Energy Exchange

Anyone who thinks “old media” is dead should have spent this week with me in Washington, DC.  Virtually everywhere I went folks were discussing the articles in the New York Times this week on the water pollution issues associated with natural gas development.  Although ProPublica has done an excellent job of covering the many environmental issues associated with shale gas development for more than a year, there still is nothing like a front page story in the New York Times to get the attention of policymakers in Washington.

Of course, the New York Times tale of water quality regulators seemingly asleep at the switch, or worse, actually hiding data and findings, is a story sure to catch anyone’s eye.  And in the days leading up to the Academy Awards, where “Gasland” was competing for the best documentary award, hydraulic fracturing seemed to be everywhere in the media, and all of it bad news stories.  Flaming water faucets are an image hard to resist or dismiss.

But as the flurry of media attention begins to die down as the week comes to a close, we are left with two simple truths to reflect upon.  The first is that America is awash in natural gas, and this promises to be a good thing both in terms of national energy security and air quality, at least in comparison to coal, which is America’s other abundant domestic energy resource.  (Yes, we actually have a fair amount of oil, too, but even the biggest boosters of domestic production concede the days of America being oil self-sufficient are long gone).  The second simple truth is that the vast majority natural gas industry is squandering this opportunity through a combination of reckless indifference and sloppy production practices.

No one should give either state or federal regulators a free pass on failures to act aggressively to enforce existing oil and gas production regulations, or act equally quickly to revise regulations where they clearly are failing to protect public health and the environment in the onslaught of natural gas production in what IHS Cambridge Energy Resource Associates (IHS CERA) calls the “Shale Gale.”  But focusing all of our ire on the regulators’ failures gives the natural gas producers a perverse excuse.  For an example of this, see my post two weeks ago, where I took an industry lawyer to task for making the claim that regulators were at fault for failing to tell natural gas producers that it is a bad idea to use diesel fuel as a hydraulic fracturing fluid.  As if someone needs to be told that injecting diesel fuel into the ground might be a bad idea!

So, by all means, put the heat on the federal Environmental Protection Agency and your state environmental regulators, and hold Congress and state legislatures accountable for providing the resources needed to have good regulations and good enforcement.  But please save some of your indignation for those gas producers who are failing to come to grips with the issues of the day.  Natural gas producers know better than anyone what is in the water that is produced during the natural gas production process, and no one should let them get away with claiming otherwise.  Sadly, unlike a few of their more progressive colleagues, many natural gas producers fail to understand that they have an affirmative obligation to minimize the possibility that contaminated water causes harm to public health and the environment.  And even worse, far too few of them take proactive steps to reduce air and water pollution from their production processes – steps that actually could save them money in the long run. 

The industry seems more inclined to operate by the principle that “haste makes waste.”  More than anything else, what the New York Times articles demonstrate is that, taken as a whole, the natural gas production industry is simply failing to hold itself accountable for adhering to the highest common sense standards of environmental stewardship.  And unless and until the natural gas industry does, don’t expect any good news stories about natural gas in either old or new media.

Chutzpah.  That’s how Washington lawyer Matt Armstrong, of Bracewell & Giuliani, characterized the possibility that the US Environmental Protection Agency (EPA) would now take enforcement action against natural gas drillers who injected millions of gallons of diesel fuel into the ground to facilitate hydraulic fracturing, or ‘fracking’, to extract  natural gas trapped in shale formations thousands of feet below.  His point was that the EPA – having taken little action to develop clear regulations banning or restricting this particular practice – can’t pretend that they always disapproved of diesel fuel injection now that a Congressional investigation spearheaded by Henry Waxman and Ed Markey has brought it to light. 

While I think Armstrong may have a point about the EPA being asleep at the switch on this one, and I take him at his word that he, and the natural gas industry clients he represents, welcome clear and effective federal regulations restricting or – better yet – banning this practice, I can’t help but conclude that it is the natural gas industry, rather than the EPA, that wins the award for chutzpah.

Part of the reason that anti-shale gas campaigners are gaining such traction with the general public is that the natural gas industry makes it so easy for them.  Does any CEO of any natural gas production company really think that the general public would ever believe that injecting diesel fuel into the ground is a good idea?  This little episode only further underscores the perception that when the natural gas industry unflinchingly opposes public disclosure of the chemicals used in “frac fluids” – or, as my colleague Ramon Alvarez pointed out yesterday – when the oil and gas industry sue to block recently adopted EPA regulations requiring basic air pollution reporting that, indeed, the industry really does have something to hide.  

Being tone deaf to public perception is not a crime, but when you turn around and blame the regulatory agency you regularly oppose for failing to stop you from engaging in what is obviously a potentially harmful practice that they should have been regulating, you certainly are guilty of chutzpah.  If the natural gas industry ever expects to be embraced as a responsible partner in transitioning this nation to a safe, secure, low-carbon, clean energy future, natural gas production practices need to dramatically improve and the stonewalling and finger pointing at others need to stop.