New Fracking Rules Unveiled for Federal Lands

By on March 30, 2015

On March 26, 2015, the Department of the Interior Bureau of Land Management (“BLM”) published its long-awaited final rule regarding hydraulic fracturing (“fracking”) in the Federal Register, which becomes effective 90 days after publication, on June 24, 2015.  The new rules mark the first update to federal fracking standards in more than 30 years.  The new rules are effectively the first rules that squarely address horizontal hydraulic fracturing, as the technology did not exist in present form when the old rules were enacted.

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Fracking is an increasingly common, and politically polarizing, method for extracting fossil fuels.  At bottom, fracking is a drilling technique used to recover gas and oil from shale rock.  The process involves drilling into the earth and then injecting a high-pressured cocktail of water, sand, and chemicals down and eventually across horizontally drilled wells.  The pressurized liquid fractures the subsurface rock, which consequently releases trapped oil and gas that is eventually pumped back to the surface.

Fracking is credited with advancing the recent U.S. “energy renaissance,” which has reduced oil prices to a two-decade low and allowed the U.S. to double its oil production from 2008 to 2015.  In fact, the U.S. is now poised to become the world’s largest producer of oil and gas.  Fracking is not without harsh and staunch critics, however, and the process has raised concerns among some regarding alleged contamination to groundwater, waste disposal, and the public’s exposure to toxic chemicals.  Ardent opponents also point to air emissions and climate change, excessive water consumption, and even the increased risk of earthquakes.  A recent Gallup poll suggests that Americans are equally divided on the use of fracking as a means of increasing natural gas and oil production in the U.S.

These concerns prompted several years of debate, culminating in the BLM’s final rules.  The BLM intends
for the new rules to “serve[] as a much-needed complement to existing regulations designed to ensure the environmentally responsible development of oil and gas resources on Federal and Indian lands, which were finalized nearly thirty years ago, in light of the increasing use and complexity of hydraulic fracturing coupled with advanced horizontal drilling technology.”  The BLM’s final rules are the first set in what is expected to be a series of federal rules governing fracking.

In sum, the new standards impose numerous new requirements on companies.  The hallmarks include:

  • Companies must publicly disclose additive chemicals used in the fracking process on FracFocus, which is an industry-run website, within 30 days of completing fracking operations.  This requirement, however, has already been adopted by many states that have examined the issue.
  • Companies must allow government employees to inspect and validate (1) the safety of the concrete barriers lining fracking wells, and (2) chemicals being stored at the fracking site.
  • Companies must adhere to new requirements and specifications or how to safely dispose of contaminated water.
  • Companies must submit detailed information about every proposed operation, including the location of faults and fractures, the depths of usable water, and the depth of estimated volume of fluid to be used.
  • Companies must submit detailed information about the geology, depth, and locations of already exiting wells.

Despite what many perceive as laudable objectives, the fear among oil and gas companies is that the BLM’s new rules will drastically increase production costs (thereby adversely affecting oil prices), as well as stifle energy development.  Indeed, the American Petroleum Institute (“API”), relying on research and consulting firm Advanced Resources International, analyzed a draft of the final rule and “estimate[d] that the total costs associated with this rule could range from $30 million per year to $2.7 billion per year.”  The API suggests that the requirement of “cement evaluation logs” (“CELs”) on surface and intermediate casing before beginning the fracking process as a source of added cost.  The Western Energy Alliance (“WEA”)—whose members include ConocoPhillips, Halcon Resources Corp. and QEP Resources Inc.—relying on an economic research firm’s analysis, provided a more focused prediction that the added cost of compliance would be $97,000 per new well, or $345.592 million annually.  The WEA warns that considerable costs will emanate from initial delay costs, administrative costs, enhanced casing costs, cement log costs for “well types,” and cement log delay costs.  Although energy trade associations are still assessing the precise costs of the new rules, many expect that the associated costs will greatly exceed the BLM’s rather conservative estimate of $11,400 per well, or $32 million annually.

