Selected Shale Gas News: Winter 2010 through Fall 2011

Shale Gas Reserves

U.S. EIA 2011 Annual Energy Outlook: Since last year’s Annual Energy Outlook, the Energy Information Agency (EIA) has changed its estimates of technically recoverable, unproved shale gas resources in the U.S. from 347 trillion cubic feet to 837 trillion cubic feet, and anticipates that production by 2035 will be almost double what was projected earlier.  The revisions reflect information from additional drilling activity in both older and newer shale gas plays.  Because many formations are so large, only small portions have been adequately tested, and as a result, actual production may vary by as much as tenfold from estimates.  Environmental considerations such as water usage add further uncertainty. Still, the EIA believes that shale gas supplies will offset declines in other fuel resources, meeting growth in U.S. demand and lowering imports (see figure 1).  Energy Information Agency (12/16)

                                                — From the EIA 2011 Annual Energy Outlook 12/16/2010


Government Regulations and Interventions

Federal Level

EPA Raises Groundwater Concerns about Wyoming Range Gas Wells: The U.S. Environmental Protection Agency says it has concerns about whether a draft plan to allow gas drilling in the Bondurant area would offer enough protection for groundwater, The Associated Press reports. The final version of the plan should include more requirements to protect groundwater, the EPA said in a letter to the supervisor of Bridger-Teton National Forest. Houston-based Plains Exploration and Production proposes to drill 137 gas wells from 17 pads inside Bridger-Teton National Forest. The drilling has been controversial because it would occur in prime moose, elk and mule deer habitat at the headwaters of trout streams. Associated Press/Casper Star- Tribune (3/17)

Pressure Limits Efforts to Police Drilling for Gas: When Congress considered whether to regulate more closely the handling of wastes from oil and gas drilling in the 1980s, it turned to the Environmental Protection Agency to research the matter. E.P.A. researchers concluded that some of the drillers’ waste was hazardous and should be tightly controlled, but that is not what Congress heard, The New York Times reports. Now some scientists and lawyers at the E.P.A. are wondering whether history is about to repeat itself as the agency undertakes a broad new study of natural gas drilling and its potential risks. Documents show that the agency dropped some plans to model radioactivity in drilling wastewater being discharged by treatment plants into rivers upstream from drinking water intake plants, the newspaper says. And in Congress, members from drilling states like Oklahoma have pressured the agency to keep the focus of the new study narrow. New York Times (3/4)

U.S. EPA Releases Draft Plan for Fracking Study: U.S. environmental regulators issued a draft plan outlining how they will determine whether a technique for drilling natural gas harms supplies of drinking water, Reuter reports. Congress commissioned the Environmental Protection Agency to study hydraulic fracturing, or “fracking”, after complaints that the process pollutes water. The study will investigate reported instances of drinking water contamination in three to five sites across the country where fracking has occurred, the agency said in the draft. In addition, the EPA will conduct two to three prospective case studies, to take samples before, during and after water extraction, drilling and production of gas. Initial results will be made public by the end of next year. Reuters (2/8)

Drilling Industry Says Diesel Use Was Legal: After three members of Congress reported this week that drilling companies have been injecting large amounts of diesel fuel underground to hydraulically fracture oil and gas wells, the industry is fighting back — not by denying the accusation, but by arguing that the EPA never fully regulated the potentially environmentally dangerous practice in the first place, ProPublica reports. ProPublica (2/2)

U.S. Fracking Firms May Have Broken Environmental Law, Says Probe: Several energy companies may have violated environmental rules by injecting diesel into the ground without permits as part of a controversial natural gas drilling technique, called hydraulic fracturing, or fracking, according to findings from a Congressional probe, Reuters reports.  A total of 12 companies, including Halliburton and BJ Services, were cited in the probe for injecting millions of gallons of fluids containing the fuel into wells between 2005 and 2009 without proper permits. In 2003, the Environmental Protection Agency entered into a voluntary agreement with Halliburton, BJ Services and Schlumberger to eliminate the use of diesel fuel in hydraulic fracturing fluids injected into coalbed methane wells. In addition, a 2005 energy law exempted hydraulic fracturing from regulation under the Safe Drinking Water Act, except when diesel is used. The probe found that no oil and gas service companies sought or were issued permits for the use of diesel fuel in fracking between 2005 and 2009. Reuters (2/1)

