• Secretary of Energy Advisory Board’s Shale Gas Subcommittee Issues Draft Report on Environmental and Safety Aspects of Shale Gas Production
  • August 15, 2011 | Authors: John C. Ale; Frank E. Bayouth; Don J. Frost
  • Law Firms: Skadden, Arps, Slate, Meagher & Flom LLP - Houston Office ; Skadden, Arps, Slate, Meagher & Flom LLP - Washington Office
  • In May 2011, Secretary of Energy Steven Chu charged his Advisory Board’s Shale Gas Subcommittee, chaired by MIT professor and former CIA director John Deutch, to identify steps to reduce the environmental impact and improve the safety of shale gas production in the United States. The subcommittee’s interim report is due August 18, with the final report due November 18. On August 11, the subcommittee released a draft report, inviting comments by August 15.1 The draft makes several recommendations that, if implemented, will affect the burgeoning shale gas industry.

    Producing natural gas through horizontal drilling and hydraulic fracturing (“fracking”) of shale rock deep below the earth’s surface has revolutionized the U.S. natural gas business in just a few years. As the draft report notes, gas from shale represented only 2 percent of U.S. production in 2001 but today is approaching 30 percent. This has cut the price of natural gas to roughly half its 2008 level and turned the U.S. from a likely importer of natural gas from the Middle East and elsewhere to a likely exporter — a notable boon to energy independence and national security. Shale gas development also has created over 200,000 new jobs at a time when the rest of the economy is flailing.2

    The draft report acknowledges what industry representatives and many regulators have said repeatedly: fracking occurs at depths well below the water table, and there are few, if any (industry would say no), examples of toxic fluids migrating from producing zones to drinking water sources. Incidents causing problems have been unrelated to fracking itself but have arisen from surface spills, poor cementing jobs in wellbores and other operational failures.3 Production processes can have significant impact on local infrastructure, from water usage and disposal to truck traffic, and can generate airborne pollutants. The draft points out that it is difficult to generalize recommendations to address these imposts, given that different shale formations require different fracking techniques and are associated with differing hydrologic conditions and opportunities for water disposal or reuse.4

    The subcommittee’s nine key recommendations in this draft are:

    1. Improve public information. The subcommittee recommends the creation of a public portal to access information available to federal and state regulators to promote study and analysis of shale gas operations.

    2. Improve intergovernmental communication. The draft encourages the promotion of STRONGER (the State Review of Oil and Natural Gas Environmental Regulation) and the Ground Water Protection Council in projects to share information and best practices.

    3. Reduce air emissions from shale operations. The subcommittee recommends looking carefully at many types of potential air pollution from shale gas development and natural gas usage, including diesel-fueled equipment, release of methane into the atmosphere during production and the use of natural gas in the home and in industrial process and power generation. Specifically, the draft recommends (a) pilot programs designed to collect data on air emissions from operations in a variety of shale basins, (b) an immediate interagency study on the overall greenhouse gas impact of producing and using natural gas “from cradle to grave” and (c) increased use of available technologies to reduce emissions.

    4. Protect water quality. The draft encourages measurement and public reporting of water stocks before and during the production process and adopting best practices in well casing, cementing and pressure management.

    5. Disclose fracking fluid composition. Though concluding that the risk of leaks into drinking water sources is remote, the subcommittee urges the disclosure of the composition of fluids with a narrow exception for truly proprietary information. The subcommittee notes that several states with a history of oil and gas production, both conventional and with fracking, are requiring disclosure, notably Colorado, Texas and Wyoming.

    6. Reduce the use of diesel fuel. The subcommittee recommends that diesel fuel should not be used as part of the fracking mix and that surface equipment should be powered by natural gas or electricity where available rather than diesel fuel.

    7. Manage related impact on communities, land use, wildlife and ecologies. The subcommittee recommends a “holistic” approach to addressing the various impacts of drilling, production and delivery activities, including traffic on roads, noise, visual aesthetics and air quality.

    8. Organizing for best practices. The subcommittee recommends that the industry create an organization to develop “best practices” through monitoring activities and sharing field experience. The subcommittee noted that several different models for such an organization already are being discussed and that it will monitor the progress before its final report. The subcommittee believes that any such organization should focus on reducing pollutants and methane emissions; establishing an emission measurement and reporting standard; developing and disseminating casing, cement bonding and other completion methods; and implementing practices to minimize water use and limit vertical fracture growth.

    9. Research and development. The subcommittee noted that, although the private sector has sufficient economic incentives to make technical advances, government funding could assist in some basic R&D, environmental protection and safety functions.

    Comments to the draft report must be submitted by noon E.D.T. on August 15, 2011, to be considered as part of the interim report. Comments should be sent to Amy Bodette, Department of Energy, 1000 Independence Avenue, S.W., Washington, D.C. 20585, or by e-mail to [email protected]. The subcommittee’s hearing will occur by conference call from 4 p.m. - 6 p.m. E.D.T. on August 15. As noted above, the final report is scheduled to be issued by November 18.

    This Department of Energy report is in addition to the ongoing study by the Environmental Protection Agency of hydraulic fracturing. Initial research results from this study are expected by the end of 2012 with a goal for a report in 2014.5 

    1 The SEAB Shale Gas Production Subcommittee Ninety-Day Report — August 11, 2011, http://www.shalegas.energy.gov/resources/081111&under;90&under;day&under;report.pdf.

    2 Id. at 6-7.

    3 Id. at 13, 19-20. Similarly, the occasional appearance of methane in water sources is unlikely to originate from gas-producing zones but more likely results from drilling through a geologically unstable formation or loss of well integrity through poor well completion or pressure management, or may be naturally occurring. Id. The subcommittee intimated that the 60-year history of safe fracking experience frequently cited by industry representatives may not be relevant to the discussion regarding the safety of shale gas production because current techniques are relatively new; e.g., horizontal drilling with fracking across laterals of two miles is a development of the past decade. Id. at 13.

    4 Id. at 13, 19-22. As the draft notes, in almost all regions where shale gas is developed, water used in fracking is a small fraction of total consumption. Id. at 19. In many areas, water returned to the surface is reused in later drilling — for example, many drillers in the Marcellus area recycle over 90 percent of the return water. In other areas, water is injected into disposal wells, which — unlike the gas wells themselves — are regulated by the Environmental Protection Agency. However, the subcommittee expressed concern that existing wastewater treatment facilities may not be equipped to measure the presence of chemicals used in fracking. Id. at 21.

    5 See http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/index.cfm.