Archive for the ‘Fracking’ Category

New Study by University of Texas Gives Fracking Advocates New Ammo

Bad news for fracking naysayers: it seems they may have lost a significant card in their deck, as a new study published early this week in the Proceedings of the National Academy of Sciences suggests that the methane leaks from fracking sites, long cited as a major concern, may not be nearly as bad as anticipated by the EPA and others. The study, sponsored by both the Environmental Defense Fund (representing the belief that shale gas extracted from fracking may in fact be more environmentally sound and thus a better short term fuel solution than coal) and nine petroleum companies (whose participation is perhaps more dubious), concludes that the sum total of methane (a toxic greenhouse gas, as we all know by now) leaking from the 190 onshore natural gas sites and 500 wells surveyed in the study is decidedly lower than expected, while still certainly within the realm of “significant.”

What does this mean for the future of fracking? Well, the EPA has already imposed regulations requiring additional control over methane leaks, and many companies have already begun imposing stricter controls over escaped green house gases. However, as Peter’s post from yesterday points out, it would seem we still have a long way to go before reaching anywhere near “total control.”


Do We Have Your Attention Now?

via WikiMedia Commons

via WikiMedia Commons

Depend upon it, sir, when a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully. – Samuel Johnson

Nobody ever said it would be easy. There’s lots of natural gas in the ground. We’ve been siphoning it up from the ground for years. But supplies dwindled as traditional fields yielded less and less gas. Fracking has brought a new production bonanza to states around the Union. Inevitably, protests have come hand in hand with increased production. This summer has been dubbed #FearlessSummer by environmentalists opposed to the extraction and carbon energy industries.

Fracking is dirty work. It can pollute ground water, endangering wells and agricultural water, and it produces a tremendous amount of waste. The byproduct of fracking is a wicked stew of proprietary chemicals and water used to force natural gas out of its ancient hiding places underground.

One of the sources of particular ire in the environmental circles is the seeming impunity with which energy companies have been able to pursue natural gas over hill and under dale. The companies rely on eminent domain to site their drilling rigs, and have been largely shielded from liability for environmental damage they have caused while feeding the country’s unquenchable demand for energy.

XTO Energy, a subsidiary of ExxonMobil settled with the Environmental Protection Agency over a 50 thousand gallon spill of fracking slurry at one of its storage tanks in Pennsylvania. Without admitting liability, it agreed to pay a $100,000 fine and implement a more rigorous waste water management regime. It also hauled away some 3,000 tons of contaminated soil.

All well and good as far as the Feds and XTO were concerned. Environmentalists,  not so much. Also not so pleased – the Pennsylvania state Attorney General. Last Tuesday, Attorney General Kathleen Kane filed criminal charges against XTO over the 2010 spill. Not civil. Criminal. That’s a first. No other Marcellus Shale production company has ever faced criminal charges.

Environmentalists are giddy over the prosecution, comparing it to the genteel supervision the company has received from state regulators. Energy industry representatives went ballistic, as well they might, accusing Kane of doing some polluting of her own – of the business environment – and sending a “chilling message” to the energy business.

But Kane’s office insists it wasn’t going off half-cocked. “The prosecutorial powers of this office are used carefully and with great consideration,” First Deputy Attorney General Adrian R. King Jr. said through a spokeswoman. “We closely examine the facts and the applicable law in each case and proceed accordingly.” And Kane’s office didn’t arrive at the charges by itself. It was a grand jury that handed down the charges.

Settlements like the one XTO reached with federal regulators are just a cost of doing business for an enormous company like ExxonMobil. Criminal charges, on the other hand, take the risk/benefit calculation to a whole new level. The Pennsylvania charges have ignited a furor and are sure to be fought by an industry red in tooth and claw. But as the good doctor observed to his friend Boswell, the gallows sharpens the mind. The prospect of standing in the dock is likely to do the same for the captains of the energy industry.



More Fracking Squabbles in Wyoming

Photo by Wikimedia Commons. Some rights reserved.

Photo by Wikimedia Commons. Some rights reserved.

Natrona County District Judge Catherine Wilking dealt a blow to Wyoming denizens (Wyomingites?) seeking specific information on chemicals currently being pumped into the ground that could be potentially harmful to the environment. Essentially, the court in Casper ruled in favor of the state of Wyoming, which already has the sought-after intelligence about these chemicals (thanks to a 2010 rule in which Wyoming became one of the first states to require fracking companies to disclose their ingredients to the state government) but refuses to share this information with the general public.

A bit of background: the chemicals in question are used by mining companies to lubricate the cracks in the earth created by hydraulic fracturing (fracking), so that loose sand will pour in and hold the cracks open, to more easily access the natural gases beneath. Environmentalists across the globe have grave concerns about the environmental consequences of fracking, as readers of this blog already know. Wyoming itself is already on red alert with the EPA regarding what kind of permanent damage is being done by fracking to its groundwater. So, the demand by environmental groups to publicly release the ingredients of these fracking fluids does not seem inherently unreasonable to me, and yet the court found otherwise, on the grounds that the ingredients are trade secrets that are protected from disclosure under Wyoming’s open records laws. Environmentalists argue that they have strong claims to the information, as it could help prevent irreversible pollution damage.

While environmentalist groups debate taking the case to a higher court, James Fallow, in a fascinating Q&A with the Atlantic, argues that asteroid mining within the next century could save the environment.