Opponents to Fracking Disclosure Take Big Money From Industry: On January 5, 32 Congressional members of the Natural Gas Caucus sent Secretary of Interior Ken Salazar a letter imploring him not to make a hasty decision about regulating hydraulic  fracturing on federal lands because more drilling regulations would increase consumers’ energy costs, suppress job creation, and hinder U.S. energy independence, Pro Publica reports.  46 House members followed up with a letter to Salazar urging him at least to require disclosure of drilling chemicals, citing problems with water contamination in several communities where hydrofracking took place.  A back-of-the-envelope analysis of campaign finance dollars contributed to Congresspersons speaking out on the issue shows that Natural Gas Caucus members received 19 times more money from the oil and gas industry between 2009 and 2010 than the pro-disclosure group members, according to Pro Publica. Pro Publica (1/14)

U.S. Govt, Halliburton Reach Deal on Fracking Info: Halliburton has reached an agreement with the U.S. government to comply with an order to turn over details about the chemicals the company uses in a controversial technique to drill for natural gas, Reuters reports. The Environmental Protection Agency subpoenaed Halliburton last month, saying the company had not fully complied with demands for information about the composition of chemicals used in its hydraulic fracturing products.  Under this new deal, Halliburton will provide the agency with the requested data on a rolling basis through the end of January 2011, the EPA said in a statement on Tuesday. The agency asked for details on hydraulic fracturing chemicals from nine oil services companies, including Halliburton, in September to help complete its comprehensive study of the practice.  All of the companies, except Halliburton, cooperated with the order, the agency said when it issued its subpoena. Reuters (12/17)

Feds Lose $23M a Year in Natural Gas Royalties: The government is losing tens of millions of dollars in potential royalties from energy companies that let immense volumes of natural gas escape into the atmosphere, congressional investigators said in a new report. The Government Accountability Office report says about 50 billion cubic feet of natural gas has been needlessly lost every year during production on federal lands. That translates into $23 million annually in lost revenues. But more than just royalties are at stake: The lost gas could fuel roughly 700,000 homes and is equivalent to the greenhouse gas emissions of more than 3 million cars. Associated Press (11/30)

Regional Level

Delaware Basin Regulator Eases Proposed Natural Gas Drilling Curbs: The Delaware River Basin Commission, charged with protecting the watershed for New York City and the Philadelphia region, eased initially tougher restrictions on Marcellus Shale drilling, but still proposed measures stricter than existing rules in nearby areas, Greenwire reports. The proposed regulations would allow gas drilling to start in eastern Pennsylvania and also in western New York once the latter’s drilling moratorium is lifted . The new rules would require drillers to post $125,000 bonds per well to cover the costs of pollution and restoration, a steep drop from the $5 million bonds initially proposed. Drilling supporters continue to be wary about the bonding requirement and the scope of the commission’s regulations, while opponents criticized the commission for not waiting on a full “cumulative impacts” study before releasing its regulations, says Greenwire.  New York Times/Greenwire  (12/9)

State Level

Pennsylvania environment chief now must approve any shale-drilling citations: In an unprecedented policy shift, inspectors in Pennsylvania have been ordered to stop issuing violations against drillers without prior approval from Gov. Corbett’s new environmental chief. The change, ordered last week in response to complaints by the drilling industry and its supporters in the Pennsylvania legislature, dismayed ground-level staff in the Department of Environmental Protection and drew a chorus of outrage from environmental advocates. The order applies only to enforcement actions in the Marcellus Shale, the gas-rich formation that has drawn a flood of drilling companies to northern and western Pennsylvania. According to John Hanger, the last DEP secretary under Gov. Ed Rendell, there has never been a similar directive in DEP. Philadelphia Inquirer (3/31)

