author contact - natural gas europe gas...leading energy experts proclaiming shale gas an energy...
TRANSCRIPT
-
2
Author Contact:
Susan L. Sakmar
Visiting Assistant Professor
Andrews Kurth Energy Law Scholar
University of Houston Law Center
www.susansakmar.com
Twitter: @SusanSakmar
Author of: Energy for the 21st Century: Opportunities and Challenges for LNG
Cover Photo Credit: Jones Township
A whitepaper for:
mailto:[email protected]://www.susansakmar.com/
-
3
Executive Summary
Overview
By most accounts, the vast shale gas reserves found throughout the world offer an unprecedented opportunity to meet growing energy demand
in a cleaner and more sustainable manner. While the economic and energy security benefits of shale gas development are substantial, the
evolving environmental, social and regulatory responses to shale gas development continue to challenge the industry. As shale gas
development continues to go global, there is likely to be continued scrutiny of how industry and governments are responding to the concerns
raised by citizens in communities where shale gas development is proposed.
Drawing on recent and authoritative studies, this paper addresses the key issues and concerns that will need to be addressed by policy makers
and industry in order to earn what has been called the “social license to operate.” These include challenges related to potential water
contamination, disclosure of chemicals used in hydraulic fracturing, induced seismicity or earthquakes, and greenhouse gas emissions. The
results of recent investigations and studies, such as the on-going US EPA Hydraulic Fracturing Study, as well as various reports from around the
world, will be addressed with the recognition that new data and studies are emerging on a frequent basis making the analysis of the impacts of
shale gas development an ongoing endeavor. The goal with this initial Whitepaper is to highlight some of the preliminary issues governments,
policy makers and citizens will need to address in assessing the potential for shale gas in their respective communities.
Key Findings
The world has vast shale gas resources and there is the potential for shale gas to be a global “game changer.” The economic benefits of shale gas development can be significant but the impact will vary country by country. A significant driver for shale gas development will need to be demonstrated to the public in most countries. In order to earn the social license to operate, governments must develop a successful regulatory framework that ensures that environmental
impacts are adequately regulated and managed. Countries will need to decide which agencies will regulate and how responsibilities will be shared. Whether or not a particular country has the water resources to support shale gas development is a critical issue and consultation with the
appropriate water management agencies is essential. Numerous environmental issues must be understood and addressed in order for the regulatory framework to succeed and be credible with
the general public.
-
4
Figure 1 Worldwide Shale Gas Resources
Source: US EIA/ARI, World Shale Gas Resources (2011)
Global Shale Gas: Earning the Social License to Operate
A World of Opportunity Exists for Shale Gas
By most accounts, the vast shale gas reserves found throughout the world offer an unprecedented opportunity to meet growing energy demand
in a cleaner and more sustainable manner.1
Although experts have known for years about the
potential for shale gas, technological difficulties and the
high costs of producing shale gas historically made it
impractical to consider as a serious energy source.2
More recently, however, technological innovations
combining hydraulic fracturing and horizontal drilling
technologies3 have resulted in a tremendous boom in
shale gas production in the United States over the past
five years.4 This boom seems likely to continue with
leading energy experts proclaiming shale gas an energy
“game changer” that will “revolutionize” global gas
markets and help bridge the gap between conventional
resources and the development of renewable energy
sources.5
Thus far, the United States has been the undisputed
leader in unlocking the vast tracts of gas-bearing shale
found throughout the lower forty-eight states, but the
so-called “shale gale,” the strong wind blown by the
technological advances in hydraulic fracturing and horizontal drilling, is not limited to only North America. Because shale formations exist in
almost every region of the world, the potential for shale gas development is enormous and global in scope.6
-
5
While various assessments are underway in many countries, one of the most widely known studies was released in 2011 by the US EIA and
assessed 48 shale basins in 32 countries containing almost 70 shale gas formations. Even with this limited assessment, that study found that the
international shale gas resource base is “vast” – with technically recoverable resources of 6,622 Tcf.7 (Figure 1 on the preceding page)
The report noted that these estimates are relatively conservative and likely to go up as more information becomes known and this has certainly
been the case in the US. However, it is also important to note that the report estimated “technically recoverable” resources, which does not
mean commercially viable resources. In other words, it may not make commercial sense to produce all of these resources.
The report also noted that there were two country groupings where shale gas development might be most attractive. The first group consists of
countries that are currently dependent upon natural gas imports and have at least some gas production infrastructure and where their
estimated shale gas resources are substantial relative to their current gas consumption. This group includes France, Poland, Turkey, Ukraine,
South Africa, Morocco and Chile.
The second group includes those countries where the shale gas resource estimate is large and there already exists a significant natural gas
production infrastructure. In addition to the US, this group includes Canada, Mexico, China, Australia, Libya, Algeria, Argentina and Brazil.
