Energy Exchange

Today, at the annual meeting of the American Association for the Advancement of Science in Vancouver, the Energy Institute at the University of Texas at Austin released a major report titled, “Fact-Based Regulation for Environmental Protection in Shale Gas Development.” The report’s conclusions are those of the authors, though Environmental Defense Fund (EDF) helped the University of Texas at Austin define its scope of work and reviewed drafts during the course of the project.

What are the main conclusions? As has been the case in other inquiries, the University of Texas study did not find any confirmed cases of drinking water contamination due to pathways created by hydraulic fracturing. But this does not mean such contamination is impossible or that hydraulic fracturing chemicals can’t get loose in the environment in other ways (such as through spills of produced water). In fact, the study shines a light on the fact that there are a number of aspects of natural gas development that can pose significant environmental risk. And it highlights the fact that there are a number of ways in which current regulatory oversight is inadequate.

The following conclusions are particularly important: 

• Many reports of groundwater contamination occur in conventional oil and gas operations (e.g. failure of well-bore casing and cementing) and are not unique to hydraulic fracturing.
• Surface spills of fracturing fluids appear to pose greater risks to groundwater than hydraulic fracturing itself.
• Blowouts – uncontrolled fluid releases during construction and operation – are a rare occurrence, but subsurface blowouts appear to be under-reported.
• The lack of baseline studies makes it difficult to evaluate the long-term, cumulative effects and risks associated with hydraulic fracturing.
• Most state oil and gas regulations were written well before shale gas development became widespread.
• Gaps remain in the regulation of well casing and cementing, water withdrawal and usage, and waste storage and disposal.
• Enforcement capacity is highly variable among the states, particularly when measured by the ratio of staff to numbers of inspections conducted.

The report deserves widespread attention. But it is by no means the final word on these topics. Chip Groat, who led the study on behalf of the Energy Institute, plans to tackle additional topics in the future. These include air emissions from natural gas operations, induced seismicity and a field and laboratory investigation of whether hydrogeologic connectivity exists between the Barnett Shale and aquifers and other geologic units above and below the formation.

To read the complete report, visit http://energy.utexas.edu/

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.