The new rules have already prompted several lawsuits challenging their legality, characterizing them as “arbitrary and unnecessary burdens” that are “a reaction to unsubstantiated concerns.”  One lawsuit was filed by the Independent Petroleum Association of American and the Western Energy Alliance.  Another was filed by the State of Wyoming.  These parties are significant stakeholders that have a sizeable presence on federal lands, and consequently they have a lot to lose with the increased cost of compliance with the new rules.  Even for those entities intent on compliance, the new rules are lengthy and complicated, and will require legal consultation with attorneys specializing in the area.

As a final and important note, the rules apply to fracking on federal lands, which accounts for only approximately 10 percent of all fracking nationwide and 5 percent of all domestic oil production.  The states have jurisdiction over fracking on state-owned and private land, and thus the BLM’s new rules do not apply.  Accordingly, these rules do not affect the vast majority of U.S. fracking operations.  Nonetheless, the BLM hopes that its new rules will eventually serve as a model and legislative benchmark for states seeking to regulate the fracking industry within their borders.

Filed under Advanced Resources International, American Petroleum Association of America, American Petroleum Institute, Bureau of Land Management, Climate Change, Department of the Interior, fossil fuels, Fracking, Groundwater Contamination, Hydraulic Fracking, Hydraulic Fracturing, Western Energy Alliance

U.S. Department of Energy Study Says Fracking Does Not Cause Water Pollution

By on October 9, 2014
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On September 15, 2014, the U.S. Department of Energy’s National Energy Technology Laboratory (DOE) released a report of a major federal study titled “An Evaluation of Fracture Growth and Gas/Fluid Migration as Horizontal Marcellus Shale Gas Wells Are Hydraulically Fractured in Greene County, Pennsylvania.”  The study concluded that there was no evidence that hydraulic fracturing (fracking) caused the contamination of drinking water at a study location in Pennsylvania.

Fracking is a method of extracting oil and gas deposits that are inaccessible by conventional drilling. Fracking uses millions of gallons of high-pressure water mixed with sand and chemicals to break apart rocks rich in oil and gas. Fracking has become increasingly common over the past decade and is largely responsible for the current energy boom in the United States, but the practice has led to concerns regarding potential groundwater contamination.

ETT BLOG_frackingAfter studying one particular site in western Pennsylvania for 18 months, the DOE determined that neither fracking chemicals nor brine water from the gas drilling process had contaminated area drinking water.  The report said that the chemicals used in fracking remained approximately 5,000 feet below drinking water supplies.  The study marked the first occasion where a company agreed to have its fracking operations independently monitored.

The DOE acknowledged, however, that fracking at other sites may have different results due to variation in geology or drilling methods.  The site studied by the DOE was limited to six wells at one location in western Pennsylvania.  It should be noted that Pennsylvania regulators have noted instances where surface spills of chemicals or wastewater damaged drinking water supplies.

At the same time the DOE study was released, scientists from Duke, Ohio State, Stanford, Dartmouth and the University of Rochester released a study in Proceedings of the National Academy of Sciences titled “Noble gases identify the mechanisms of fugitive gas contamination in drinking-water wells overlying the Marcellus and Barnett Shales.”  The study, which took place in the Marcellus Shale in Pennsylvania and in the Barnett Shale in Texas, concluded that defective construction of the wells caused pollution, but not the fracking process itself.  This study focused on 113 drinking water wells in Pennsylvania and 20 wells in Texas that were known to have elevated levels of methane.  An analysis of gas geochemistry data implicated leaks through annulus cement in four cases, production casing in three cases and underground well failure in one case.  The study authors concluded that gas migration induced by fracking deep underground was not found to be a cause of contamination.

These studies suggest that the use of fracking as a method of extracting oil and gas deposits is not responsible for groundwater contamination.  In those rare instances where groundwater contamination occurs, it is more likely due to faulty well construction rather than gas migration induced by fracking, which takes place far below any drinking water aquifer.  The concerns identified in the universities’ study are not unique to fracking, but to oil and gas exploration generally.

Filed under Fracking, Groundwater Contamination, Hydraulic Fracturing

Environmentalists Support Fracking But With Important Reservations

By on January 24, 2014

It is necessary that natural gas be substituted for coal and oil as an energy source if the world is to have any chance of avoiding runaway greenhouse gas (“GHG”) emissions, particularly from the developing world.