An updated assessment from the EIA was released in June 2013 that also included an initial assessment of worldwide shale oil resources. That
assessment indicates technically recoverable resources of 345 billion barrels of world shale oil resources and 7,299 trillion cubic feet of world
shale gas resources. The new global shale gas resource estimate is 10 percent higher than the estimate in the 2011 report.8
Policy Makers Need to Align Shale Gas Drivers with the General Public
As a clean-burning fuel, many business and policy leaders have begun to look to natural gas to meet growing energy demand using more
environmentally sustainable fuels.9 In most countries, however, the “case for gas” is just being developed with policy makers weighing a number
of “shale gas drivers” including energy security, diversity of supply, lowering energy costs, emissions and a host of other reasons. It should be
noted that in the US, one of the early “drivers” of the shale gas revolution was the fact that individual landowners generally own the oil and gas
rights under their land and therefore receive a direct financial benefit when those resources are developed. For other countries without this
incentive, it may be more difficult to convince the general public that a significant financial driver exists for development of shale gas in their
country.
-
6
Figure 2 Global Shale Gas Drivers
More recently, increased focus has been placed on
the potential economic benefits of shale gas
development. For example, In the United States
several studies have been released finding that the
economic benefits of shale gas development have
been quite significant. These studies have
generally concluded that against the background
of a historically slow economic recovery and
persistently high unemployment, the increased
spending associated with shale gas development
throughout the United States has been an
important engine for jobs creation and economic
recovery.10
While these studies are important contributions to
the policy debate in the US, it should be noted that
each country will have to assess the potential
economic impact of shale gas development for their own country depending on a range of factors including assessments of geological potential
which take into account both oil and gas reserves and development activity, estimates of capital expenditures for unconventional oil and gas
activity, and direct, indirect and induced contributions from these activities.11
It should also be noted that the United States has many elements in place to allow the economic benefits of unconventional oil and gas
development to flow through the economy, including a well-established oil and gas industry. It is not clear that many countries have this in
place so policy makers and governments will need to offer credible studies on the potential economic benefits of shale gas for that country and
not merely rely on the economic impacts in the US.
-
7
Figure 3 A Successful Regulatory Strategy
Earning the “Social License to Operate” Requires an Effective Regulatory Strategy to Address Environmental and Social Concerns
In a widely circulated special report from the International Energy Agency (IEA), Golden Rules for a Golden Age of Gas, the IEA cautioned that
natural gas is poised to enter a “Golden Age” but only if a significant amount of the world’s unconventional gas resources are brought to
market.12 This requires considerations of both the profitability of shale gas as well as whether policy makers and the industry successfully
address the legitimate public concerns that have been raised about the associated environmental and social impacts of shale gas development.13
To that end, the IEA suggested seven “golden rules” – framed as best practices – with the goal of aiding industry, governments and other
stakeholders to “earn and maintain a social license to operate.” 14 The seven golden rules highlight the prevailing view that full transparency,
measuring and monitoring environmental impacts and engagement with local communities are critical to addressing public concerns about shale
gas development. The following seven golden rules are principles that can enable governments, industry and other stakeholders to address the
environmental and social impacts of shale gas development:
1. Measure, disclose and engage; 2. Watch where you drill; 3. Isolate well and prevent leaks; 4. Treat water responsibly; 5. Eliminate venting, minimize flaring & other emissions; 6. Be ready to think big; and 7. Ensure a consistently high level of environmental performance.
A Regulatory Strategy for Shale Gas
In order to earn the social license to operate, governments must develop a
successful regulatory framework that ensures that environmental impacts
are adequately regulated and managed. The public must also be convinced
that the regulatory framework is adequate to address the real risks and
that it will be adequately enforced. This framework will necessarily vary
country by country. In the US, the regulatory strategy that is generally
articulated is one that mitigates adverse impacts by providing clear rules and regulations to encourage investment while protecting public safety
and environment.15 (Figure 3)
-
8
In general, most countries that are considering shale gas development are following conventional oil and gas frameworks if those exist. This has
been the experience in the United States, which regulates its conventional oil and gas industry through a variety of federal, state, and local laws
and regulations.16
While various federal law protections exist to mitigate environmental impacts, including provisions in the Clean Air Act, Clean Water Act, Safe
Drinking Water Act, Endangered Species Act, regulation of shale gas development is largely left to the individual States, which regulate through
an oil and gas agency, an environmental agency, or usually both. This means, for example, that State and local governments typically deal with
issues regarding permitting, well spacing, operation, abandonment, surface disturbance, wildlife, worker health and safety, discharges, water
and waste management and disposal, and air emissions.
In the United States, and as discussed in more detail below, conventional oil and gas regulations are evolving to deal with the opportunities and
challenges of shale gas development and a number of US states, including Texas, Colorado and Pennsylvania, have modified and/or enacted new
regulations to address issues raised with unconventional oil and gas development.17
An initial question for many countries will be who will regulate – Federal, state, local - and how will regulatory responsibility be shared. For
countries that do not have a conventional oil and gas framework to start with, the challenges of developing such a framework for
unconventional gas will be more acute. At the World Gas Conference in Kuala Lumpur in June 2012, the CEO of ExxonMobil, Rex Tillerson,
offered his view that “regulations must strike an appropriate balance between proper risk management and economic viability. Governing or
setting policy and regulation based upon the precautionary principle will stifle innovation and investment and bring development to a
standstill.”18
One approach to establishing a regulatory framework for shale gas development in particular is being tested in the United Kingdom, which
recently announced the creation of an Office of Unconventional Gas and Oil (OUGO).19 As envisioned, the UK’s new OUGO will engage with
industry and communities to bring forward proposals to ensure that the people of the UK benefit from shale gas development in their area and
will serve as a single point of contact for industry to ensure an effective, streamlined approach for regulations.20
Environmental Issues and Regulatory Responses
Many countries, including the United States are in the process of development or adjusting their regulatory frameworks to address the
numerous issues and challenges that have been raised pertaining to shale gas development. As such, it is increasingly becoming important to
-
9
Figure 4 Water Lifecycle
Source: US EPA
understand what the legitimate environmental risks are and how regulations might mitigate those risks. This analysis is complicated by the
inherent complexities in oil and gas law but also by the multitude of studies that have been released in the past few years that have served to
increase our knowledge about the potential risks, but has also served to increase the sheer volume of information that governments and
stakeholders must analyze. As such, this paper highlights the most serious risks raised as well as well as a number of the most authoritative
sources addressing those risks with the acknowledgment that there are many more studies that exist than can be addressed in this Whitepaper.
