Talladega forest drilling could boost economy -- if there's anything down there
by Patrick McCreless
Apr 24, 2012 | 5501 views |  0 comments | 7 7 recommendations | email to a friend | print
Companies could soon drill for natural gas in the Talladega National Forest, possibly stimulating the local economy in the process.

But they would have to find the gas first –- a feat some experts say is unlikely.

The U.S. Bureau of Land Management, or BLM, which manages federal land and its resources, recently announced its intention to sell gas leases June 14 for parcels totaling more than 43,000 acres in Alabama’s national forests, mostly in the Talladega National Forest. Some experts say the development of a well could boost the local economy, from jobs to tax revenue. However, other experts say the geology of the area makes the discovery of natural gas unlikely and that if it were found, the possible negative environmental impact of drilling could hurt local tourism.

Dennis Lathem, executive director of the Coalbed Methane Association of Alabama, said significant economic potential typically comes from the development of gas wells in an area. Lathem said just building the infrastructure for a drilling site would create jobs.

“Certainly, the more wells you drill, the more pads you build, then the more contractors you’ll need to hire to first get to the well and to get the connections to produce what you get out of the ground,” Lathem said. “The more infrastructure you have to build, then the more demand you’ll have to hire local workers.”

Lathem said taxes on gas drilling would possibly generate significant revenue for the area. He said the state has a production privilege tax, the amount of which depends on how much gas a well produces and how much it sells in the market.

“Approximately 34 percent collected under that tax is redistributed to cities and counties near the wells,” Lathem said.

Robert Robicheaux, chairman of the department of marketing, industrial distribution and economics at the University of Alabama at Birmingham, agreed that the gas industry moving into Calhoun County could stimulate a boost to the economy.

“It depends on the situation of the find … but I know that a significant find could transform a local economy … from tax revenues to investments make into the community to extract the product and from distribution companies that locate there to transport the product,” Robicheaux said.

Where a significant find would not help economically would be in lowering natural gas prices, Robicheaux said.

“It would be viewed as a small contribution to the overall supply,” he said. “It would not be enough of a sufficient supply to affect globally supply and demand.”

But to have any economic impact, there actually has to be some natural gas under the forest. And to Nick Tew, state geologist for the Alabama Oil and Gas Board, which regulates the oil and gas industry in the state, the chances of natural gas being underneath Talladega National Forest in Calhoun and Cleburne Counties are slim at best.

“The geology of the area is very complex, with significant folding and faulting of the rock bodies,” Tew wrote in an email. “Owing to the general lack of data and drilling experience, exploration activity in this area would be highly speculative in nature. There are, however, some subsurface geologic strata, primarily carbonates (limestones and dolostones) and shales, in the area that could possibly have hydrocarbon accumulations, but the actual potential for production from these rocks is unknown at this time.”

Tew said historically, natural gas and oil deposits are not found in the eastern part of the state.

In general, with the exception of two very shallow oil and gas test wells drilled in Calhoun County a number of years ago, Cleburne and Calhoun counties have not been areas of active oil and natural gas exploration,” Tew wrote. “Thus, there are minimal subsurface data available for evaluation of future potential.”

Lathem added that even if a well were found, companies may not decide to drill at all because of the low price of natural gas, currently at about $2 per 1,000 cubic feet.

“Natural gas prices are lower than they have been in 10 years,” Lathem said. “Producers are deciding whether to shut wells down because it’s costing them more to pump it than what they’d get back from selling it.”

Still, it was oil and gas companies that requested leases of the Talladega National Forest be sold in the first place, said Bruce Dawson, BLM field manager for the southeastern states.

“The way it works is the industry would contact our office and nominate a parcel for leasing,” Dawson said. “That would generate something from us called an expression of interest. That would go from our home office in Virginia and down to the field office and then we’d do a sale. Basically, the leasing is industry driven.”

The BLM declined to reveal which companies requested the leases be sold, saying the information was confidential.

Some conservation groups are concerned that if the oil and gas industry were to get a foothold in the Talladega National Forest, it could potentially harm the wildlife and water supply there. The Southern Environmental Law Center, a regional non-profit conservation organization that uses the law to support environmental issues in the Southeast, submitted a letter of protest last week to the BLM, demanding Alabama’s national forests be taken off the list for use in oil and gas drilling. Some areas proposed for leasing contain or are near environmental resources such as the Pinhoti National Recreation Trail, the Chinnabee Silent Trail, Talladega Scenic Drive, Cheaha Mountain and Rebecca Mountain. They also contain waterways including Choccolocco, Cheaha and Shoal creeks, along with other tributaries to the Coosa, Tallapoosa, and Cahaba rivers.

One particular type of drilling the Southern Environmental Law Center is concerned with is fracking, which involves millions of gallons of water and chemicals being injected underground to fracture shale and release natural gas. The technique has garnered much controversy in recent years due to its supposed harmful effects on ground water.

Pete Conroy, director of the Environmental Policy and Information Center at Jacksonville State University, said the destruction of wildlife in the national forest or even the perception of damage could hurt tourism in the area. The Environmental Policy and Information Center strives to implement environmental, cultural and heritage-based protection that fosters both economic development and growth.

“You could imagine the overall impact from bird watching to hiking to mountain biking -– the potential impact to ecotourism is far and wide,” Conroy said. “We’re talking about the potential loss of tens of millions of dollars.”

Staff writer Patrick McCreless: 256-235-3561. On Twitter @PMcCreless_Star

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