Marcellus Shale Drilling Moratorium Poised for MD House Passage: Legislation to create a temporary moratorium on natural gas drilling in Western Maryland’s Marcellus Shale deposits appears poised for passage in the House of Delegates, The Corridor Inc reports. The full House gave the bill preliminary approval Tuesday after the chamber rejected five amendments and an attempt to shelve debate by the proposal’s staunchest opponent. The bill, dubbed the “Maryland Shale Safe Drilling Act of 2011,” would restrict drilling in Maryland’s slice of the Marcellus formation until 2013, when two state agencies would be required to complete a study that outlines the potential environmental impact associated with a drilling method called hydraulic fracturing, or “fracking. The Baltimore-Washington Corridor Inc   (3/23)

OH Gov. Kasich Wants to Open Parks to Drilling: Ohio has moved closer to joining neighboring states in the debate over natural gas drilling, a shift that could bring jobs and more money along with worries over the impact on drinking water and the environment, The Associated Press reports. Gov. John Kasich’s budget plan released this week includes a proposal to open up state parks to drilling for natural gas and oil, along with expanding timber sales. The state will spend the next three to six months determining where natural gas exploration might take place, said the state’s environmental chief, ruling out any drilling in Ohio’s nature preserves, where there are rare and endangered species. The Associated Press/Journal News (3/16)

ND House Looks at Curbing Natural Gas Flaring: North Dakota oil drillers burn up almost one-fourth of the natural gas they extract, and state lawmakers want to curb a practice that they say wastes energy and may harm the environment, The Bismarck Tribune reports. A bill reviewed by the House Energy and Natural Resources Committee asks legislators to study how to reduce a process called flaring, in which natural gas, a byproduct of oil production, is burned off. Local companies flared 23.5 percent of their natural gas in 2010, up from 13.7 percent the year before, state statistics show. The 3.1 million thousand cubic feet of gas flared in December alone could heat about 31,000 North Dakota homes for a year, the newspaper says. The Associated Press/Bismarck Tribune (3/12)

WV Officials Push for Marcellus Permit Fee Hike: West Virginia is at least $1 million short of the funds its regulators need to oversee drilling in the booming Marcellus Shale natural gas field, the state’s environmental chief told lawmakers Tuesday, The Wall Street Journal reports. As a result, its Environmental Protection Secretary asked the House Finance Committee to consider a hefty fee hike to $10,000 in legislation introduced Monday. Outlining the budget his office has requested for the upcoming fiscal year, the official explained that Marcellus drillers now pay the same $650 as their shallow-well counterparts, although the cost of regulating each type of well differs considerably. Wall Street Journal (2/8)

Some PA Legislators Try Again for State Tax on Marcellus Shale: Some legislators, aided by environmental groups, are making another try at enacting a severance tax on natural gas pumped from the vast areas of Marcellus Shale in Pennsylvania, the Pittsburgh Post-Gazette reports. Rep. Greg Vitali today proposed House Bill 33, which would impose a two-phase extraction tax that includes a five percent levy on the gross sale value per 1,000 cubic feet of gas and a 4.6 cents levy per 1,000 cubic feet that wouldn’t vary with gas prices. If enacted this year, the tax would generate $245 million in 2011 and rise to $477 million in 2014, as the value and the amount of natural gas pumped rises, Rep. Vitali told the Post-Gazette. The money would be divided into equal thirds for the state general fund, state environmental programs, and county and municipal governments where the gas-producing sites are located. Sources indicate that the bill faces a tough time in the Legislature, though environmental representatives approve of the proposal. Pittsburgh Post-Gazette (2/8)

NYS Comptroller Joins Hydrofracking Bid: New York State Comptroller Thomas DiNapoli is joining a bid by investors to force ExxonMobil, Anadarko and seven other companies to detail their plans for managing the risks of water pollution and lawsuits tied to hydraulic fracturing as they explore for natural gas, The Times Union reports. The investors are insisting on the disclosure in shareholder resolutions that will be voted on at the companies’ upcoming annual meetings. Despite an industry-wide agreement to provide information on the chemicals used in fracturing fluids, companies haven’t been forthright about all of the risks and environmental challenges that result from unconventional shale gas extraction, DiNapoli told the Times Union. These risks have the potential to affect shareholder value negatively, he said. Similar shareholder resolutions were offered last year, and there were some close votes. Times Union (1/21)