Thus far, the most serious risks related to shale gas development center around the following:
1. The water lifecycle - from water acquisition to disposal; 2. The risk of water contamination and well integrity issues; 3. Disclosure of chemicals used in hydraulic fracturing fluids; 4. Induced seismicity (earthquakes); and 5. Emissions from shale gas production.
1. The Water Lifecycle For Shale Gas Development
By far one of the most critical issues related to shale gas
development pertains to what the US Environmental Protection
Agency (EPA) has called the water lifecycle. At the request of the US
Congress, the US EPA is conducting a study to better understand any
potential impacts of hydraulic fracturing on drinking water and
ground water. 21
The scope of the EPA’s research includes the full lifecycle of water
use in hydraulic fracturing, from acquisition of the water, through
the mixing of chemicals and actual fracturing, to the post-fracturing
stage, including the management of flowback and produced water
and its ultimate treatment and disposal.
This study is significant because to date, it is the most comprehensive study being undertaken on the impact of hydraulic fracturing on water and
the findings may be useful to inform decisions around the world. The EPA’s first progress report was released in December 2012. 22
-
10
A final draft report will be released in 2014 for public comment and peer review. In the meantime, a number of issues have been raised and are
in the process of being studied.
Water Acquisition Issues
With many countries facing acute water shortages, concerns have been raised pertaining to the large volumes of water needed during the
hydraulic fracturing process. According to a report issued by the U.S. Geological Survey (USGS) pertaining to water resources and gas production
in the Marcellus Shale, “many regional and local water management agencies [in the Marcellus shale region] are concerned about where such
large volumes of water will be obtained, and what the possible consequences might be for local water supplies.”23
Chesapeake Energy Corp., one of the most active drillers in the Marcellus shale,24 candidly admits water is an essential component of its deep
shale gas development. According to the company, “fracturing a typical Chesapeake Marcellus horizontal deep shale gas well requires an
average of five and a half million gallons per well.” Industry generally maintains that water resources are protected through stringent state,
regional and local permitting processes and in comparison to other uses, deep shale gas drilling and fracturing uses a small amount of water.
According to Chesapeake, 5.6 million gallons of water is equivalent to the amount of water consumed by New York City in eight minutes, a 1,000
mega-watt coal-fired power plant in 13 hours, a golf course in 28 days, or nine acres of corn in a season.25 Nonetheless, whether or not a
particular country or community has the water resources to support shale gas development is a critical issue and consultation with the
appropriate water management agencies is essential.
Water Disposal Issues – Flowback Water
Related to the issue of how much water is needed for shale gas development is the issue of how to dispose of the water that is returned to the
surface as “flowback” water. While some of the injected hydraulic fracturing fluids remain trapped underground, the majority—sixty to eighty
percent returns to the surface as “flowback.” The USGS has noted that because the quantity of fluids is so large, the additives in a 3-million
gallon frac job would yield about 15,000 gallons of chemicals in the flowback water, making wastewater disposal a significant challenge for many
regions.
The US EPA has noted that wastewater associated with shale gas extraction can contain high levels of total dissolved solids (TDS), fracturing fluid
additives, metals, and naturally occurring radioactive materials.26 The EPA is currently examining the different disposal methods used by the
industry to ensure that there are regulatory and permitting frameworks in place to provide for the safe disposal of flowback and produced
water. In general, wastewater in the US is disposed of in one of several ways:27
-
11
1. Underground injection: In many regions of the US, underground injection is the most common method of disposing of fluids or
other substances from shale gas extraction operations. Disposal of flowback and produced water via underground injection is regulated under
the Safe Drinking Water Act’s Underground Injection Control (UIC) Program.28
2. Wastewater discharges to treatment facilities: Shale gas wastewater is often transported to treatment plants or private
centralized waste treatment facilities for disposal. In the US, a number of concerns have been raised that many treatment facilities may not be
equipped to properly treat such wastewater. As a result, the EPA is currently developing national standards for wastewater treatment with
plans to solicit public comment for a proposed rule for shale gas in 2014.
3. Recycling of wastewater: Some drilling operators are electing to re-use a portion of the wastewater for a future well or to re-
fracture the same well. The ability to re-use waste water is in part dependent on the levels of pollutants in the wastewater and the proximity of
other fracturing sites that might re-use the water.
