Energy exploration bill returns to NC Senate panel

RALEIGH, N.C. (AP) -- A state Senate panel agreed Thursday to set a 2015 date for North Carolina's first fracking permits, but bill supporters vowed drilling licenses wouldn't be granted until regulations governing the controversial practice are finalized.

Senate Republicans are pushing legislation that expands on last year's law, which authorized fracking but prohibited licensing until state regulators produced rules for it by October 2014.

The proposal heading to the Senate floor next week says the state Mining and Energy Commission and state environment department would be authorized to issue permits starting March 1, 2015. An amendment also approved Thursday would not require the regulators to issue the permits until all the required rules are in effect.

Sen. Buck Newton, R-Wilson, one of the bill's primary sponsors, said no one was speeding up the process to allow horizontal drilling and fracking. Newton said legislators will likely to have to vote to affirm whatever regulations are developed.

"So the rules are going to be in place before any permits are issued," Newton said.

Fracking is a process that involves injecting a drilled well with chemicals, water and sand at high pressure in order to crack shale rock and release natural gas. Environmental groups that opposed the 2012 law, which then-Gov. Beverly Perdue vetoed but was overridden, say the process is too risky, particularly for groundwater supplies.

They say Republicans aren't waiting for Mining and Energy Commission to carefully work out the regulations.

"We do think this process needs to slow down a little bit,'" Dan Crawford with the North Carolina League of Conservation Voters told the committee earlier this week.

A change in Thursday's bill directs that certain water generated from the drilling process can be returned underground, but it still doesn't prevent groundwater contamination by the fluid used to fracture the rocks, according to Elizabeth Ouzts, state director of Environment North Carolina.

The bill "threatens our water quality," Ouzts said after the meeting. "It represents the wrong course for our energy future."

A state government report issued in 2012 said fracking could be performed safely in North Carolina if the right regulations were in place.

Newton said earlier this week the new bill was needed because the natural gas industry needed assurances North Carolina was serious about exploration. In New York, for example, a fracking moratorium has been in place for 4½ years with no assurance it will be lifted even if regulations are finalized this year.

The greatest potential for fracking in North Carolina appears to be with shale deposits in the Piedmont and Sandhills. Estimates vary on the amount of natural gas that could be reached. Republicans see a burgeoning natural gas industry bringing jobs and tax revenues to the state, but critics say the benefits are several years away or may never come because the reserves aren't that great.

The bill also sets new severance tax rates on gas, oil and liquid fuel extracted by future exploration that's based on its market value and increase over time, which lawmakers hope will attract exploration early. The measure also urges McCrory to work with the governors of South Carolina and Virginia to lobby the federal government to jump-start energy exploration off the mid-Atlantic coast. McCrory and the other governor wrote a letter last week promoting the exploration.

The bill will ultimately go to the House, where Speaker Thom Tillis, R-Mecklenburg, said last week he was inclined for now to let the fracking process play itself out based on what the 2012 law directed. McCrory has said he supports both fracking and offshore energy exploration.