Energy Exchange

The 24-hour news cycle has prompted a higher quantity of topics brought to viewer’s and reader’s attention.  However, with sound bites and the brevity of social media, rarely are topics reported with a balanced level of quality.  Film documentaries are evolving as a more sophisticated medium to explore issues in expanded formats with interviews, commentary and a wider perspective.  But are some of these documentaries more fiction than fact?

An Inconvenient Truth advocated common sense about climate issues.  The Academy-Award nominated Gasland sparked much controversy about exploration and production of natural gas.  Its sequel, Gasland II, is scheduled to air on HBO this summer.  This week, a film Truthland debuted on YouTube (not in theaters) with more splash than substance.

Of EDF’s core strategies of sound science, market-based solutions, non-partisan policy and unlikely partnerships – a most unlikely partnership was mischaracterized by the producers of Truthland.  My words in an interview in the documentary are accurate, but the context in which they were presented — implying that EDF agrees with the rhetoric presented in the film — is misleading.  When interviewing for this film over a year ago, I was not told that the film would be subsequently sold to Independent Petroleum Association of America (IPAA) and Energy In Depth (EID), and used a promotional tool for the natural gas industry.  In hindsight, I should have demanded more limitations on my interview – but the producers were very convincing when pitching the film as a presenting a “balanced perspective” on the natural gas debate.

Rather than promoting Truthland, I suggest a more impartial documentary choice where EDF’s Senior Energy Policy Advisor Scott Anderson is interviewed as demonstration of how EDF’s efforts can decrease the adverse effects of natural gas development.  The SWITCH Energy Project offers a more sound approach to reviewing the past, present and future of energy solutions for the U.S. and globally.  University of Texas’ Bureau of Economic Geology’s Director Dr. Scott Tinker explores the world’s leading energy sites, from coal to solar, oil to biofuels, with interviews of international leaders of government, industry and academia experts, plus a voice  in the environmental community.

Scott Anderson’s interview in the film describes the natural gas drilling method of hydraulic fracturing and the regulatory atmosphere of improving environmental aspects pertaining to water, land and air quality issues.

Source: Trekkie Gal

A lumber yard in the middle of Tel Aviv is an unlikely place to discover innovative new technology to transform ocean waves into energy, but there I was watching a demonstration of wave-to-energy technology in a makeshift wave tank constructed by Shmuel Ovadia.  Ovadia is a talented engineer passionate about harnessing the power of the ocean when he is not otherwise engaged in running his successful high-end lumber business.  See for yourself at:  http://www.sde.co.il/.

I suppose I shouldn’t have been surprised.  I am on the first day of a seven trip for U.S. energy leaders sponsored by Project Interchange, an educational institute of the American Jewish Committee, and by the time I arrived at Ovadia’s lumber yard in the late afternoon, I had already seen tremendous creativity in the unlikeliest places.  Our morning was spent walking down Tel Aviv’s Rothschild Boulevard, Israel’s equivalent of Silicon Valley, dropping by several of the technology incubators that are a large part of the reason why Israel is known as the “start-up nation.”  

Here, 20-somethings only a few years out of Israel’s army – where technology and project management skills are acquired and honed – are developing innovative software at a furious pace.  The aging, somewhat decrepit buildings dating back to Israel’s socialist early years, are brimming with entrepreneurial drive and youthful spirit.  Most interesting to me was a visit to the IDC Elevator, where Shmuel Chafets, Director of Business Development for Giza Venture Capital, described a recent investment in a start-up that is applying sophisticated software and smart grid technology to improve the efficiency of water delivery systems, which – among other things – anticipates leaks before they happen. 

In Israel, a nation increasingly reliant on energy-intensive desalination, saving water is also saving energy, a lesson at the heart of our report two years ago on the Energy-Water Nexus in Texas.  This visit got me wondering whether this same technology might be helpful in EDF’s efforts to partner with gas utilities to reduce methane leaks along their distribution systems.  Surely such smart grid ingenuity can be used to help fight the causes of global warming and not just the fresh water scarcity that is one of its many symptoms?

While software companies in Israel do well in attracting venture capital from the United States, Europe and, more recently, Southeast Asia, guys like Shmuel Ovadia struggle to attract capital to their bright ideas.  Even venture capitalists like to see commercial scale prototypes before investing major dollars, and good-old fashioned mechanical technologies are a whole lot more physically difficult and expensive to get to commercial scale than software solutions.  So it takes a special type of investor to risk the serious capital it takes to bring a hardware solution to market. 