At present, it is unrealistic to expect renewable energy sources (solar, wind and geothermal) to serve as a foundation for national energy policy. In the United States, even with the best use of conservation, energy efficiency and renewables, the combination of these various “alternatives” will not become a substitute for fossil fuels for a very long time.

In a thoughtful article in the New York Law Journal on January 2, 2014, titled  “Countries Approach Fracking With Interest and Caution,” Stephen L. Kass, makes the case that natural gas from hydraulic fracturing should be an important component of a comprehensive energy strategy, both in the United States and abroad.  According to Kass, fracking is attractive to: (1) economists seeking to stimulate development; (2) national security officials seeking independence from unreliable oil suppliers; and (3) environmentalists who seek to avoid runaway GHG emissions, particularly from developing countries.

In the United States, fracking now accounts for a staggering 25% of domestic natural gas (a figure expected to rise to 50% by 2035). In addition to lowering energy costs, according to Kass, fracking is widely credited with reducing U.S. “carbon intensity” and GHG emissions.

Fracking places the environmental community between the proverbial rock and a hard place. On the one hand, environmentalists recognize that fracking offers enormous environmental benefits in terms of reduced GHGs. On the other hand, environmentalists continue to be concerned that fracking fluids may contaminate precious water sheds.

Therefore, it is the goal of the environmental community that the amount of water used in fracking be minimized through recycling, that double-walled drill shafts and other controls be effectively utilized to minimize fugitive methane releases, and that waste fluids be adequately treated on-site before being recycled, discharged to water treatment plants or re-injected. The oil and gas industry’s refusal to disclose the composition of its fracking fluids has become an unnecessary distraction from these key environmental concerns.

In the long run, environmental concerns are likely to be largely addressed by increased and more effective regulation and by self-policing by industry. From the standpoint of providing an inexpensive fuel to tens of millions of American homeowners, the stakes are simply too high for environmentalists, who support fracking with these reservations, to concede defeat. As industry continues to demonstrate that fracking can be performed in a safe and environmentally sound manner, opposition to the practice will most likely diminish.
 

Filed under Fracking, geothermal, GHG, greenhouse gas emissions, Hydraulic Fracturing, Oil & Gas, renewable energy sources, solar, Stephen L. Kass, substituting natural gas for coal and oil, wind Tagged with

NYS Hydrofracking Moratorium: No End In Sight

By on August 16, 2013

The NYLCV’s eco politics daily reported this morning that Governor Andrew Cuomo will not reach a decision on whether to allow fracking in New York until the NYS Department of Health releases its long-awaited study concerning fracking’s health effects.

On Monday, Gov. Cuomo spoke with Susan Arbetter of NCYN’s Program, "The Capitol Pressroom".  He acknowledged that while fracking could have economic benefits for upstate New York, the accompanying health and environmental impacts were not insignificant and he was not prepared to condemn or condone the practice before knowing the full consequences of such action.

At the same time, the DEC is in the process of collecting information on a comprehensive exploration of environmental impacts for which fracking opponents and supporters have been anxiously.  The five year moratorium on hydrofracking in New York is a hot button issue in New York’s gas-rich Southern Tier, where the economy could use the boost that natural gas exploration could provide. 

According to Debbie Preston, Broome County Executive, "We won’t be silenced and we won’t stop fighting for our future until we are start drilling here in New York state”.  In an article by Elyse Michalonis, dated July 23, 2013, appearing in YNN, state legislators in the area compare the boom economy in neighboring Pennsylvannia with the absence of growth in New York.   "If you go down to Pennsylvania, travel around, it’s a booming economy, things are happening. There’s new roads and buildings. They’re thriving. We’ve got people in this area driving there, because that’s the only place to get a job,” said Assemblyman Clifford Crouch.