Fracking Updates in NY, IL, and MN

Probably not the best sand for fracking. Photo by Sharon Mooney, some rights reserved.

A quick update on fracking regulations at the state level around the country: The New York State Assembly passed a two-year moratorium on high volume hydraulic fracturing, which must now go before the Senate, then Governor Andrew Cuomo. The bill also would require the State University of New York to conduct a review of high volume fracking. The Assembly’s bill follows similar moratoria passed in 2010 and 2011 that went nowhere in the Senate; however, the political makeup of the Senate makes the bill’s passage more likely this year.

Governor Cuomo’s administration is awaiting its own health impact study of fracking before proceeding with the Department of Environmental Conservation’s fracking regulations. This regulatory review process has already resulted in what is essentially a five-year ban on fracking. DLA Piper, whose memo gives the details on the moratorium, sees the prospects for shale gas production in New York to be low.

In contrast, Illinois, after five months of negotiations between environmental groups and the energy industry, has worked out draft regulations on fracking. The Natural Resources Defense Council stepped in to ensure that drillers were liable for water pollution and that they disclosed the chemical makeup of fracking fluid, among other safeguards.

The makeup of the fracking fluid that is injected to extract shale gas has been a hot topic recently, but a few Minnesota towns are making news by rejecting Minnesota Proppant’s proposal to open a sand processing and rail-loading facility. The sand near St. Charles Township in southeastern Minnesota is just the right size and strength to wedge open cracks just enough for natural gas to escape. And after St. Charles Township rejected their proposal, next-door St. Charles did the same. Supposedly Wisconsin has been more pro-sand mining in the past, but there is some evidence that it might not be smooth sailing there, either, as the town of Bridge Creek rejected similar plans for a sand mine there.

Is U.S. Natural Gas Boom Due to Good Government?

Photo by Dru Bloomfield, some rights reserved.

The economics of the energy industry are perennially unstable due to resource availability and regulatory uncertainty, and we are barraged with data about the latest developments every week. Haynes and Boone just released a memo detailing that oil and gas companies paid landowners $21 billion in 2010, and we have written about the average cost of producing oil in the Arctic versus in the Gulf of Mexico and West Africa. Often it is useful to look at all these developments with a different perspective in mind.

Today’s post looks further at the reasons for the U.S.-led surge in shale drilling, considering the arguments of BP’s chief economist that stable property rights in addition to “open access and sound government” – as opposed to dumb luck and fortunate geology – unleashed the recent boom in natural gas extraction. Evidence he offers to support this claim is that natural gas drilling has not taken off outside North America. India and parts of Latin America and Africa also have generous supplies of accessible shale gas, but the market pricing of energy and private-sector drive in the U.S. have enabled natural gas development to become a natural gas boom unlikely to be copied elsewhere anytime soon.

The answers to the questions these politically-driven tidbits touch on will require some serious economic analysis, but still they are a useful reminder that geology is not the only factor in the cost of energy extraction. While production costs in the Arctic may be so much higher than in West Africa for reasons of the physical difficulty of drilling, Canadian and American market pricing, infrastructure, and private property rights certainly drive some of the natural gas industry’s ability to expand so quickly.

What the Frack?

The Associated Press revealed on Wednesday that it discovered the EPA had evidence indicating that a major drilling company was responsible for contaminating drinking water at homes near its operation. When the EPA moved against the company, however, it threatened not to cooperate in a large-scale study of fracking within the industry. Soon after, the EPA ceased investigative activity directly targeting the company. Yet at one point, the agency was so concerned about the local water quality that it issued an Imminent and Substantial Endangerment Order regarding the situation. The order was later retracted.

The Scramble to Regulate Fracking

North Carolina, now open for fracking. Photo by US Fish and Wildlife Service, some rights reserved.

As the risks and potential benefits of fracking become impossible to ignore for local and state governments, communities are taking action to address the shale gas development that seems inevitable in many places. At the state level, North Carolina’s legislature voted to override Governor Beverly Perdue’s veto of Senate Bill 820, opening the doors to fracking and shale gas development in North Carolina and establishing a regulatory framework. In addition, Colorado local governments are attempting to address air quality issues from hydraulic fracturing and imposing temporary moratoriums.

In North Carolina, Governor Perdue vetoed the fracking legislation for its inadequate environmental protection, though she expressed support for shale gas development in general. To override a veto requires a two-thirds majority vote in both chambers of the General Assembly. The Senate voted 29 to 13 to override the veto, and with Republicans needing every last vote in the House of Representatives, a five-term Democrat accidentally pushed the wrong button to open the state to fracking. A do-over was not granted, perhaps because the vote took place late Monday night in a marathon 36-hour legislative session. Details on the legislation can be found in a McGuireWoods memo here.

Separately, (thanks to a Davis Graham & Stubbs memo for its insight) local governments in Colorado have imposed temporary moratoriums banning fracking until better regulations addressing air quality and other environmental impacts are developed. Localities in Colorado cannot ban oil and gas operations altogether, but many are stepping up their efforts to regulate environmental impacts associated with oil and gas operations, an area whose jurisdiction is uncertain. Colorado and other states are trying to pass statewide legislation to preempt local regulation, but the jurisdictional uncertainty remains for now.

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