develop fracking operations.
“We have identified potential resources, but can you turn that into a producing and profitable well?” he asked in a phone interview. “We just hand our data to companies where they make the decisions on economics and if it will make them enough money.”
He noted that a variety of factors would play into those decisions including if companies could find landowners willing to lease land for well operations, the volume of the potential resource and the location of resources in relation to existing pipelines. He said in some instances it costs $1 million per mile to build a pipeline.
He said some companies would have no interest in 323 feet of potential shale, but noted that other companies may be interested.
“We have had Canadian companies that have looked at this and said that will be fine,” said Taylor, noting those companies also conduct fracking operations in Africa. “They only drill vertical wells and frack the stuff with propane.”
Taylor said before any company considered fracking in the Dan River Basin many more questions would have to be answered and said a consortium could play a vital role in helping to answer all of those questions, by allowing companies to pool their resources to analyze the data.
“One way we can leverage a lot more research is by setting up a consortium,” he said. “That is where you gather up a a group of people who want to move the ball forward and are willing to put up a portion of what it will cost to do the research.”
He said any consortium formed would be focused on the shale gas potential of the entire state, and noted that a consortium could likely be formed with or without state funding.
If state funding was involved it would allow the state to have “skin in the game,” according to Taylor. He noted that if a consortium was formed without public funding the companies involved would likely want exclusivity on the data produced for a number of years. He said he did not know who would have to give permission for a private consortium to be formed.
Taylor noted that the North Carolina Geological Survey, as part of its core mission, has always focused on identifying and marketing the mineral resources of the state. He said in recent years that focus has been on marking the potential in the state for fracking, noting that funds had been allocated in recent budgets to explore and verify potential areas.
“We have been going and marketing this stuff,” said Taylor, noting that Reid and other staff have attended a variety of industry trade shows. “He has brought back a two-inch high stack of business cards of people interested in the information he had.”
Other core drilling operations conducted recently in the state were aimed at verifying whether or not a potential basin identified by aerial magnetic anomalies actually existed.
“We went out and drilled to see if is there or not there,” said Taylor. “We drilled three holes, one in Scotland County, one in Hope County and one in Cumberland County. There was no Triassic rock found proving that the basin does not exist.”
Mary Kerley, with No Fracking In Stokes, said her organization had a number of concerns both with the preliminary core sample findings and with the possibility of the state helping to form a consortium for further exploration.
“One of the concerns we have had for the past three and half years is the proximity of the shale layers to our aquifers,” she said Tuesday. “If the shale starts at 98 feet that makes me believe that it is not only near but actually in our aquifers. It just scares me even more.
“It is just silly to even think about the possibility of rampant contamination of our drinking water to extract what seems to be a very small potential of gas,” she added. “It seems like the state is willing to let shale basins be the sacrificial lambs for their idea of a commercial enterprise in the state.”
Kerley also expressed concerns over the state investing as a partner in any consortium.
“My initial reaction is the state is expending an extraordinary amount of tax payer’s dollars for what appears, at least in comparison to other shale places, to be very minor,” said Kerley. “It seems like the state and General Assembly are willfully spending money that could be better directed to help the entire state in terms of education or healthcare or child care. It seems like a shocking waste of money to me.”
Nicholas Elmes may be reached at 336-591-8191 or on Twitter @NicholasElmes.