V&E Shale Insights — Tracking Fracking E-communication, August 11, 2011
The Shale Gas Subcommittee of the Secretary of Energy Advisory Board (the “Subcommittee”) released its much-anticipated report on hydraulic fracturing earlier today. The report, prepared at the request of Secretary of Energy Stephen Chu, concludes that the development of the nation’s shale gas resources has produced major economic benefits, but that a variety of measures should be implemented to reduce the environmental impacts from shale-gas production. Perhaps most significantly, the report concludes that the risk of fracturing fluids contaminating drinking water sources through fractures in shale formations “is remote.”
Nevertheless, to address public concerns regarding possible contamination of drinking water resources, the Subcommittee recommends the following actions by producers and regulatory agencies:
Measure and publicly report the composition of water supply and flow throughout the fracturing and well completion process;
Manifest all transfers of water among different locations;
Adopt best practices in well development and construction, especially casing, cementing, and pressure management. Pressure testing of cemented casing and state-of-the-art cement bond logs should be used to confirm formation isolation. Microseismic surveys should be carried out to assure that hydraulic fracture growth is limited to the gas-producing formations. Regulations should be developed and inspections performed to confirm that operators have taken prompt action to repair defective cementing jobs. The regulation of shale gas development should include inspections at safety-critical stages of well construction and hydraulic fracturing;
Conduct additional field studies on possible methane leakage from shale gas wells to water reservoirs;
Adopt requirements for background water quality measurements (e.g., existing methane levels in nearby water wells prior to drilling for gas) and report the measurements in advance of shale-gas production activity; and
Agencies should review field experience and modernize rules and enforcement practices to ensure protection of drinking and surface waters.
The Subcommittee also addresses other concerns relating to hydraulic fracturing and shale-gas production and recommends the following:
- Improve public information about shale gas operations: Create a portal for access to a wide range of public information on shale gas development, to include current data available from state and federal regulatory agencies. The portal should be open to the public for use to study and analyze shale gas operations and results.
- Improve communication among state and federal regulators: Provide continuing annual support to the State Review of Oil and Natural Gas Environmental Regulation (STRONGER) and to the Ground Water Protection Council for expansion of the Risk Based Data Management System and similar projects that can be extended to all phases of shale gas development.
- Improve air quality: Measures should be taken to reduce emissions of air pollutants, ozone precursors, and methane as quickly as practicable. The Subcommittee supports adoption of rigorous standards for new and existing sources of methane, air toxics, ozone precursors, and other air pollutants from shale gas operations. The Subcommittee recommends:
- Enlisting a subset of producers in different basins to design and rapidly implement measurement systems to collect comprehensive methane and other air emissions data from shale gas operations and make these data publicly available;
- Immediately launching a federal interagency planning effort to acquire data and analyze the overall greenhouse gas footprint of shale gas operations throughout the lifecycle of natural gas use in comparison to other fuels; and
- Encouraging shale-gas production companies and regulators to expand immediately efforts to reduce air emissions using proven technologies and practices.
- Disclosure of fracturing fluid composition: The Subcommittee “shares the prevailing view that the risk of fracturing fluid leakage into drinking water sources through fractures made in deep shale reservoirs is remote.” Nevertheless, the report concludes that there is no economic or technical reason to prevent public disclosure of all chemicals in fracturing fluids, with an exception for genuinely proprietary information. While companies and regulators are moving in this direction, the Subcommittee believes progress needs to be accelerated in light of public concern.
- Reduction in the use of diesel fuel: The Subcommittee concluded that there is no technical or economic reason to use diesel in shale-gas production and recommends reducing the use of diesel engines for surface power in favor of natural gas engines or electricity where available.
- Managing short-term and cumulative impacts on communities, land use, wildlife, and ecologies: Each relevant jurisdiction should pay greater attention to the combination of impacts from multiple drilling, production, and delivery activities (e.g., impacts on air quality, traffic on roads, noise, visual pollution), and make efforts to plan for shale development impacts on a regional scale. Possible mechanisms include:
Use of multi-well drilling pads to minimize transport traffic and need for new road construction;
Evaluation of water use at the scale of affected watersheds;
Formal notification by regulated entities of anticipated environmental and community impacts;
Preservation of unique and/or sensitive areas as off-limits to drilling and support infrastructure as determined through an appropriate science-based process;
Undertaking science-based characterization of important landscapes, habitats and corridors to inform planning, prevention, mitigation, and reclamation of surface impacts; and
Establishment of effective field monitoring and enforcement to inform ongoing assessment of cumulative community and land-use impacts.
The Subcommittee report also recommends the establishment of a shale gas industry production organization dedicated to “continuous improvement of best practices.” These best practices should initially focus on: (a) reductions in emissions of pollutants and methane from shale-gas production and delivery activities, (b) establishment of an emission measurement and reporting system at various points in the production chain, (c) casing and cementing standards, to include use of cement bond and other completion logging tools, and (d) minimizing water use and limiting vertical fracture growth. The Subcommittee recommends that these best practices should be deployed nationwide but that they should be implemented “through regional mechanisms that recognize differences in geology, land use, water resources, and regulation” — a statement that suggests the Subcommittee believes that state oil and gas commissions should retain primary responsibility for regulating hydraulic fracturing.
The report is likely to guide the debate regarding how hydraulic fracturing should be regulated until the comprehensive study now being performed by the U.S. Environmental Protection Agency is released in late 2012 or early 2013. Overall, the Department of Energy report recognizes that the development of the nation’s shale gas resources has been beneficial on many fronts, and it expresses the opinion that continued development can occur with minimal environmental impact as long as appropriate safeguards are employed.
A complete copy of the Subcommittee’s report can be accessed here.
For more information, please contact Vinson & Elkins lawyers Larry Nettles or Jim Thompson. Visit our website to learn more about V&E’s Environmental practice, or e-mail one of the practice contacts.