WV Drilling Reforms to Get Legislative Attention: Oil and gas lobbyists and environmental groups are offering cautious reactions to a Department of Environmental Protection proposal for a wholesale rewrite of the way West Virginia regulates drilling operations across the state, according to news reports. Citizen groups are hoping to persuade lawmakers to strengthen the legislation, while industry officials question a permit fee increase intended to help pay for improved regulation of their operations. After months of talks with both sides, DEP officials produced a 141-page bill that aims to get a handle on fracking fluid additives, water use and disposal plans for polluted wastewater along with the increased surface footprint required for the larger drilling sites and wells, among other things. The draft bill advanced out of a legislative interim committee Monday — but without a recommendation for its passage. Sunday Gazette Mail (1/8); Charleston Gazette (1/10)

WY Natural Gas Fracking Rules Point the Way for Public Disclosure of Chemicals Used: To coax more oil from a wildcat well near Casper, Wyoming, Halliburton is planning to inject water mixed with small concentrations of napthalene, ethanol, “1,2,4-Trimethylbenzene” and “hydrotreated light petroleum distillate”  into well bores, Greenwire reports. Detailed chemical information like this was once kept secret, but it is now available on the Internet because of newly instituted regulations in Wyoming.  Wyoming’s governor and state regulators decided that the best response to fears about water contamination and the prospect of federal regulation was to order the country’s most detailed disclosures of the ingredients used in hydraulic fracturing,.  Although companies had long argued that fracturing fluid recipes are valuable trade secrets, there has been relatively little grumbling since the rules kicked in September 15.  New York Times/Greenwire (12/20)

New Round of Comments on Drilling for NY: Gov. David A. Paterson ordered state environmental officials to complete revisions to their proposed standards for a controversial type of natural-gas drilling by June and submit them to a new round of public comment, The New York Times reports. In his executive order, Mr. Paterson said hydraulic fracturing combined with horizontal drilling required a comprehensive review of possible environmental impacts before its “deployment” in the state. He gave the New York State Department of Environmental Conservation until June 1 to publish “a revised draft” of drilling standards and then accept public comment “for a period of not less than 30 days.” New York Times (12/13)

On Drilling, NY Gov. Pleases Both Sides: On the surface, it looked as if Gov. David A. Paterson threaded the needle when he addressed one of the most far-reaching environmental and economic issues facing New York: the future of natural gas drilling upstate, The New York Times reports. Mr. Paterson vetoed legislation that would have placed a moratorium on drilling that uses a technique called hydraulic fracturing, while also issued an executive order instituting a longer moratorium that extended until July 1, 2011, but that more narrowly defined the types of drilling to be restricted. Both the gas industry and the environmentalists seemed pleased. New York Times (12/12)

Tougher Regulations to Affect Barnett Shale Gas Drillers: The Texas Commission on Environmental Quality moved this week to impose tougher regulations on natural gas drillers but opted to try them out only in the Barnett Shale area in North Texas before applying them statewide, The Star Telegram reports. The state agency voted Wednesday to beef up its air emission limits on toxic chemicals associated with natural gas drilling and required producers to test their drilling sites more stringently. It’s the first major change to the agency’s drilling regulations in over a decade. Industry interests pushed for the trial period to see whether any changes will be needed before the rest of the state falls under the rules. The commissioners ended up approving weaker rules than those initially proposed by the agency, a fact that elicited some criticism from some environmentalists and state legislators. The regulations are likely to increase drilling costs, but not enough to deter production, according to the agency’s documents. Star Telegram (1/27)

EPA Action on TX Natural Gas Driller Escalates Fight over State Regulation: An EPA official’s decision to take action against a Texas gas driller is likely to turn up the heat on a long-simmering debate about whether the state has protected residents against the dangers of drilling, Greenwire reports.  EPA Regional Director Al Armendariz issued an emergency order yesterday against Range Resources Corporation, charging that its drilling in the Barnett Shale contaminated at least two water wells with methane and benzene and that Texas regulators didn’t do enough to help residents near the Fort Worth area drilling operations. Range Resources is also one of the biggest independent players in Pennsylvania’s Marcellus Shale drilling, where state legislators have had ongoing debates about how to regulate and tax shale drilling. Environmentalists applauded EPA’s actions. New York Times/Greenwire (12/8)

