Assessing Natural Gas' New Promises and Controversies:
Strategies to Improve the Safety &
Environmental Performance of Shale Gas
Extraction
Sue Tierney – Analysis Group
Wisconsin Public Utility Institute
University of Wisconsin, Madison – October 3, 2011
Wisconsin Public Utility Institute
Overview –
Shale Gas: Game Changer or Something Else?
Context for my comments
What’s going on with shale gas
Opportunities and challenges
What’s needed
October 3, 2011
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Wisconsin Public Utility Institute
Context for my comments:
SEAB Shale Gas Production
Subcommittee
 Presidential request to DOE
Sec. Chu (Blueprint for Secure
Energy Future Charge):
 Examine steps to improve the safety
and env’l performance of shale gas
extraction
 Not regulation, per se
 Initial report:
August 2011
 “90-Day Report”
October 3, 2011
mid-
National Petroleum
Council
 DOE Sec. Chu request to
NPC (Sept 2009)
 Assessment of the size of the oil and
natural gas resource base in North
America
 Assessment of the role of natural
gas in GHG reductions
 Report: Sept. 15, 2011
 “Prudent Development: Realizing
the Potential of
N. America’s
Natural Gas and
Oil Resources”
* Note: in the rest of the presentation, a report icon will show if
the information is from the SEAB or NPC report. Slides without
an icon do not reflect specific information from either report.
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Wisconsin Public Utility Institute
Natural Gas: Shale Gas
WHAT’S HAPPENING
October 3, 2011
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Wisconsin Public Utility Institute
What does shale gas look like? REGIONS
October 3, 2011
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Wisconsin Public Utility Institute
What does shale gas look like? PRODUCTION GROWTH
Shale plays
October 3, 2011
NPC, Prudent Development, 2011
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Drill site
Wisconsin Public Utility Institute
Stored water
Steel casing
and cement
Drinking water
Borehole
What does
shale gas
look like?
TECHNOLOGY
Hydraulic fracturing
Horizontal drilling
October 3, 2011
http://news.nationalgeographic.com/news/energy/2010/10/101022-energy-marcellus-shale-gas-rush/
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Wisconsin Public Utility Institute
What does shale gas look like? SURFACE ACTIVITIES
Perforation
7000 ft
Source: WRI, Adapted from Grandberg
October 3, 2011
2010
Note: Simplified process; illustrative use only
Shale
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Wisconsin Public Utility Institute
What does shale gas look like? SURFACE ACTIVITIES
October 3, 2011
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http://news.nationalgeographic.com/news/2010/10/photogalleries/101022-energy-shale-gas-drilling-pictures/#/energy-marcellus-shale-environment03-hallowich-dinner_27065_600x450.jpg
Wisconsin Public Utility Institute
What does shale gas look like? LAND USES
http://news.nationalgeographic.com/news/energy/2010/10/101022-energy-marcellus-shale-gas-rush/
October 3, 2011
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Wisconsin Public Utility Institute
What does shale gas look like? ENVIRONMENTAL RISKS
Phil Nguyen, Regulatory Options and Challenges in Hydraulic Fracturing, WISE, 2010
October 3, 2011
Risks from past
practices and
events
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Wisconsin Public Utility Institute
What does shale gas development look like? PAST, PRESENT WELLS
Total:
4.3 Million
Wells
Wells per 100 square miles
1-50
51-250
251-500
501-1000
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October 3, 2011
> 1000
NPC Report, Prudent Development, 9-15-2011
Wisconsin Public Utility Institute
What does shale gas look like? REGULATION
Mineral rights
(surface, subsurface)
are privately held
(except on federal and
other public lands)
NPC Study, Prudent Development, 2011
October 3, 2011
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Wisconsin Public Utility Institute
What does shale gas look like? PACE OF DEVELOPMENT
Permits for
drilling in
Pennsylvania
2007 - 2010
Source: “In the Shadow of the Marcellus Boom”, 2011.
October 3, 2011
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Wisconsin Public Utility Institute
What does shale gas look like? ATTENTION (+ and -)
October 3, 2011
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Wisconsin Public Utility Institute
What does shale gas look like? JOBS
Penn State – estimate 200,000 new jobs by 2020
Marcellus Shale Coalition: 2010 estimate:
 $11.2 billion in economic activity
 $1.1 billion in state and local taxes
Keystone Research
Center: 2010
 10,000 jobs created
October 3, 2011
http://www.theatlantic.com/technology/archive/2011/08/can-the-fracking-industry-self-regulate/243831/
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Wisconsin Public Utility Institute
SEAB: Environmental urgency:
Areas of concern:
 Water – possible pollution of drinking water (methane,
chemicals), water consumption, disposition/management
of flow back water
 Air pollution – GHG (methane), VOCs, ozone precursors
 Community disruption during shale gas production
 Preservation of unique and/or sensitive areas
 Cumulative adverse impacts (traffic, noise,
visual, odors, intensity) on communities,
ecosystems, wildlife
October 3, 2011
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Wisconsin Public Utility Institute
SEAB: Environmental urgency:
Perspective:
 There are serious environmental impacts underlying these
concerns
 These impacts need to be prevented, reduced and, where
possible, eliminated as soon as possible.
 Absent effective control, public opposition will grow, thus
putting continued production at risk.
October 3, 2011
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Wisconsin Public Utility Institute
Natural Gas: Shale Gas
WHAT’S NEEDED
October 3, 2011
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Wisconsin Public Utility Institute
Recommendations:
90-Day Report of the SEAB Shale Gas Subcommittee
(August 11, 2011)
 Better information about shale gas production operations
more accessible
 Immediate regulatory actions to reduce env’l and safety
risks
 Creation of a shale gas industry organization
 R&D to improve safety and env’l performance
October 3, 2011
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Wisconsin Public Utility Institute
SEAB Recommendations:
Regarding information disclosure