It is a challenge, but not impossible, as our visit to Better Place’s Tel Aviv showroom demonstrated.  Here, we were treated to a test drive of the Renault Fluence ZE, an all-electric four passenger sedan, that has a range of approximately 100 miles and a battery that can either be recharged at home or our work or swapped out in a 5-minute visit to a Better Place ‘refueling’ station.  When you buy the car (and had we been Israelis, sales people were there ready to take our order), you buy a contract for miles to go with it.  Included in that contract are up to two charging stations, the electricity they supply, and access to any of Better Place’s battery swapping stations now being constructed throughout Israel. 

In short, the Better Place’s Renault Fluence is like the cell phone I have carried with me to Israel.  It is my phone, but I purchase the international sym card and the corresponding minutes of voice and data from Orange, a local carrier, which is easily slipped into the phone and recharged with new minutes as needed. 

Tomorrow we head down south to the Negev to see what is brewing in the world of solar energy.  I can only imagine what surprises await us.  I’ll keep you posted.

Ohio Governor John Kasich showed real leadership earlier this month when he introduced energy bill with the most comprehensive rules in the country for chemical disclosure during oil and gas operations. The Governor’s bill would have required disclosure of not only the chemicals used in hydraulic fracturing – as a number of other states have done – but also the full range of chemicals used throughout the lifecycle of a well. Hydraulic fracturing gets all the attention, but the Governor and his team understand that dangerous chemicals are also used in drilling, producing, servicing and shutting down wells. The entire process should be transparent from beginning to end — “from spud to plug,” as it’s called.

This was smart policy when the Governor proposed it. And it’s smart policy today. Unfortunately, the energy bill passed yesterday by the Ohio General Assembly fails to fully deliver on that vision. In the face of intense industry opposition, lawmakers eliminated many of the reporting requirements contained in the original bill. EDF is disappointed the final bill does not live up to what Governor Kasich proposed, but we give the Governor credit for putting the idea forward and expanding the terms of the debate – both in Ohio and nationally.

To be fair, even in its scaled-back version, the Ohio disclosure policy breaks new ground. It requires disclosure of the chemicals used in stimulating a well. This includes not just hydraulic fracturing but also other kinds of stimulation techniques – something most states have missed in their disclosure rules.

Additionally, companies will be required to disclose the chemicals used in a well until the surface casing is set in place. As we testified in the Ohio House, this still leaves the public in the dark about a lot of dangerous chemicals that are used to drill and operate a well. But again, it’s a step forward compared to what other states have done.

We’re disappointed, though, by changes the House made to the trade secret provisions in the bill. In the original version, companies would have been required to report trade secret information to the Department of Natural Resources. This would have ensured that the agency had quick access to chemical information it might need to respond to a spill, initiate an investigation or respond to a complaint.  Under industry pressure, the Assembly caved on that language, and companies will now be allowed to withhold trade secret information from the regulators. 

The bill establishes an unqualified right for certain land owners to challenge trade secret claims in court. So, there’s at least a mechanism in place to police the system and make sure companies aren’t hiding behind bogus trade secret claims. But it would have been far better to have trade secrets turned over to the state – not only in cases where this information is needed to protect public health and safety, but also because it would have given anyone, not just the land owners, a right to challenge trade secrets under the Ohio Public Records Act.

This is a big bill. It addresses a wide range of issues – not just oil and gas – and includes far too much to cover here. It has some good provisions, such as new requirements for companies to report where they’re getting their water from and how much they’re using, and requirements for companies to test the baseline water quality in nearby water wells before they start drilling. The bill also has some really bad provisions – like an egregious one that strips citizens of the right to appeal permits issued to oil and gas operators.

The passage of the energy bill is not the end of the process: the agency rules implementing this bill will be written in the months ahead, and EDF will be working to make sure they are as strong as possible. And we’ll be working on other rules to reduce the risks oil and gas operations pose to communities and the environment.

This includes improving Ohio’s rules for air pollution from oil and gas operations. It means making sure we have tough standards in place to manage the huge waste streams these operations produce. It means putting smart planning in place to preserve landscapes and protect the fabric of local communities. And sooner rather than later, it’s going to mean coming back to the General Assembly and fixing what didn’t get done right the first time.

