Natural gas regulators and the hydraulic fracturing industry must uniformly adopt best practices and rules to protect the environment in order to “meet the needs of public trust.”
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That’s the conclusion of a Secretary of Energy Advisory Board (SEAB) panel from a draft report released today. The panel does not call for a federal takeover of hydrofracking regulation, as many environmentalists advocate, but it does stress that natural gas drillers cannot thrive without acquiring and retaining public acceptance.
The panel urges improved public communication and state regulation, adoption of “best practices” for air and water quality by both industry and regulators, full public disclosure of fracking chemicals, and more industry and federal research on fracking’s potential environmental effects.
Balancing Act
The panel’s job was to recommend near-term steps, while the Environmental Protection Agency is studying whether the technique causes environmental problems and needs new rules. The panel’s recommendations followed analysts’ expectations, particularly disclosure of the fluids injected deep underground.
But Teri Viswanath, director of commodity strategy with BNP Paribas in Houston, said the recommendations seemed a “very weak follow-through” and questioned whether they could “restore public faith.”
Environmental practices vary widely among drillers, she noted, and “it’s important to get it right” for the whole industry since shale gas offers the promise of low-cost energy to “reinvigorate” American industry.
Fuel Domination
Hydrofracking and horizontal drilling have been the technology innovators allowing producers to tap natural gas reserves in shale rock formations. In less than five years, according to federal figures, shale production has risen to 30% of US natural gas supply. The sudden abundance has also depressed the price of natural gas for the near term.
For more on the impact of low natural gas prices on energy markets, read: Natural Gas Review, Boring Is Beautiful.
That low price has enticed electricity generators looking for replacement fuels for older coal plants as pollution rules make them more expensive. The spectre of new federal regulation, particularly in the water quality area now delegated to states, raised concern natural gas prices would rise again just as demand increases.
But hydrofracking has also mobilized environmental opponents, who claim it threatens drinking water. While there was limited controversy as the technology spread in Texas, Louisiana and Arkansas, it leaped onto the national stage when drilling activity picked up in the Northeast. New York temporarily banned it, but hundreds of wells have been drilled in Pennsylvania coal country.
Read more on the controversy over fracking in New York in Pataki Gets Presidential.
States now issue drilling permits under varying regimes. The panel urged better communication among regulators and uniform use of current interstate information data bases and exchanges. “Best practices” are recommended not just for industry but also for regulators, and the industry is urged to form a safety institute “dedicated to continuous improvement of best practices.”
The report also urges extensive data collection and research. Many complaints about environmental harm from fracking can’t be established because there’s no pre-drilling environmental data. The panel wants that testing required before drilling.
It also said cumulative environmental impacts of multiple drill sites should be considered, “best practices” required for cementing and casing to prevent well leaks, recording of all water transfers required, state inspections made on-site at “safety-critical stages” of well drilling, and diesel fuel, with its higher pollution output, banned for surface machinery.
Asking The Right Questions
The panel found no evidence that hydrofracking deep underground leaks methane into water reservoirs, but called for more funding for federal research, as well as more industry research and data collection, to make sure all environmental impacts are known and accounted for.
The panel is already under attack from hydrofracking opponents, some scientists and some New York lawmakers, who allege five of six panel members have ties to the gas industry. The one member to mostly escape criticism so far has been Fred Krupp, head of the Environmental Defense Fund. Today’s report was approved unanimously.
The panel’s report now goes to the SEAB, which is to make it final in November.
Photo Caption: (Left – Right) Baker Hughes U.S. Pressure Pumping Vice President Fred Toney, Exxon Mobil Environmental Policy and Planning Vice President Sherri Stuewer, Anadarko Operations Vice President Jim Kleckner, Natural Resources Defense Council Executive Director Peter Lehner, and Trout Unlimited Government Affairs Vice President Steve Moyer participate in a forum on ‘Natural Gas Hydraulic Fracturing on Public Lands’ at the Department of Interior November 30, 2010 in Washington, DC. The forum, on the process in which rock is fractured to access gas wells, included government officials, representatives of the oil and gas industry and environmental advocates.