4. Surface impoundments (pits or ponds): In some cases, operators use surface storage tanks and/or pits to temporarily store
hydraulic fracturing fluids for re-use. The US EPA is currently evaluating industry practices and is considering the need for technical guidance on
the design, operation, maintenance, and closure of pits to minimize potential environmental impacts. Some states now require that all surface
pits be lined with some sort of protective barrier.
2. The risk of water contamination and well integrity issues
In the United States and elsewhere, much of the public debate surrounding hydraulic fracturing has centered on whether “fracking” can lead to
water contamination. In many cases, the concerns raised are whether the fracturing process could create or extend fractures linking the
producing zone to an overlying aquifer and, thus, provide a pathway for gas or fracturing fluids to migrate. However, in most shale formations,
the vertical distance separating the target zone from usable aquifers is usually much greater than the length of the fractures induced during
hydraulic fracturing. Thousands of feet of rock layers typically overlay the produced portion of the shale, and these layers serve as barriers to
flow. Consequently, most regulators and geologists generally consider there to be only a remote possibility that a fracture could extend to a
potable aquifer. However, if the shallow portions of shale formations were developed, then the thickness of the overlying rocks would be less
and the distance from the shale to potable aquifers would be shorter, posing more of a risk to groundwater. 29
To date there is no confirmed case that the hydraulic fracturing process itself has led to water contamination although a possible link has been
raised in one case that is still under review in Pavillion, Wyoming. On December 8, 2011, the U.S. Environmental Protection Agency (EPA) issued
-
12
a draft report on its investigation of groundwater contamination near the town of Pavillion, Wyoming after residents of Pavillion petitioned EPA,
asking the agency to investigate whether groundwater contamination exists, its extent, and possible sources. 30 The draft report indicated that
EPA had identified certain constituents in groundwater above the production zone of the Pavillion natural gas wells that are consistent with
some of the constituents used in natural gas well operations, including the process of hydraulic fracturing. Because the EPA’s draft report linked
groundwater contamination in the deeper portions of the aquifer to activities related to hydraulic fracturing, it raised concerns about hydraulic
fracturing practices in general and attracted a lot of attention in the US. As a result, numerous organizations representing the oil and gas
industry and other stakeholders took issue with some of the findings in the draft report, and questioned the scientific validity of EPA’s
contention. 31 EPA originally intended to extend the public comment period for the draft research report on Pavillion to September 30, 2013.32
However, on June 20, 2013, EPA announced that it turn over any further investigation of drinking water quality in Pavillion to the State of
Wyoming. Accordingly, EPA does not plan to finalize or seek peer review of its draft Pavillion groundwater report released in December 2011.
The sampling data obtained throughout EPA’s groundwater investigation will be considered in Wyoming’s further investigation, and EPA will
have the opportunity to provide input to the State of Wyoming and recommend third-party experts for the State’s consideration. The State
intends to conclude its investigation and release a final report by September 30, 2014. 33
While the Pavillion case remains under review by the State of Wyoming, the general consensus that seems to have emerged is the greater risk
for groundwater contamination is related to the process of developing a natural gas or oil well (drilling through an overlying aquifer, and casing,
cementing and completing the well). Incidents of well water contamination attributed to hydraulic fracturing, typically have been found to be
caused by problems with the well casing or cementing. In some states, such as Pennsylvania, regulators have confirmed that methane had
migrated to water wells and that the gas migration was caused by improperly cased and cemented wells, as well as excessive pressures in some
cases. The challenge of sealing off the groundwater and isolating it from possible contamination is common to the development of any oil or gas
well, not only those that rely on hydraulic fracturing. Nonetheless, given the higher pressures and large volumes of water used in hydraulic
fracturing, a number of states have revised well casing, cementing, pressure testing and other requirements to protect water resources. 34
Another primary concern involves the potential contamination of ground water from surface activities such as accidental or careless surface
disposal of drilling fluids. Other potential water quality issues involve the management (storage, treatment and disposal) of water produced in
the fracturing process.
-
13
Figure 5 Typical shale fracturing fluid makeup and chemicals
3. Disclosure of chemicals used in hydraulic fracturing fluids
A key component to hydraulic fracturing is the high-
pressure injection of hydraulic fracturing fluids that
increases the permeability of the rock by “propping
up” or holding open the fractures. According to the
industry, fracturing fluid is a mixture of about 90%
water, 9.5% sand, and 0.5% other chemicals.35
Although water is the main component of hydraulic
fracturing fluids, a number of additives and chemicals
are also used, the number varying based on the
conditions of the specific well-being fractured and
thus no “one-size fits all formula for the volumes for
each additive.” The chemical additives used include
“common chemicals which people regularly
encounter in everyday life” as well as “chemical
additives that could be hazardous, but are safe when
properly handled.” The service companies that
provide these additives have developed a number of
different combinations to be used depending on the
well characteristics.36
As shale gas development increased in the United States, there were growing calls for the industry to disclose the chemicals used in hydraulic
fracturing fluids. In addition to public calls for disclosure, various members of the US Congress through the US Subcommittee on Energy and
Environment also requested this information from oil and gas companies with companies ultimately complying.37
-
14
Figure 6 Growing Trend Requiring Disclosure
Source: Ground Water Protection Council, June 2012
More recently, there is a growing trend in the US towards requiring
companies to disclose the chemicals used in hydraulic fracturing with a
number of states now requiring disclosure and more states likely to
follow this trend.