 

Filed under Broome County, Debbie Preston, Broome County Executive, DEC, eco politics daily, Fracking, Governor Andrew Cuomo, Hydraulic Fracturing, hydrofracking, moratorium, New York State, New York State Department of Health, Oil & Gas, Southern Tier, Susan Arbetter, York Tagged with ,

Among Environmentalists, Hydrofracking Is Not A “Yes Or No” Issue

By on April 11, 2013

On April 10, 2013, I participated in “Justice Speaks,” an event sponsored by the Justice Action Center at New York Law School on hydraulic fracturing.

 Joining me on the podium was Daniel Raichel, a Project Attorney with the Natural Resources Defense Council (“NRDC”), and the lead attorney with the newly formed Community Fracking Defense Project. Pursuant to this initiative, NRDC provides legal assistance to towns and local governments in potential shale drilling zones upstate that seek to prohibit hydrofracking in their communities.

 My presentation concerning hydrofracking centered broadly around the following points:

1.  The technology under discussion, by which oil and gas is extracted from shale deposits, is a game-changer. Due to technological advances, the use of horizontal drilling and hydrofracking has had a transformative effect on oil and gas exploration;

2.  The discussion over hydrofracking is not merely an environmental debate. What is at stake has important economic and social implications, not just for the United States, but for the entire world. The extent to which this technology can make the United States energy independent has significant national security and foreign policy ramifications.

 3.  Among mainstream environmentalists, hydrofracking is no longer a “Yes/No” question. Both industry and the environmental community recognize a need for more comprehensive regulation and environmental oversight. This recognition has resulted in significant joint efforts to develop standards and best practices.

The players on both sides of the debate have come together to find common ground. For example, a partnership has emerged between energy firms involved in hydraulic fracturing, including Chevron and Royal Dutch Shell, and environmental groups that are often opposed to fossil fuel development, including the the Environmental Defense Fund, the Clean Air Task Force, and the Group Against Smog and Pollution.

These entities jointly established the Center for Sustainable Shale Development (“CSSD”), which will provide independent and voluntary evaluations and certifications of shale gas developers. CSSD will establish standards to limit flaring, maximize water recycling, and reduce the toxicity of injection fluids, among other initiatives.

There is recognition by both the environmental community and industry that industry made a number of missteps early on and did not do as good a job as it could have in bringing this new technology online. Part of the problem was that regulators in many states were overwhelmed by the increased industrial activity and did not have the manpower or the necessary regulations on the books to properly oversee the activity that was occurring. Another problem was that the horizontal drilling technology was developing so rapidly. However, as public scrutiny on horizontal drilling has increased and as the industry has become more mature with the passage of time, the likelihood of serious environmental problems occurring due to hydrofracking has significantly diminished.

Mr. Raichel argued convincingly that there remain many gaps in regulatory oversight of hydraulic fracturing, particularly in existing statutory schemes such as the Clean Water Act and the Clean Air Act. However, New York’s deliberate and painstaking approach to understanding the potential impacts of hydrofracking on human health and the environment will  hopefully result in a well-regulated program once permits are issued and gas exploration finally gets off the ground.

Filed under envrionmental concerns, Hydraulic Fracturing, New York State' 'Justice Action Center' 'New York Law School' 'Center for Sustainable Shale Develo, Oil & Gas, question" Tagged with

Hydrofracking And The Debate Over Municipal Infrastructure

By on March 5, 2013

On February 11, 2013, the IADC conducted a lively, interactive panel discussing the risks and benefits of shale oil and gas extraction at the IADC Mid-Winter Meeting. The panel represented the spectrum of political, regulatory and scientific views on the issue and debated perceived potential risks to human health and the environment.

In addition to me,  the panel consisted of Blaine D. Edwards, Assistant General Counsel at Superior Energy Services, Inc.; Raymond G. Mullady, Jr., a partner at Blank Rome LLP in Washington, D.C.; and Niall A. Paul and Nathan D. Atkinson, partners at Spilman Thomas & Battle PLLC. Eric Lasker at  Hollingsworth LLP in Washington, D.C. assisted in the preparation and coordination of the event.

Ray Mullady presented his paper, “Defending Marcellus Shale Groundwater Contamination Claims: The Case Against Class Actions and Other Theories of Liability,” which he co-authored with other lawyers at his firm. I presented my paper titled, “Shale Oil and Gas Development: The Stakeholder Perspective.”

