Opportunities and Challenges Posed by the Marcellus Shale

By Eleanor Saunders

In the wake of Japan’s nuclear disaster, BP’s oil-well blowout in the Gulf of Mexico and the many environmental reservations that have been expressed about coal, natural gas is fast becoming the fuel of choice.  Or, as a spokesperson from one international bank reportedly quipped, the fuel of “no choice.”

But aside from the particular notice generated after catastrophic events, in the last year a week has rarely gone by without news about multiple controversies related to the huge natural gas reserves located in shale formations in the United States, Canada, Europe and North Africa.

For the country as a whole, and the Northeast in particular, substantial environmental and economic stakes are involved, a reality that makes basic shale-gas literacy essential for policy makers.  In service of that goal, this review both highlights key issues and provides a sampling of recent news stories, briefly summarized and topically arranged, that survey the debates taking place at local, state, national and international levels (see below).

The Issues

Ancient shale formations rich in natural gas have triggered what many call a 21^st century gold rush in the United States, and the vast Marcellus Shale, which spans six eastern states including Pennsylvania, New York and Maryland, looks to be the largest reservoir of all for this unconventional, or hard-to-extract, type of gas (click here for a map of all U.S. shale formations).

A 2008 study estimated that the Marcellus contained about 50 trillion cubic feet of technically recoverable gas, enough to supply the entire country’s needs for about two years at the current rate of consumption.  But informed by more recent drilling experience, experts have ramped up their estimates to between 400[1] and 500[2] trillion cubic feet, or enough gas to satisfy all U.S. demand for about 20 years.

Geologists have long known about the gas in shale formations, but the characteristics of the deposits made it unrecoverable on technical and financial grounds– that is, until drilling innovations developed in the Texas Barnett Shale ten to 15 years ago redefined what was possible. Now, armed with the technology to bore mile-long horizontal wells at depths of six thousand or more feet, it is possible to crack open the hard rock’s pores and release the gas locked inside, using a process called hydraulic fracturing, or hydrofracking  (Click here for a short discussion of horizontal drilling and hydrofracking).

With this capacity in hand, drilling companies have blanketed shale-rich areas of Pennsylvania and New York, as well as West Virginia and Ohio, to obtain leases for mineral rights and sink test wells in the hunt for the best reserves. The search has recently spread to western Maryland, where exploratory drilling is just beginning.

On the one hand, the ability to tap these unconventional gas resources offers golden opportunities. Domestic natural gas could help reduce the nation’s dependence on imported fossil fuels, while acting as a bridge to a cleaner energy economy by providing baseload power plants with a fuel supply that emits only about half the greenhouse gas of coal as it burns.   Shale-gas operations could also spur tremendous economic growth in economically challenged rural areas that were suffering even before the current recession, thereby creating needed jobs and adding revenues to depleted state coffers.

Despite this potential, as more information emerges about the impact of hydraulic fracturing, serious questions have arisen about its potential costs to the environment and public health.

Anecdotal reports have now been supplemented by more systematic analyses that point to contamination of some drinking-water wells near drilling pads in Wyoming and Pennsylvania with hazardous chemicals and methane, although the exact sources of the contamination have yet to be pinned down.  Measurements around Fort Worth, TX, where Barnett Shale gas has been extracted for over a decade, point to problems with air quality caused by methane and other emissions associated with hydrofracking and its support operations.

Worries have also been raised about the sheer amount of water needed to carry out the process – on average three to four million gallons per well.  Sometimes this water is withdrawn from local streams and rivers; sometimes it is trucked in. Complaints have been registered about lax oversight and permitting for water withdrawals, resulting in some examples of local water resources being strained.

Once drilling is completed, highly saline wastewater that is laced with potentially hazardous chemicals and radioactive material returns to the surface and must be safely disposed of. Some of the wastewater’s contaminants may come from the fluids used in hydrofracking and others – for example, corrosive salts and in the Marcellus formation, radioactive elements –naturally occur deep underground where gas deposits are located.

Gas companies contend that hydrofracking can be carried out without risk to the environment or public health.  But many environmentalists and government officials point to data documenting drilling violations and accidents, and cite instances of alleged water and air pollution as evidence that actual performance has fallen well short of companies’ claims.

The results of the discrepancy have provoked controversies at the local, state and federal levels.  Some municipalities, including Pittsburgh and Philadelphia, instituted bans on drilling in their jurisdictions, though these bans were largely symbolic because drilling companies had not signaled their intent to drill within city limits.

Last November, the New York State Legislature approved a drilling moratorium, following an outpouring of public concern, particularly from the greater New York City area. Although former Gov. David Paterson vetoed the bill, he simultaneously issued an executive order that established a moratorium with a slightly different scope, pending the results of studies addressing the potential impact of drilling, especially on New York City’s upstate drinking water supply and infrastructure. Now Maryland is considering a two-year drilling moratorium in order to have time to institute appropriate regulatory safeguards before opening its piece of the Marcellus Shale to gas companies.

