Monthly Archives: May 2011

What Can The World Learn From Texas About Frac Chemical Disclosure?

I wrote last month that Texas House Energy Committee Chairman Jim Keffer, sponsor of a measure that would require oil and gas drillers to tell the public what chemicals are added to hydraulic fracturing fluid, said “the world is watching” to see how Texas handles the issue. There has been a lot to see. The House approved a disclosure bill “on second reading” yesterday afternoon and may vote later today to send the measure to the Senate. Meanwhile, the Senate Natural Resources Committee held a hearing this morning on a nearly identical bill, SB 1930, filed just a few days ago by Senator Jane Nelson.

Despite predictions in many quarters that Texas would never pass a bill requiring frac chemical disclosure, passage is a real possibility. The current version of the bill leaves several things to be desired, and at this point EDF is withholding support. But EDF, Sierra Club, Environment Texas and a number of other environmental advocates agree that this is landmark legislation even in its current form.

The legislation is not the “plug-and-play” model for other jurisdictions that I had hoped for, but it is landmark legislation nonetheless.

Three things in particular are worth noting:

First, virtually the entire oil and gas industry in Texas has come to recognize that voluntary disclosure efforts will never be enough to resolve this issue – regulation is required. All of the major industry associations now support mandatory disclosure, as do a long list of individual companies. In contrast, until recent weeks – and even days – only a handful of companies were on record supporting meaningful disclosure requirements. EDF applauds this development, and we especially applaud those who came out in support of mandatory disclosure early in the process. The early supporters are listed below.

The second thing notable about the legislation is that industry and Texas public officials have recognized that disclosure cannot be limited to chemicals currently known to be hazardous in the workplace – all chemicals used in frac fluid additives must be subject to disclosure, not just chemicals required by the Occupational Safety and Health Administration (OSHA) to be listed on Material Safety Data Sheets (MSDS). The failure to include non-MSDS chemicals is one of the major limitations of the voluntary chemical registry recently launched by the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission.

Third, the Texas bill authorizes landowners to challenge trade secret claims. At the beginning of the session, this didn’t seem to be in the cards.

It is not at all certain that Texas will end up with good disclosure rules. The bill might not pass or rules implementing the legislation could turn out to be weak. And some aspects of this legislation will prove troublesome even under the best of circumstances. But can what has happened in Texas help other jurisdictions get their rules right? Absolutely.

Here are the companies that deserve special applause for breaking ranks with their peers and expressing early support: Apache, Anadarko Petroleum, BG Group, El Paso, Encana Natural Gas, EXCO, Linn Energy, Petrohawk Energy, Pioneer Resources, Range Petroleum, Southwestern Energy, and Talisman Energy. A letter this group wrote to Chairman Keffer on May 6th is well worth reading.

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Smart Grid: Big Market, Big Return

Guest Blog Post By: Jackie Roberts, EDF’s Director of Sustainable Technologies, National Climate Campaign

The exciting innovations in the area of an energy internet – also known as the “smart grid” – illustrate just one of the ground-breaking ways that the U.S. can reduce our energy consumption and carbon emissions while also creating new business opportunities that help expand jobs.

Big Market, Big Return

Using data from a Pacific Northwest National Lab study that quantified several categories of smart grid benefits, Duke University estimates that a built-out smart grid could reduce an estimated 18% of emissions from the U.S. electric sector.   Looking across the full spectrum of possible benefits, EDF sees even greater potential.  By mobilizing system-wide efficiencies and large-scale deployment of renewable and distributed resources, a well-designed smart grid could reduce electric sector carbon emissions 30% by 2030.

This new market is predicted to be just as large as the aforementioned emission estimates.  According to one market research firm, the global market value of products to enable the smart grid has grown from an estimated $26 billion in 2005 to more than $69 billion in 2009, a compounded annual growth rate of 22%. Total market value is expected to exceed $186 billion by 2015 (SBI Energy, 2010).

Who Will Benefit?

Duke University’s report, “U.S. Smart Grid: Finding New Ways to Cut Carbon and Create Jobs,” identifies 334 U.S. company locations in 39 states that are already developing or manufacturing products for a smart grid. All regions of the country will benefit.

For example, Chicago-based S&C Electric Company, founded in 1911, acquired new customers in the smart grid market. The company holds thousands of patents in switchgear, interrupters, and other transmission-voltage devices.  In the past four years, its business has expanded approximately 50%, according to the company, with new products such as a truck-sized device that connects wind farms to the grid.   Today, most of S&C’s products are made in the United States and Canada, with only a small portion made elsewhere.  In all, the U.S. workforce totals about 1,700 employees, including more than 1,000 machinist, manufacturing, assembly and support positions, 200 engineers and technicians, a global sales force, and finance and accounting offices.

Global Expansion

Export markets are promising as well.  According to Duke, “Italy’s 30 million installed smart meters all use Echelon (a U.S. company based in California) technology.  Echelon has recently won large contracts in China, Russia, and Denmark.” 

As former Google CEO Eric Schmidt noted, “Many companies can skirt downturns entirely by coming up with innovations that change the game in their industries – or create new ones.”  That’s exactly what companies identified by Duke, from well-known IBM and other partners in our Pecan Street Project to companies such as Cooper Power Systems, are doing as they expand their offerings to meet the demands of the smart grid value chain.  

Just last Friday, Eric Spiegel, President and CEO of Siemens Corporation, announced that their “orders and sales are increasing and [they] have added more than 1,000 new jobs to our U.S. workforce in just the last two quarters to keep up with the demand.”  All three of the company’s sectors – Industry, Energy, and Healthcare – contributed to these results, but job growth was concentrated in the Industrial Automation, Building Efficiency, Smart Grid, and IT areas.  Encouraging news all around.

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Poor Well Construction Is The Culprit

The iconic image of shale gas development is the flaming faucet featured in Josh Fox’s recent movie, Gasland.  Inquiring minds want to know: “how does methane get into a water faucet, and is hydraulic fracturing of shale to blame?”  A Duke University study released this week sheds light on these important questions.

The study, performed by three researchers affiliated with Duke University’s Biology Department and Nicholas School of the Environment, examined 60 drinking water wells in northeastern Pennsylvania and southern New York, the northern tier of the geological formation known as the Marcellus Shale, ground zero for aggressive shale gas development in the eastern United States.  And sure enough, methane concentrations were detected in 51 of the 60 wells, with substantially higher concentrations of methane found in drinking water wells closest to active natural gas production sites.  While there are numerous instances of methane migrating into drinking water supplies through naturally occurring fissures, even in the absence of gas drilling, this study makes a pretty compelling case that natural gas production can create a problem where none ever existed, or certainly make an existing problem worse.

But, on the question of whether hydraulic fracturing is to blame, the evidence is less compelling.  Indeed, the fact that methane was found in water wells, but the chemicals used to fracture the shale were not, suggests that fracturing may have had nothing to do with the unwanted migration.  The culprit, it would seem, are not fissures created by the fracturing of the shale, but rather poor well construction – specifically, failures in the cement casing surrounding a well – which enable the natural gas to migrate into the water table as it moves its way up the well to the surface.  The authors have noted that “leaky casings” are the most likely cause of problems.

Poor well construction is a problem that can occur anywhere, whether production is aided by hydraulic fracturing or not.  For all of the attention Gasland’s flaming faucet has brought to the hydraulic fracturing debate, this study points our attention to the role that better well construction and design practices can play in reducing the very real problem of methane contamination of well water.

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