My paper concerning stakeholder perspectives was presented against the backdrop of the debate in New York concerning whether to permit fracking to occur. In researching this issue, I learned that some stakeholders representing county and municipal interests expressed deep concern regarding perceived secondary societal impacts of fracking, including diminution of property value; increased demands placed on community infrastructure, particularly roads; increased crime rates and rental prices associated with an influx of out-of-state workers; and the fragmentation of rural landscapes with pipelines, roads and staging areas. Surprisingly, for these stakeholders, these concerns outweighed environmental or health concerns.

These stakeholders express deeply held fears – whether rational or not – that gas exploration will be detrimental to their established way of life in rural upstate New York.
The natural gas industry possesses both the science and the practical know-how to be confident that fracking can be performed without causing the contamination of groundwater and surface water. However, social concerns raise questions beyond purely environmental issues. In a largely rural region that is unaccustomed to the perceived sprawling industrial impact of natural gas drilling, unlike other parts of the country, there is apprehension that adverse societal effects may outweigh the predicted economic benefits.

There are a number of tools an industry can utilize to address concerns over infrastructure impacts of hydrofracking. Better public relations to win over the hearts and minds of upstate New Yorkers is paramount.  Perhaps because public relations efforts have not been necessary in other areas of the country long accustomed to natural gas exploration, there may not have been a perceived need for PR in upstate New York.  

Explaining how horizontal drilling works is an important first step in reassuring folks that gas exploration will not bring about an end to their semi-agrarian way of life.  For example, there is a superb animation that explains how horizontal drilling works on the website of the Oklahoma Oil & Natural Gas Producers & Royalty Owners.  In the immediate vicinity of drilling operations, companies can provide, among other things, Value Assurance Programs (“VAPs”) to homeowners to protect them against diminution of property value as a result of their living in an area where industrial activity is taking place. As discussed in other articles on this blog, a VAP is a contractual commitment to the community that assures homeowners that the proposed activity will not result in loss of investment in their homes.  

Any day now, the blue ribbon panel appointed by NYS Health Commissioner, Dr. Nirav Shah, to assist in the NYSDOH’s consideration of the health risks of fracking, will issue its report.  The panel experts – Lynn Goldman, dean of George Washington University’s School of Public Health and Health Services; John Adgate, chair of the Environmental and Occupational Health Department at the Colorado School of Public Health; and Richard Jackson, chair of the Department of Environmental Health Sciences at UCLA’s Fielding School of Public Health – are among the foremost experts in the country in their respective fields and in the field of health impact assessment. Environmental advocacy groups, including NRDC, were extremely pleased with these appointments. It is likely that the issuance of the panel’s report will re-energize the hydrofracking debate.

Filed under Blaine D. Edwards, Diminution of Property Value, Energy, Eric Lasker, Hydraulic Fracturing, IADC, Nathan D. Atkinson, Nuisance, Paul', public, Raymond G. Mullady, Jr, Services, stakeholders, value assurance programs Tagged with ,

Hydrofracking And The Battle Over Water In South Texas

By on October 10, 2012

In an article titled, “Introduction to Hydraulic Fracturing Natural Gas Exploration,” Rebecca Jo Reser, an IADC member and partner at the San Antonio, Texas law firm of Davidson Troilo Ream & Garza, discusses the potential burden that hydraulic fracturing imposes on water resources in South Texas.  In areas of South Texas stricken by drought, the issue of water allocation balances signficant strides in economic development and employment attributable to energy exploration and the interests of growers and others who fear that fracking activity may draw down too large a share of scarce water resources.

According to Reser, hydrofracking drilling and production companies compete for scarce water supplies in areas of South Texas,particularly in the Eagle Ford Shale, where drought has resulted in widespread pasture losses, crop failures and shortages of water in reservoirs, rivers and wells.   Based upon the tone of the article, it would appear that the battle lines are being drawn in Texas along the fault lines of this issue.

 Reser writes, "In an area known for drought and scarcity of water, the fact that this much valuable water will be pumped out, used and then disposed of forever in deep injection wells is something every South Texas resident should be concerned about."