In Pennsylvania, where over fifteen hundred  wells have been drilled in the last three years or so, an array of policy conflicts have arisen over questions ranging from gas-extraction taxes and the leasing of state forestland for drilling to the adequacy of environmental regulation and oversight where drilling has occurred. According to some stakeholders, the increasing pace and scope of drilling has seemed to exceed the monitoring capacity of state inspectors. A recent New York Times article also alleged worrisome laxity in the treatment and disposal of wastewater there. But John Hanger, who served as secretary of the state Department of Environmental Protection until the end of January 2011, disputes both these claims at length, citing significant increases in DEP inspectors and stringent new water regulations as of November 2010.

At the federal level, the Obama Administration turned down Rep. Maurice Hinchey’s (NY) request for a drilling moratorium in the Delaware River Basin Watershed (DRBW), which includes parts of New York and Pennsylvania.  But the Environmental Protection Agency, although largely prevented from regulating hydraulic fracturing under a provision in the Safe Drinking Water Act (SWDA) of 2005, has undertaken a comprehensive study of its potential impacts. In the current Congress, Sen. Bob Casey (PA) along with Representatives Diana DeGette (CO), Jared Polis (CO), and Maurice Hinchey (NY) have sponsored legislation entitled the  Fracturing Responsibility and Awareness of Chemicals (FRAC) Act, which would remove the SWDA loophole and require companies to disclose the chemical constituents used in fracking fluids for individual wells.

More urgency has been felt at the federal level in the wake of several new developments.  In February, a Congressional probe revealed  that major drilling companies had violated a voluntary agreement to eliminate diesel fuel from fluids used in coalbed methane recovery.  The probe also found that the companies had not abided by the one provision in the 2005 SWDA that would trigger a permitting requirement: addition of diesel to shale-gas hydrofracking fluids.  In addition, a recent investigative series by the New York Times uncovered a trove of information about the potentially deleterious impact of shale-gas drilling on drinking and surface water supplies. The series also reported allegations and included documents showing that the Environmental Protection Agency had suppressed reports detailing such dangers as a result of political and lobbying pressures, starting in the late 1980s.

Finally, the EPA itself recently recalculated estimates of the greenhouse-gas savings thought to be offered by natural gas, based on data about losses and venting of methane from the point of drilling and production at wellheads through processing and transmission of gas to its final distribution[3].  As a result of the new full life-cycle analysis, the agency has concluded that natural gas cuts emissions by less than half of what was previously believed to be the case.

From an environmental and public health perspective, this new information adds another serious question to the already considerable reservations about shale-gas extraction among environmentalists.  It also suggests that companies may need to do more to reduce emissions from methane losses and venting, so as maintain support from those who advocate the use of natural gas as a bridge fuel.

Resolution of the shale-gas debate will ultimately require participation and buy-in from a wide range of stakeholders – drilling and gas companies, land owners, local communities, environmentalists, and governments at all levels.  And it shines a particularly bright light on a recurrent and vexing dilemma: whether competing interests can reach mutually acceptable compromises at a time when questions about energy, like so many issues, are highly polarized.

Selected Shale Gas News: Winter 2010 through Fall 2011

Topics include:

Shale Gas Reserves

Government Regulations and Interventions

Economic Benefits

Drilling Violations and Accidents

General Environmental Concerns

Water Use and Pollution 

Air Quality

Earthquakes

“Greener” Hydrofracking

New Shale Gas Territory

[1] EIA (December 2010). 2011 Annual Energy Outlook, with the figure of 410 tcf provided by D. Van Wagener (Personal Communication, January 2011) for the Marcellus Shale’s technically recoverable unproved gas resources — that is, the estimate of what can be recovered given today’s technical capabilities, although the amounts are not proved because actual production in different areas of the formation can vary widely.

[3] A report from the EPA entitled Greenhouse Gas Emissions Reporting from the Petroleum and Natural Gas Industry (November 2010) revises estimates of the greenhouse-gas (GHG) emissions associated with the two fuels, based on more accurate life-cycle data about the losses and venting of GHGs during from the point of drilling and production at the well through processing and transmission to final distribution. According to the new figures in this report, increases in emissions are particularly large for shale or unconventional gas during the steps that optimize the productivity of a new well or restore lost productivity to an old well. Carbon emissions per unit of natural gas also vary, depending upon the efficiency of the generating plant for which it provides fuel.  Thus, as reported by the nonprofit news source ProPublica, natural gas may have at best only a 25 to 40 percent advantage over coal in terms of its greenhouse-gas emissions. A study by researchers from Cornell University says that the life-cycle emissions of hydrofracked shale gas exceed even coal’s, but their results have been questioned by industry experts as reported, for example, in the New York Times (4/12).