Growing oil industry must pay attention to environmental liabilities

The American oil and gas industries are stronger than they have been in years, particularly in the South and the Midwest.

Consider Texas, for example. It's already the most obvious candidate for an oil boom, having been a major oil producing state for decades. According to a post on Texoma's Homepage, industry experts from all across the state have been hailing the rapid progress that has been made.

"The oil and gas industry has been a superstar in the economy over the last five or six years," former U.S. Congressman J.C. Watts said at a recent gathering in Wichita Falls, Texas. "I don't see it obviously going away. I think we'll continue to see the industry be on solid footing.

Alex Mills, president of the Texas Alliance of Energy Producers, told those at the gathering that new processes like horizontal drilling and hydraulic fracturing are responsible for much of the recent growth in the industry.

"Those two techniques have revolutionized the oil and gas industry," he said. "We've turned around our decline in oil and gas production in Texas and the United States dramatically over the last 10 years,"

Texas is far from alone. The Louisiana Oil and Gas Association has recently been pushing for the development of the Tuscaloosa Marine Shale, which is more viable than ever thanks to the development of new technology. It is estimated that as many as 7 billion barrels of oil may be reachable. In addition, Oklahoma has seen its oil rig count rise from 69 in September 2009 to 195 this year, putting the state in second place behind Texas for the most oil rigs.

What does this ramp up of production mean for the environment? What can oil and gas producers do to minimize their potential liabilities?

Changes in the industry come with compliance concerns

In a previous post, this blog wrote about how oil companies are increasingly relying on rail transport to get their oil shipments where they need to go. Though it is a slightly more expensive form of transportation, it is quicker and more flexible than pipelines, which are the main alternative. However, recent high-profile rail accidents have drawn attention to this practice and put pressure on companies to improve their safety efforts.

However, when it comes to drilling for oil, environmental regulations have focused on the act of drilling itself. Hydraulic fracturing, for example, relies on a specific fluid that contains a number of different chemicals. While they are effective at splitting shale rock, they must be properly managed to avoid potential environmental complications.

In many ways, the shale oil and gas revolution has boosted the U.S. economy and powered its manufacturing industry. In order to sustain their growth, companies need to work with environmental consultants to ensure that they are not creating environmental liabilities that will require costly remediation solutions in the future.