But Chesapeake Energy, an energy company involved in deep shale development in the Eagle Ford Shale, strongly disputes that industry is using too much of the area’s water supply. According to a Chesapeake Energy Fact Sheet, the volume of water necessary to drill and fracture Eagle Ford deep shale wells represents a very small percentage of the total water resources used in the Eagle Ford Shale.

Citing Texas Water Development Board statistics, Chesapeake Energy states that the primary water users in Eagle Ford Shale are irrigation (approximately 70%) and municipal/public water supply (approximately 26%). Moreover, the company observes that its operations differ notably from other uses because it is temporary, occurring only once during the drilling and completion phase of each well. Unlike agricultural uses, use of this water does not represent a long term commitment of the resource.  According to a San Antonio Express-News article, last year, the Eagle Ford contributed $25 billion in total economic output in a 20-county South Texas region and provided 47,097 full-time jobs, according to statistics provided by UTSA. Thus, the econoimic benefits of drilling in Eagle Ford Shale are both measurable and significant.

Closer to home, in and around the Marcellus Shale region, the impact of water withdrawals for hydraulic fracturing on the Upper Delaware River and in the Delaware River Basin is the subject of ongoing investigation; however, the discussion has largely focused on environmental issues rather than on competition over scarce  resources.
 

Filed under Chesapeake Energy Corp, Eagle Ford Shale, Hydraulic Fracturing, IADC, Oil & Gas, Rebecca Jo Reser, Texas Water Development Board, water rights, water usage Tagged with

Public Comment For NYS’s Draft Hydro Fracking Draft Regulations

By on September 29, 2011

 

Recently, New York DEC issued its draft regulations for hydraulic fracturing based on the proposed requirements in the revised supplemental generic EIS released earlier this month. Public comment began yesterday and will run concurrently with the public comment period on the DSGEIS, which ends on December 12.  DEC  also released the proposed SPDES general permit for storm water discharges associated with hydraulic fracturing.  Public hearings will be held during November and here in New York on Nov. 30 at Tribeca Performing Arts Center. No permits can be issued for hydraulic fracturing until the SGEIS is finalized and the DEC issues the required Findings Statement.  The summary of express terms can be found on the DEC website at  http://www.dec.ny.gov/regulations/77373.html

Filed under DEC, Hydraulic Fracking, Hydraulic Fracturing, NYDEC, Oil & Gas, public comment, Regulations Tagged with

Gas Drillers To Disclose Fracking Chemicals

By on June 20, 2011

The Wall Street Journal reported today that Texas Governor Rick Perry signed into law Friday a bill that will require companies to make public the chemicals they use on every hydraulic fracturing job in the state.  Texas’ law is significant because the oil and gas drilling industry, which is powerful in Texas, vocally supported the measure.  Opponents to fracking in the Marcellus Shale region of  New York and Pennsylvannia have long accused the drilling companies of secrecy for failing to disclose the chemicals used in hydrofracking.  Widespread support for this measure, and similar measures in other states, provide some indication of just how untenable the industry’s former stance had been.  Fracking involves blasting millions of gallons of water, sand and chemicals into the ground to break up oil and gas-bearing rocks.  Environmentalists and residents in drilling areas fear that the fracking process may result in chemical contamination of drinking water aquifers.  Until now, industry’s argument that fracking is safe has been hamstrung by drillers’ refusal to disclose the chemicals used.  Going forward, the fracking debate can now refocus on the important issues, such as the likelihood that faulty well construction may result in contamination of an aquifer.  According to industry spokespersons, tens of thousands of wells have been drilled with relatively few problems.  In those rare instances where a problem has been reported, the industry believes that the problem is most likely attributable to an improperly constructed well.  Earlier this year, some of the larger gas producers, notably Chesapeake, Chevron and BP, announced that they would voluntarily begin to publicize the chemicals they use online at FracFocus.org. This website is a joint project of the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission.

Filed under Chesapeake Energy Corp, disclosure, FracFocus.org, Fracking, Governor Rick Perry, Hydraulic Fracturing, Oil & Gas, secrecy Tagged with , ,