No economic or technical reason to prevent public
disclosure (except genuinely proprietary
information)

Base line conditions – pre-drilling

Chemical injections

Composition of flow back water

Disposition of water

Air emissions
Supported by a portal for access to a wide
range of public information
October 3, 2011
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Wisconsin Public Utility Institute
SEAB Recommendation:
Regarding improved regulation (not who, but what...)
Effective and capable regulation
 adequate regulatory staff at the state and federal level
 technical expertise to issue, inspect, and enforce regulations
 fees, royalty payments and severance taxes = sources of funding
Benchmarking needed for the efficacy of regulations
 Useful to disclose company performance and enforcement history
 Field studies of emissions (water, air).
Peer review of state regulatory practices:
 Better participation in STRONGER (more states & issues, more often)
 Industry & government should provide continuing
annual support for expanded Risk Based Data
Management System.
October 3, 2011
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Wisconsin Public Utility Institute
SEAB Recommendation:
Regarding improved environmental performance
Air Impacts:
 Enlist companies to design/implement data collection
(VOCs, methane)
 Encourage regulators to put in place better air emission
control systems using existing technologies
 Launch federal interagency effort to assess life-cycle of
GHGs
October 3, 2011
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Wisconsin Public Utility Institute
SEAB Recommendation:
Regarding improved environmental performance
Water Impacts:
 Measure/report background water quality, stocks and flows
 Manifest water transfers through process
 Adopt best practices for well development/drilling/construction/
completion
 Casing and cementing
 Pressure management
 Inspections
 Seismic stimulation (vertical depth of fractures)
 Field studies of methane and water interactions in certain
geological basis
October 3, 2011
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Wisconsin Public Utility Institute
SEAB Recommendation:
Regarding improved environmental performance
Diesel fuel
 No reason to use diesel fuel in fluids
Land Use Impacts:
 Notification of impacts – public process to assess, disclose
 Preservation of sensitive areas
 Use of various well-site designs (multi-well pads)
October 3, 2011
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Wisconsin Public Utility Institute
SEAB Recommendation:
Regarding improved environmental performance
Research and development
 Industrial R&D remains strong
 But role for government research – especially in areas with public
benefit or inability of industry to capture proprietary value of R&D
results
Examples:
 Environmental and safety studies and risk assessments – e.g.,
fracturing and micro-seismicity issues, tools for assessing integrity
of cementing/casing, etc.
 Resource assessments (water supply interactions)
 Chemical interactions among chemicals
 Long-term issues (methane hydrates)
October 3, 2011
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Wisconsin Public Utility Institute
SEAB Recommendation:
Regarding best practices
Creation of a shale gas industry production organization :

Dedicated to continuous improvement is needed:


defined as improvements in techniques and methods that rely
on measurement and field experience
A national approach: including regional mechanisms

Supported by technology peer reviews

Reporting on individual companies’ performance

A compliment to, not a substitute for, strong
regulation and effective enforcement.
October 3, 2011
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Wisconsin Public Utility Institute
NPC Finding and Recommendations:
Regarding the size of the gas resource base
October 3, 2011
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Wisconsin Public Utility Institute
NPC Finding and Recommendations:
Regarding best practices
October 3, 2011
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Wisconsin Public Utility Institute
NPC Recommendations:
October 3, 2011
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Wisconsin Public Utility Institute
Sue Tierney
Managing Principal
Analysis Group
111 Huntington Avenue, 10th Floor
Boston, MA 20199
[email protected]
617-425-8114
October 3, 2011
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