Some states require or allow for the disclosure via FracFocus, which is
a web-based national registry where companies can disclose the
chemical additives used in the hydraulic fracturing process on a well-
by-well basis.38 Canada has a similar website and other countries are
considering something similar for disclosure which is likely to be
required in most countries.
4. Induced Seismicity – Earthquakes
To date, the most significant research pertaining to hydraulic fracturing
and induced seismicity comes from the experiences of the United
Kingdom (UK) and United States. In April and May of 2011, two
earthquakes with magnitudes 2.3 and 1.5 occurred in the UK in an area
where Cuadrilla Resources was hydraulically fracturing for shale gas at
their Preese Hall site in Lancashire. Operations were suspended and Cuadrilla submitted a geotechnical report, which concluded that the
tremors were caused by fracking. The UK suspended all shale gas activity pending review of the incident.39
Following a detailed study and further analysis by an independent panel of experts commissioned by the DECC, along with public feedback and
the benefit of a report by the Royal Society and Royal Academy of Engineering,40 the UK Government ultimately concluded that the seismic risks
associated with fracking can be managed effectively with proper controls in place.41 These controls include:
A prior review before fracking begins must be carried out to assess seismic risk and the existence of faults;
A fracking plan must be submitted to DECC showing how seismic risks will be addressed;
Seismic monitoring must be carried out before, during and after fracking; and
A new traffic light system to categorize seismic activity and direct appropriate responses, including a trigger mechanism, which will stop fracking operations in certain conditions.
-
15
Figure 7 Emissions
Induced Seismicity Caused By Disposal
In the United States, a recent report by the National Research Council (NRC) noted that induced seismicity can be caused by a range of activities
that involve disposal or storage by injection deep into the ground and that this has been known since the 1920s with respect to geothermal
energy and carbon capture and storage. That report concluded that the process of hydraulic fracturing poses a low risk for inducing earthquakes
and notes that over 35,000 wells have been hydraulically fractured for shale gas in the US.42
The NRC report, as well as some recent work done by the US Geological Survey, concluded that there is a greater risk of earthquakes from the
use of injection wells used for the disposal of wastewater in oil and gas development. In the US, there are approximately 150,000 Class II
injection wells, which include about 40,000 waste fluid disposal wells
for oil and gas operations. A small number of these disposal wells
have induced earthquakes that are large enough to be felt and could
cause damage – these are generally earthquakes of magnitude 4.0
or higher. There has also been an uptick in seismic activity in the US
in areas with significant shale gas development, such as Oklahoma,
and additional research is being undertaken.43
5. Emissions
It is generally recognized that natural gas has about half of the CO2
emissions of coal. But, as noted in the IEA’s Golden Rules report,
shale gas has higher production related greenhouse gas emissions
than conventional gas due to more wells being needed per cubic
meter of gas production and more venting or flaring during well
completion.
In its report, the IEA noted that the estimation of greenhouse gas emissions from shale gas production has been the subject of much
controversy, which stems primarily from a study by Professor Robert W. Howarth from Cornell University.44 The Howarth Study evaluated the
greenhouse gas footprint of natural gas obtained by high-volume hydraulic fracturing from shale formations, focusing on methane emissions.
That study found that 3.6% to 7.9% of the methane from shale-gas production escapes to the atmosphere in venting and leaks over the life-time
of a well and that these methane emissions are at least 30% more than and perhaps more than twice as great as those from conventional gas.
-
16
The study further found that the higher emissions from shale gas occur at the time wells are hydraulically fractured—as methane escapes from
flow-back return fluids—and during drill out following the fracturing. The study noted that methane is a powerful greenhouse gas with a global
warming potential that is far greater than that of carbon dioxide, particularly over the time horizon of the first few decades following emission.
As a result, the study found that the greenhouse gas footprint for shale gas is greater than that for conventional gas or oil when viewed on any
time horizon, but particularly so over 20 years. Compared to coal, the footprint of shale gas is at least 20% greater and perhaps more than twice
as great on the 20-year horizon and is comparable when compared over 100 years.
The IEA Golden Rules report also noted that methane is a more potent greenhouse gas than CO2 but has a shorter lifetime in the atmosphere
and as a result there are various ways to compare the effect of methane and CO2 on global warming – including evaluating the Global Warming
Potential of methane. While noting that methane emissions from the gas chain come from a number of sources including venting and fugitive
emissions, the IEA also indicated that these emissions are VERY difficult to quantify. It should be noted that the Howarth study has been refuted
by other studies including a commentary that is widely cited by the industry that disagreed with the underlying assumptions in the Howarth
study. 45 A number of research activities are underway with various groups conducting a number of emissions related studies.46
Conclusions
While there is a widely held view within the industry that shale gas resources can be developed in a safe and environmentally sound manner, the
public and policy leaders in many regions remain skeptical. Since shale gas development is a global opportunity, there is a growing need to
coordinate and share lessons learned and best practices on a global scale to ensure that the opportunity is not just limited to some areas of the
world.