AR Officials Require Disclosure of Gas Drilling “Frack” Fluids: Arkansas just became one of the first states in the country to require drilling companies to disclose what chemicals they’re using to crack open shale rock to extract natural gas, reports Alabama public radio station KUAR. The state Oil and Gas Commission has decided to require companies drilling for natural gas in the Fayetteville Shale to tell the public first, what kinds of chemicals they plan to use on a new well and second, the specific additives they ended up using.  However, environmentalists say that the commission should have proposed an even stronger rule, encompassing not just new wells, but those already drilled. KUAR (12/7)

PA Rules Panel OKs New Gas-Drilling Safeguards: Crews rushing to drill deep, high-pressure wells into the vast Marcellus Shale reservoir beneath Pennsylvania will soon have tougher safety standards to obey as regulators work to modernize the state’s environmental protection laws, CNBC reports. The Independent Regulatory Review Commission, the gatekeeper of Pennsylvania state regulations, unanimously approved a set of proposed standards that are designed to protect waterways and drinking water supplies from natural gas migrating underground, well-site chemical spills and the massive volumes of toxic sludge that comes out of newly drilled wells. The regulations would lower the maximum allowable well pressure, raise standards for well cement and pipes and strengthen the industry’s obligations to investigate and report incidents of gas migrating out of well bores and into residential water wells. They are expected to be published and final no later than January. CNBC (11/18)

PA Governor Rendell Signs Moratorium Protecting Sensitive State Forest Land from Future Natural Gas Leases: Governor Edward G. Rendell today signed an executive order protecting Pennsylvania’s state forests from any new natural gas development activities, following the state Legislature’s failure to pass a bill that would have instituted a moratorium on state forest land leases, P R Newswire reports.  A recent and extensive evaluation conducted by the Department of Conservation and Natural Resources found that any additional leases could endanger the environmental quality and character of these tracts, and pose a risk to Pennsylvania’s existing certification that it manages its forests in a sustainable manner, the executive order says.  Currently, 700,000 acres of Pennsylvania’s 2.2 million-acre state forest are available for natural gas extraction. When completely developed over the next 30 years, these leased lands will include about 1,000 well pads and as many as 10,000 wells that along with associated roads and infrastructure, could disturb as much as 30,000 acres of the land already leased. P R Newswire (10/26)

Range Posts First Voluntary Marcellus Shale Hydraulic Fracturing Disclosure Forms: Range Resources Corporation announced today that it submitted its first hydraulic fracturing disclosure forms to the Pennsylvania Department of Environmental Protection and posted the information on the Range Web site, according to a company press release. The information covers the first three Marcellus Shale wells in Pennsylvania that Range has hydraulically fractured since implementation of the voluntary initiative. As additional Marcellus wells are drilled, Range will provide similar information within approximately 30 days of completion.  Policy makers, regulators, Pennsylvania citizens and environmental and conservation groups have responded positively to its July 14 announcement about voluntary disclosure, the company reports. Range Resources Press Release (8/12)

Local Level

Buffalo, NY Bans Hydraulic Fracturing: The city of Buffalo, New York, banned the natural gas drilling technique of hydraulic fracturing on Tuesday, a largely symbolic vote that demonstrates concern about potential harm to groundwater from mining an abundant energy source, Reuters reports. The city council voted 9-0 to prohibit natural gas extraction including the process known as “fracking,” and also banned storing, transferring, treating or disposing of fracking waste within the city. No such drilling projects had been planned in Buffalo, though city officials were concerned that fracking waste water from nearby operations was reaching the city sewer system, says Reuters. Reuters (2/8)

In Symbolic Move, Philadelphia Calls for Gas Drilling Ban: As the federal government continues to study hydraulic fracturing  and the states work on their own regulations, some cities and towns are trying to halt local drilling, Pro Publica reports. Philadelphia became the latest to do that, when city officials called for at least a temporary ban on new wells in the watershed that serves the city’s taps and a ban on purchases of shale gas by the city’s public utility. The requests were part of a set of recommendations in a report approved by the city council asking federal and state authorities to tighten drilling regulations. The vote was largely symbolic because drilling in the Delaware River Basin is already on hold and the utility doesn’t buy any Marcellus Shale gas. Pro Publica (1/28)

