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Fracking in Arkansas Falling Short of Promise

Sep 13, 2010 | Parker Waichman LLP
Fracking in Arkansas

Hydraulic Fracturing Woes In Arkansas

It appears that hydraulic fracturing in Arkansas’ Fayetteville shale isn’t living up to past promises. According to a report in Arkansas Business, depressed natural gas prices have eaten away at royalties and at the state’s severance tax, which was designed to raise revenue to offset the damage the industry causes to roadways.

A gas industry-funded study released in 2008 promised that fracking in Arkansas would have an $18 billion economic impact over five years. The year the study was released, the price of natural gas peaked above $11 per thousand cubic feet (MCF). Since then, Arkansas Business says the national average wellhead price has rarely topped $5 per MCF. That’s significantly cut the amount of royalties gas drillers have paid to mineral rights owners.

When the severance tax was increased in 2008, it was projected to bring in $57 million in its first year. But between the law’s passage in April 2008 and its effective date on Jan. 1, 2009, the price of gas dropped by half. That means that dollars available for road repair have been in short supply, Arkansas Business said. As a result, some judges in the Fayetteville Shale region have reportedly been trying to restrict the drilling equipment to designated roads, and some gas companies have made direct payments to cover the cost of repairs.

Environmental Concerns Mounting

While the economic boom promised by fracking has yet to materialize, environmental concerns are mounting. According to Arkansas Business, complaints to the Arkansas Department of Environmental Quality (ADEQ) surged in fiscal year that ended on June 30, 2009. That year, ADEQ’s Water Division received 108 complaints related to oil and gas activities and performed 216 inspections. As the 2010 fiscal year drew to a close in June, the number of complaints was about 80.

The Natural Resources Defense Council recently detailed some the water contamination incidents that have come out of Arkansas since fracking took off there. They include:

• In 2009, a Bee Branch family reported their drinking water turned gray and cloudy and had noxious odors after fracking of a nearby natural gas well owned by Southwestern Energy Company.

• A Center Ridge family reported that in 2007, after hydraulic fracturing of wells owned by Southwestern Energy Company, their water turned red or orange and looked like it had clay in it.

• Another Center Ridge homeowner reported that after hydraulic fracturing of a well owned by Southwestern Energy Company in 2008 his water turned brown, smelled bad, and had sediment in it.

• In 2007, a family in Pangburn reported contamination of drinking water during hydraulic fracturing of a nearby natural gas well owned by Southwestern Energy Company. The water turned muddy and contained particles that were “very light and kind of slick” and resembled pieces of leather.

• In 2008, Charlene Parish, another Bee Branch resident, reported contamination of drinking water during hydraulic fracturing of a nearby natural gas well owned by Southwestern Energy Company. Her water smelled bad, turned yellow, and filled with silt.

Need Legal Help Regarding Fracking Hazards?

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