United States: Second Department Of Energy Fracking Study Report Issued

The Shale Gas Subcommittee of the Secretary of Energy Advisory Board (the Subcommittee) released its second and final report on hydraulic fracturing on November 10, 2011. The Subcommittee is an ad hoc group with authority only to report its recommendations to Secretary of Energy Stephen Chu. A repeated theme of the report is that "concerted and sustained action is needed to avoid excessive environmental impacts of shale gas production and the consequent risk of public opposition to its continuation and expansion." The new report summarizes progress regarding and proposes additional actions to implement the 20 recommendations from the Subcommittee's initial report dated August 18, 2011.¹

Air Emissions

Of particular interest, the Subcommittee noted that U.S. EPA's proposed rules governing New Source Performance Standards (NSPS) and National Emissions Standards for Hazardous Air Pollutants (NESHAPs) for the oil and natural gas sector fell "short" of the Subcommittee's earlier recommendations to regulate methane emissions. EPA's proposed NSPS promulgate new standards to control volatile organic compounds (VOCs), which are ozone precursors. Because it is a VOC, methane emissions are regulated under the proposed NSPS. However, the Subcommittee recommended that EPA take further action to establish specific methane emissions limitations because methane is a potent greenhouse gas.²

The Subcommittee also recommended that EPA gather data on methane and greenhouse gas emissions related to shale gas drilling, production, processing, and distribution to facilitate study of greenhouse emissions related to the entire natural gas industry. In particular, the Subcommittee noted that recent EPA changes to Subpart W of the Mandatory Reporting of Greenhouse Gases Rule could affect the collection of detailed air emissions data. Changes to Subpart W will result in a deferment of the collection of inputs for certain greenhouse gas calculations until 2015. The report states that these inputs are necessary to verify producers' methane reporting. The Subcommittee also expressed concern regarding the expansion of the use of Best Available Monitoring Methods, which permit operators to substitute good engineering practice and the use of representative measurements for the direct measurement of emissions.

Overall, it appears that the Subcommittee recommended that EPA regulate methane because it is a greenhouse gas. However, at the same time, the Subcommittee recommended collecting data from the natural gas industry to confirm that its methane emissions indeed warrant the recommended method of regulation.

Water

In its initial report, the Subcommittee recommended study of several water-related issues by federal and state governments. The Subcommittee considers states to be best positioned to measure and report the composition of water stocks, create a system to manifest all transfers of water among different locations, and adopt requirements for background water-quality measurements. The Subcommittee recommends that the federal government mandate public disclosure of the composition of fracturing fluid used on federal land and implement a ban on fracturing fluid containing "diesel" fuel. The Subcommittee suggests that federal, state, and local authorities need to enact appropriate statutory authority to allow producers or government agencies to sample private water wells in the vicinity of proposed hydraulic fracturing wells so as to develop a baseline or "objective benchmark to assess potential damage to water resources."

Research and Development

The report calls for the federal government to provide $5 million per year to fund the State Review of Oil and Natural Gas Environmental Regulations (STRONGER) and the Ground Water Protection Council (GWPC). In the past, the federal government has funded these public interest, information-sharing organizations, but appropriations have expired. The proposed federal funding would balance funding currently provided by the oil and gas industry. In turn, STRONGER and GWPC would work with industry to create a system of best management practices (BMPs) for well construction, casing and cementing, pressure control, and other areas. The report stressed that industry should focus on developing BMPs that can be "validated by measurement and disclosure of key operating metrics." Although the report does not make this explicit, the Subcommittee evidently contemplates that these BMPs could eventually be incorporated into regulations.

The Subcommittee also called for federal and state government support for shale gas research and development; including studies of possible methane migration from shale gas wells to water reservoirs and the effects of shale gas drilling on wildlife and land use. However, the Subcommittee does not have the power to direct funds to the ends that it suggested.

Footnotes

1 For more information, see V&E Tracking Fracking E-communication "Department of Energy Fracking Study Report Issued."

2 The potency of a greenhouse gas is measured by its "global warming potential" – the amount of heat the gas traps in the atmosphere compared to the amount of heat trapped by a similar quantity of carbon dioxide. Methane's global warming potential is estimated to be 70 times greater than carbon dioxide.

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