Understanding government oil and gas subsidies
Wednesday, February 24, 2016
Len Tesoro, director of land products at DrillingInfo, discusses subsidies in the oil and gas industry on Forbes.
Tesoro explains that there are different dollar amounts associated with subsidies given to oil and gas companies, depending on the source. He breaks down these “subsidies” and explains where the estimates come from for master limited partnerships, intangible drilling costs, royalty payment reductions for federal lands, depletion allowance, domestic manufacturing deduction and foreign tax credit.
Read more: Forbes > Debunking Myths about Federal Oil & Gas Subsidies
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Shale FAQ
What is fracking?
Fracking is a slang term for hydraulic fracturing. Fracturing is a process by which highly pressurized fluid is pumped thousands of feet into the ground to fracture rock formations. The goal is to release the natural gas that’s locked inside the rock.
Is it safe?
What most concerns people about fracturing is ground water contamination. The worry is that fractures underground, caused by the process, will extending upwards and into aquifers, releasing gas and chemicals into the ground water supply. There’s been no confirmed reports of such a thing happening. Though surface spills and drill site blowouts can lead to localized environmental concerns.
Will my water catch on fire?
Flammable water is caused by the release of methane gas into a drinking water supply. Methane gas occurs naturally and can be released by any kind of drilling, including water wells. In Pennsylvania officials fined Chesapeake Energy $1 million for contaminating ground water with methane. It was determined that the company had not properly cemented it’s boreholes and gas migrated up the well, between rock and into aquifers.