A Burning Debate Over Natural Gas Drilling

The natural gas-producing shale that lies under 34 states is now being seen as a game-changer in helping meet the nation's energy needs for decades to come. But the process of extracting that natural gas, dubbed "fracking," is fueling environmental fears. CBS News chief investigative correspondent Armen Keteyian has more:

"You can't live like this - it's so stressful every single day."

Homeowner Stephanie Hallowich is like many in western Pennsylvania who have watched their once-pristine neighborhood become an industrial site. Sprawling plants with flares that reach high into the night, noxious smells, trucks, and containment ponds with unknown chemicals are among the complaints of people who live in areas where natural gas companies have descended.

Hallowich believes three natural gas-drilling operations bordering her property turned her well-water black, forcing her to purchase a tank of fresh water every month.

The air? Uncertain.

"I'm very afraid, health-wise, for the kids, just because of the exposure to the water and the constant not-knowing what we're breathing in outside," she said.

The Hallowich home sits near the center of the Marcellus Shale, an energy-rich geological formation stretching from New York to Tennessee.

Three-quarters of Pennsylvania contain vast energy riches buried deep underground in shale formations, representing hundreds of billions of dollars in untold wealth locked up in rock - a potential goldmine for natural gas companies.

"The development of shale gas in the Marcellus and across the country is a very important part of the nation's energy strategy," said Kathryn Klaber, president of the Marcellus Shale Coalition, a natural gas industry group

Big players are rushing in. Exxon has invested $30 billion in the Marcellus in recent months. Foreign investors are also swooping in. India's largest company, Reliance, has purchased a large stake. China, Korea, and Britain are investing in gas drilling in the Marcellus shale.

As gas companies rush in to make deals with landowners for the right to drill, the money on the table - signing fees and royalties - is substantial, and hard to argue with in a recession . . . hundreds of thousands of dollars in some cases.

In Pennsylvania, 60 gas companies hold 4,504 permits to drill, almost half (1,915) granted this year alone.

What's driving the drilling rush here, and across the country, are advances in hydraulic fracturing, or "hydro-fracking," a process whereby millions of gallons of water, sand and chemicals are blasted deep underground - about 5,000 feet - forcing cracks in the shale and freeing natural gas for collection.

It is at the surface where problems have been reported, like blowouts and spills into ground water . . .

. . . And - as depicted in the HBO documentary "Gasland" - ignition at the kitchen sink.

"Gasland": Is "Fracking" Polluting America?

At public meetings, environmental groups and pro-drilling landowners who receive royalties ("It's my house, it's my land, my property, I deserve to be able to frack if that's what I want to do," says one) have squared off over potential health risks and safety.

"There's no such thing as zero-impact drilling," says John Hanger, head of Pennsylvania's Department of Environmental Protection. Since 2008 he's doubled the number of state regulators (100 to 205) and inspectors (21 to 45) to oversee the gas industry.

Hanger told Keteyian that there is evidence of chemical contaminants in water. "Spills and surface leaks have, in fact, contaminated people's drinking water," he said.

Yet nationwide the industry is not required to disclose what potentially toxic chemicals - like hydrochloric acid - are used in the drilling process.

A provision of a law proposed by the Bush administration and passed by Congress in 2005 (dubbed by opponents the "Halliburton loophole") stripped the EPA of its ability to regulate "fracking" - leaving the job of regulatory enforcement in the hands of cash-strapped, undermanned state agencies.

Since then, drilling companies have been allowed to put millions of gallons of unknown chemicals into the ground without reporting it, making it difficult to link pollution claims to drilling.

What environmentalists fear most is widespread contamination to the watershed, on which millions of people depend.

"I think the industry's way out of bounds for not disclosing the list of chemicals," Hanger said. "I think the industry is close to insane to allow that issue to become a source of suspicion."

Much like the quality of air and water now surrounding thousands of home sites like Stephanie Hallowich's.

Legislation is being proposed in the Senate, sponsored by Sen. Robert Casey, D-Pa., called the Fracturing Responsibility and Awareness of Chemicals (FRAC) Act.