The University at Buffalo’s Shale Resources and Society Institute issued a report yesterday, “Environmental Impacts During Shale Gas Drilling: Causes, Impacts and Remedies,” which offers a quantitative data review of Pennsylvania’s regulation of natural gas development in the Marcellus Shale. The press release notes that I was a reviewer for the report.

While I was a reviewer, this does not mean that all of my suggestions were taken or that I agree with all of the report’s opinions and conclusions.

Does the report have strengths? Absolutely. Unfortunately, it is hard to find understandable, comprehensive data describing natural gas industry environmental violations and the responses taken by enforcement agencies. The University at Buffalo has done a great service by bringing such information to light for the period studied (2008 through August 2011).

At the same time, several of the opinions and conclusions in the report are questionable. These include: 

• The idea that a violation isn’t an “environmental” concern if it is a violation of “paperwork” or “preventative” regulations and didn’t result in immediate, actual harm to the environment.
   
• Characterizing the rate of environmental violations (narrowly defined) as “low” in the first eight months of 2011 when, even using a narrow definition of environmental violation, violations were found at 26.5% of the wells drilled.
   
• The suggestion that the present regulatory program is effective because the incidence of “environmental violations” (narrowly defined) declined from 58.2% of wells in 2008 to 26.5% of wells in 2011.

In sum, there’s a lot of good information to be gleaned from the study, but caution should be exercised with regards to some of the conclusions.

Yesterday the Ohio Senate passed Senate Bill 315, major energy legislation that addresses a wide range of issues – including provisions relating to transparency in oil and gas operations.  Unfortunately, the version that passed falls short of Governor Kasich’s ambitious call for broad chemical disclosure.

In the introduced version of the bill put forward by Governor Kasich and sponsored by Chairwoman Shannon Jones, companies would have been required to publicly disclose all chemicals used throughout the entire lifecycle of oil and gas wells – the so-called “spud to plug” approach to chemical reporting.

This comprehensive approach to chemical reporting stands in contrast to other state policies that merely require disclosure of those chemicals used in the hydraulic fracturing process.  It reflects an understanding that a wide range of dangerous chemicals are used in drilling, stimulating, operating and closing wells, and regulators and the public need to know what’s being used in order to evaluate risks and put strong standards in place that protect communities and the environment.  Governor Kasich deserves a lot of credit for advancing this idea in the original version of the bill.

Unfortunately, in the face of intense industry opposition the version of SB315 that passed yesterday eliminates much of the reporting that would have been required under the Governor’s original proposal. 

The version of the bill that passed yesterday still has requirements for reporting the chemicals used in stimulating a well (which includes hydraulic fracturing).  It also has requirements for reporting chemicals used for drilling the surface interval of a well.  And it’s worth noting that the bill language for these provisions – while still needing improvements – is stronger than what was in the introduced version of the bill.

But the requirements for disclosing chemicals used for drilling beyond the surface interval were dropped – as were most of the requirements for disclosing chemicals used to service and operate the well.  So, it’s now up to the Ohio House of Representatives to restore these important provisions.  There’s a lot of nasty stuff that goes down a well during drilling and production.  In fact, it tends to be the case that companies use increasingly dangerous chemicals the deeper they go in the drilling process.  So, limiting disclosure of drilling fluids to just what’s used in the surface interval doesn’t make sense.

In addition to restoring the full “spud to plug” approach to the chemical reporting, the House also needs to add bill language ensuring that Ohio citizens can challenge any trade secret claims that companies may make to conceal the identity of chemicals.  That’s just a basic necessity for policing the system and giving the public a reasonable level of confidence that companies are playing on the up and up.

Finally, the bill should be amended to begin the process of assessing and reporting the chemical composition of waste streams from oil and gas operations.  Without an adequate picture of the chemical makeup of wastewater and other wastes that come from oil and gas operations, it is difficult to impossible to determine whether various methods of waste handling and disposal are protective of human health and the environment.

EDF was pleased to offer our support for the “spud to plug” concept embodied in the introduced version of the bill, but SB315 needs to be strengthened to earn our support going forward.

Transparency is just one small part of all that must to be done to ensure oil and gas operations are safe for communities and the environment, but it’s a critical piece of the puzzle that lays a foundation for developing protective rules and rebuilding the public trust.  So EDF looks forward to working with our partners, leaders in the General Assembly and the Governor to make sure the final version of SB315 lives up to its full promise and sets Ohio on the right path for protecting communities and environment.