Some of this work is already underway with the IEA recently announcing the creation of an Unconventional Gas Forum to address key
environmental issues and share insights on operational best practices from around the world.47 In the meantime, it remains to be seen whether
global shale gas will be a “revolution” like it was in the United States, or more of an “evolution” as countries assess their resources, evaluate the
environmental issues and develop regulatory frameworks to effectively manage the many issues that have been raised.
-
17
Endnotes and References 1 IEA, Golden Rules for a Golden Age of Gas, World Energy Outlook Special Report on Unconventional Gas, May 29, 2012,
http://www.worldenergyoutlook.org/media/weowebsite/2012/goldenrules/WEO2012_GoldenRulesReport.pdf. 2 See HALLIBURTON, U.S. SHALE GAS: AN UNCONVENTIONAL RESOURCE, UNCONVENTIONAL CHALLENGES 1 (2008).
http://www.halliburton.com/public/solutions/contents/Shale/related_docs/H063771.pdf. 3 The hydraulic fracturing technology has been so successful that energy experts have called this the “most significant energy innovation so far of this century.” Mary Lashley
Barcella & David Hobbs, Fueling North America’s Energy Future, WALL ST. J., Mar. 10, 2010, at A10. 4 See Hydraulic Fracturing, AM. PETROLEUM INST., http://www.api.org/policy/exploration/hydraulicfracturing (last visited Apr. 5, 2011); see also Advanced Drilling Techniques, AM.
PETROLEUM INST., http://www.api.org/aboutoilgas/natgas/drilling_techniques.cfm (last visited Apr. 5, 2011) (explaining “horizontal drilling” techniques). 5 See Tom Fowler, Energy Game-Changer?, HOUS. CHRON., Nov. 1, 2009, at A1.
6 See Leta Smith & Peter Jackson, Is Unconventional Gas Going Global?, WALL ST. J., Mar. 10, 2010, at A14, available at www2.cera.com/ceraweek2010/NAm2010-03-10.pdf.
7 US EIA, World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States, (April 5, 2011), http://www.eia.gov/analysis/studies/worldshalegas/.
8 US EIA, Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States (June 10, 2013),
http://www.eia.gov/analysis/studies/worldshalegas/. 9 For a discussion of the role of natural gas in the 21
st century as well as the divergent views around the world of natural gas, see Susan L. Sakmar, ENERGY FOR THE 21
ST CENTURY:
OPPORTUNITIES AND CHALLENGES FOR LIQUEFIED NATURAL GAS (LNG), Edward Elgar Ltd. (Pub. 2013), available on Amazon http://www.amazon.com/dp/1849804214 . 10
The global energy group IHS is conducting a three-part study on the economic benefits of unconventional oil and gas production in the United States. The first study was released in October 2012, America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy – Volume 1: National Economic Contributions, and concluded that unconventional oil and gas production currently supports more than 1.7 million U.S. jobs and will support nearly 3 million by the end of the decade. The second study, America’s New Energy Future: The Unconventional Oil and Gas Revolution and the U.S. Economy – Volume 2: State Economic Contributions, was released in December 2012 and examines the impact of shale gas development for every state on a state-by-state basis. A third study is underway assessing the economic contributions and prospects for a domestic manufacturing renaissance resulting from unconventional upstream oil and natural gas activity in the lower 48 US states. Information about the IHS research study can be found at http://www.ihs.com/info/ecc/a/americas-new-energy-future-report-vol-2.aspx. 11
These are just a few of the factors considered in IHS’s economic contribution assessment and are listed for illustrative purposes only. 12
The IEA’s Golden Rules for Gas are linked to the IEA’s report released in June 2011, “Are We Entering a Golden Age of Gas?” which laid out a positive outlook for the increased role of natural gas in the world’s energy supply mix in general but was phrased as a question to highlight the uncertainties connected with the potential for growth in unconventional gas supply. 13
IEA, Golden Rules for a Golden Age of Gas, World Energy Outlook Special Report on Unconventional Gas, May 29, 2012, http://www.worldenergyoutlook.org/media/weowebsite/2012/goldenrules/WEO2012_GoldenRulesReport.pdf 14
IEA, Golden Rules for a Golden Age of Gas, World Energy Outlook Special Report on Unconventional Gas, May 29, 2012, http://www.worldenergyoutlook.org/media/weowebsite/2012/goldenrules/WEO2012_GoldenRulesReport.pdf. The “social license to operate” can be defined as the “degree of societal acceptance” that shale gas will require “in order to flourish.” Id. at p. 15. 15 Christopher Smith, Deputy Asst Secy, Office of Oil and Natural Gas, “Prudent Unconventional Oil & Gas Development: A U.S. Government Perspective,” Presentation to the CWC World Shale Oil & Gas Summit, Sept. 20, 2012. 16
GROUND WATER PROT. COUNCIL & ALL CONSULTING, MODERN SHALE GAS DEVELOPMENT IN THE UNITED STATES: A PRIMER (2009) http://www.netl.doe.gov/technologies/oil-gas/publications/EPreports/Shale_Gas_Primer_2009.pdf [hereinafter GROUND WATER PROT. COUNCIL MODERN SHALE GAS PRIMER].
