First Quarter Natural Gas Royalties Already Exceed All of 2010 in Pennsylvania

I have posted many times that the EPA could shut down the Bakken; links can be found at the EPA tab at the top of the blog.

I honestly don't feel that will happen, but I have also said that I am inappropriately bullish about the Bakken and it would be dangerous to newbies if I did not point out some significant downsides/risks. One spill in the Gulf shut down the Gulf for a year, and the permitorium in the Gulf continues.

The EPA could do the same thing in the Bakken if the Federal government takes regulatory control of hydraulic fracking. 

But this is why I don't think it will happen. Two reasons: the amount of money being poured into western North Dakota (and several other areas around the country) -- oil companies wouldn't be pouring this amount of money into the this if they thought there was a real chance that the EPA would shut them down (or would they?).

The second reason is a much stronger reason. Too many states with huge budget problems are becoming more and more dependent on royalties from oil and gas production.  Here's one example: royalty payments to Pennsylvania in the first three months of this calendar year already exceed total royalty payments for the entire calendar year, 2010.  There may not be enough representation in Congress from the "red" states to stop the EPA but they would team up with the "blue" states with large oil and gas royalties if necessary. Pennsylvania is one of those states.

Shutting down hydraulic fracking would probably push the US into recession, and would significantly increase unemployment.

But when it comes to the EPA, all bets are off. (But again, I don't think it will happen -- I don't think the EPA will shut down hydraulic fracking but I wouldn't bet my life on it, as some say.) Both New York and New Jersey have declared a moratorium on hydraulic fracking.