http://www.worldenergyoutlook.org/media/weowebsite/2012/goldenrules/WEO2012_GoldenRulesReport.pdfhttp://www.halliburton.com/public/solutions/contents/Shale/related_docs/H063771.pdfhttp://www.eia.gov/analysis/studies/worldshalegas/http://www.eia.gov/analysis/studies/worldshalegas/http://www.amazon.com/dp/1849804214http://www.ihs.com/info/ecc/a/americas-new-energy-future-report-vol-2.aspxhttp://www.worldenergyoutlook.org/media/weowebsite/2012/goldenrules/WEO2012_GoldenRulesReport.pdfhttp://www.worldenergyoutlook.org/media/weowebsite/2012/goldenrules/WEO2012_GoldenRulesReport.pdf
-
18
17
For an overview of key regulatory elements in most of the oil and gas producing US states, see Resources for the Future (RFF), Center for Energy Economics and Policy, Shale Gas Regulations by State, http://www.rff.org/centers/energy_economics_and_policy/Pages/Shale_Maps.aspx. 18
Rex W. Tillerson, Enabling Economic and Environmental Progress: The Role of Natural Gas, Speech to the
World Gas Conference, Kuala Lumpur, Malaysia, June 5, 2012, http://www.exxonmobil.com/Corporate/news_speeches_20120605_rwt.aspx. 19
The creation of the UK’s Office of Unconventional Gas and Oil was announced by the Government in December 2012 and is part of the of the UK’s Department of Energy and Climate Change (DECC), http://www.gov.uk/government/organisations/department-of-energy-climate-change. 20
UK DECC Press Release, “New Office to look at community benefits for shale gas projects,” March 20, 2013, https://www.gov.uk/government/news/new-office-to-look-at-community-benefits-for-shale-gas-projects. 21
US Environmental Protection Agency (US EPA), EPA’s Plan to Study the Potential Impacts of Hydraulic Fracturing on Drinking Water Resources
http://www.epa.gov/hydraulicfracturing. 22
US EPA, http://www2.epa.gov/hydraulicfracturing 23
Daniel J. Soeder & William M. Kappel, WATER RESOURCES AND NATURAL GAS PRODUCTION FROM THE MARCELLUS SHALE 3–4 (2009) http://pubs.usgs.gov/fs/2009/3032/pdf/FS2009-3032.pdf. 24
Press Release, Chesapeake Energy, Chesapeake Energy Corporation Confirms Decision Not to Drill for Natural Gas in the New York City Watershed (Oct. 28, 2009) available at http://www.chk.com/news/articles/pages/1347788.aspx. 25
Fact Sheet: Water Use in Marcellus Deep Shale Gas Exploration, CHESAPEAKE ENERGY (2010),
http://www.chk.com/media/marcellusmediakits/marcellus_water_use_fact_sheet.pdf [hereinafter CHESAPEAKE ENERGY, Water Use]. 26
US EPA, http://www2.epa.gov/hydraulicfracturing 27
US EPA, http://www2.epa.gov/hydraulicfracturing. 28
Safe Drinking Water Act, 42. U.S.C. § 300f (2005). The SDWA is the primary US federal law for protecting public water supplies from harmful contaminants. Enacted in 1974,
and broadly amended in 1986 and 1996, the SDWA is administered through a variety of programs that regulate contaminants in public water supplies, provide funding for
infrastructure projects, protect underground sources of drinking water, and promote the capacity of water systems to comply with SDWA regulations.
The EPA is the federal agency responsible for administering the SDWA but a federal-state structure exists in which the EPA may delegate primary enforcement and
implementation authority (primacy) for the drinking water program to states and tribes. A key component of the SDWA requires the EPA to regulate the underground injection
of fluids to protect underground sources of drinking water. In terms of oil and gas drilling, the UIC program regulations specify siting, construction, operation, closure, financial
responsibility, and other requirements for owners and operators of injection wells. 29
Mary Tiemann and Adam Vann, Congressional Research Service (CRS) Report for Congress, “Hydraulic Fracturing and Safe Drinking Water Act Issues,” R41760, July 12, 2012, www.crs.gov. 30
U.S. Environmental Protection Agency, Region 8 and Office of Research and Development, National Risk Management Research Laboratory, (Draft) Investigation of Ground
Water Contamination near Pavillion, Wyoming, EPA 600/R-00/000, December 2011, http://www.epa.gov/region8/superfund/wy/pavillion/ EPA_ReportOnPavillion_Dec-8-
2011.pdf. 31
Peter Folger, Mary Tiemann and David M. Bearden, Congressional Research Service (CRS) Report for Congress, “The EPA Draft Report of Groundwater Contamination Near
Pavillion, Wyoming: Main Findings and Stakeholder Responses,” R42327, Jan. 25, 2012, www.crs.gov. 32
EPA Pavillion Groundwater Investigation, http://www2.epa.gov/region8/pavillion. 33 News Releases from EPA Region 8, Wyoming to Lead Further Investigation of Water Quality Concerns Outside of Pavillion with Support of EPA, http://yosemite.epa.gov/opa/admpress.nsf/20ed1dfa1751192c8525735900400c30/dc7dcdb471dcfe1785257b90007377bf!OpenDocument.
http://www.rff.org/centers/energy_economics_and_policy/Pages/Shale_Maps.aspxhttp://www.exxonmobil.com/Corporate/news_speeches_20120605_rwt.aspxhttp://www.gov.uk/government/organisations/department-of-energy-climate-changehttps://www.gov.uk/government/news/new-office-to-look-at-community-benefits-for-shale-gas-projectshttps://www.gov.uk/government/news/new-office-to-look-at-community-benefits-for-shale-gas-projectshttp://www.epa.gov/hydraulicfracturinghttp://www2.epa.gov/hydraulicfracturinghttp://pubs.usgs.gov/fs/2009/3032/pdf/FS2009-3032.pdfhttp://pubs.usgs.gov/fs/2009/3032/pdf/FS2009-3032.pdfhttp://www.chk.com/news/articles/pages/1347788.aspxhttp://www2.epa.gov/hydraulicfracturinghttp://www2.epa.gov/hydraulicfracturinghttp://www.crs.gov/http://www.epa.gov/region8/superfund/wy/pavillion/http://www.crs.gov/http://yosemite.epa.gov/opa/admpress.nsf/20ed1dfa1751192c8525735900400c30/dc7dcdb471dcfe1785257b90007377bf!OpenDocument
-
19
34
Mary Tiemann and Adam Vann, Congressional Research Service (CRS) Report for Congress, “Hydraulic Fracturing and Safe Drinking Water Act Issues,” R41760, July 12, 2012, www.crs.gov. 35
AM. PETROLEUM INST., FREEING UP ENERGY, HYDRAULIC FRACTURING: UNLOCKING AMERICA’S NATURAL GAS RESOURCES 5 (2010), http://www.api.org/~/media/Files/Policy/Exploration/HYDRAULIC_FRACTURING_PRIMER.ashx [hereinafter API FREEING UP ENERGY]. 36
Id. At 61-62. 37
Letter from Rep. Henry A. Waxman, Chairman, Comm. on Energy and Commerce, to 10 Oil and Gas Companies (July 19, 2010), available at http://energycommerce.house.gov/documents/20100719/Letters.Hydraulic.Fracturing.07.19.2010.pdf 38
FracFocus, www.fracfocus.org. 39
UK DEEC, “New controls announced for shale gas exploration,” Dec. 13, 2012, https://www.gov.uk/government/organisations/department-of-energy-climate-change. 40
The leading engineering and science bodies in the UK, the Royal Academy of Engineering and the Royal Society carried out an independent review of the health, safety and environmental risks associated with hydraulic fracturing for shale gas. Their central conclusion is that the risks can be managed effectively in the UK so long as operational best practices are implemented, and enforced through regulation. The Royal Society, Shale Gas Extraction Report, June 2012, http://royalsociety.org/policy/projects/shale-gas-extraction/report. 41
UK DEEC, “New controls announced fro shale gas exploration,” Dec. 13, 2012, https://www.gov.uk/government/organisations/department-of-energy-climate-change. 42
National Academies, Induced Seismicity Potential in Energy Technologies, www.nationalacademies.org. 43
Joe Eaton, “Scientists Say Oil Industry Likely Caused Largest Oklahoma Earthquake,” National Geographic News, March 29, 2013,
http://news.nationalgeographic.com/news/energy/2013/03/130329-wastewater-injection-likely-caused-quake/. 44
Howarth R, Santoro T, and Ingraffea A Methane and the greenhouse gas footprint of natural gas from shale formations. Climatic Change (2011). availilable at http://www.springerlink.com/content/e384226wr4160653/. 45
Lawrence M. Cathles III, Larry Brown, Milton Taam, Andrew Hunte, A commentary on “The greenhouse-gas footprint of natural gas in shale formations” by R.W. Howarth, R. Santoro, and Anthony Ingraffea, Climatic Change (2012) available at http://link.springer.com/article/10.1007%2Fs10584-011-0333-0. 46
Environmental Defense Fund, Methane Leakage, http://www.edf.org/methaneleakage. 47
IEA Press Release, IEA launches Unconventional Gas Forum, March 23, 2013, http://www.iea.org/newsroomandevents/news/2013/march/name,36494,en.html.
http://www.crs.gov/http://www.api.org/~/media/Files/Policy/Exploration/HYDRAULIC_FRACTURING_PRIMER.ashxhttp://energycommerce.house.gov/documents/20100719/Letters.Hydraulic.Fracturing.07.19.2010.pdfhttp://www.fracfocus.org/https://www.gov.uk/government/organisations/department-of-energy-climate-changehttp://royalsociety.org/policy/projects/shale-gas-extraction/reporthttp://royalsociety.org/policy/projects/shale-gas-extraction/reporthttps://www.gov.uk/government/organisations/department-of-energy-climate-changehttp://www.nationalacademies.org/http://news.nationalgeographic.com/news/energy/2013/03/130329-wastewater-injection-likely-caused-quake/http://www.springerlink.com/content/e384226wr4160653/http://link.springer.com/search?facet-author=%22Lawrence+M.+Cathles+III%22http://link.springer.com/search?facet-author=%22Larry+Brown%22http://link.springer.com/search?facet-author=%22Milton+Taam%22http://link.springer.com/search?facet-author=%22Andrew+Hunter%22http://www.edf.org/methaneleakagehttp://www.iea.org/newsroomandevents/news/2013/march/name,36494,en.html