Pittsburgh First PA City to Ban Gas Drilling: Pittsburgh became the first city in gas-rich Pennsylvania to ban natural gas drilling after city council members, citing health and environmental concerns, unanimously approved the measure Tuesday, The Associated Press reports. The council received a standing ovation after voting 9-0 to approve the ban within city limits. About 362 acres, or about 1 percent of the land in Pittsburgh, has been leased for drilling, but no companies are actively pursuing drilling on the leased properties, according to the University of Pittsburgh Center for Social and Urban Research.Wall Street Journal/Associated Press(11/16)


Economic Benefits

Digging in the Shale: Drilling in the Marcellus Shale began in earnest in 2004 and 2005, and since then, the formation’s estimated $2 trillion worth of natural gas has drawn some of the world’s biggest energy giants to southwestern Pennsylvania and boosted the local economy, The Pittsburgh Post-Gazette reports.  As many as 5,000 drilling permits are expected to be issued by the state before the end of 2010, and so far, more than 1,600 wells have been drilled. In addition to drilling’s environmental impact, potential tax revenues from the Marcellus Shale have been in the spotlight. Although the state faces a budget shortfall of at least $3 billion by June, part of which was to be eased through a new gas extraction tax, the state Legislature failed to act on various proposals to generate tax revenue.  Gov. Ed Rendell warned that Pennsylvania would lose $100 million or more as a result. Pittsburgh Post-Gazette (12/30)

Tiny Towanda Cashes in on Drilling, But Some Worry about the Changes: Because of drilling in the Marcellus Shale, millions of dollars are being pumped into tiny outposts like Towanda, Pennsylvania, where the 6.6%unemployment rate is among the lowest in the state, The Wall Street Journal reports. In 2010, 286 Marcellus wells were drilled in Bradford County, where more than 20% of the county’s population has leased mineral rights to Chesapeake Oil & Gas.  The company has paid out $300 million in lease bonuses and royalties there since 2008, and has spent over $94 million this year to pave or repair local roads. Business is booming for local truck dealerships, restaurants and motels, and some farmers are using their lease money to pay off debt, invest in new equipment or retire. Real-estate values have risen dramatically, with rents tripling over the past two years. Though good news for some, other families have become homeless and children placed in foster care because of steeper rents, said the chairman of the county commissioners. The state Department of Environmental Protection says that six wells in Bradford County have been contaminated with natural gas since 2008 as a result of Marcellus Shale drilling, and the additional trucks on the roads near drilling sites have led to more traffic and accidents. The county’s safety director told the Journal that there was a 23% increase in 911 calls over the past year, and that volunteer fire departments are straining to respond to calls.  Wall Street Journal (12/14)

A Drive for New Jobs through Energy: The energy business taking root in the Appalachian Mountains has opened the door to a new source of clean-burning fuel close to the population centers of the Eastern United States, National Geographic reports. In Pennsylvania, the epicenter of the development, there’s been plenty of debate over the potential environmental impact. But an equally great focus has been on the chance for a much-needed boost to the state’s economy, and how state and local government can help with training and other steps to stoke the potential for revenue and jobs far beyond the drilling rigs.  An industry-sponsored study  by Pennsylvania State University energy experts projects 200,000 new jobs in the Keystone State by 2020 if the shale is developed to its full potential. But with the state’s economy suffering with that of the rest of the nation, the new energy business’s impact so far is hard to discern. National Geographic (10/14)

State Deals with Drillers Raise Brows: The cash-strapped Rendell administration has leased nearly 150,000 acres of public forests and game lands to gas companies that paid $400 million to drill for natural gas, The Pittsburgh Tribune-Review reports. Some critics say Pennsylvania taxpayers lost out on more money when administration officials privately negotiated two of the deals, worth $122.3 million, instead of seeking bids.  The leases went for less than the $5,000 to $6,000 an acre paid to private landholders at the time, said a local petroleum geologist who authored studies on the Marcellus Shale formation. Pittsburgh Tribune-Review (9/2)

Unions Want Their Piece of Shale Business:  With many of the Pittsburgh region’s big construction projects over, trade unions are contemplating the Marcellus Shale industry and its prospective jobs, The Pittsburgh Post-Gazette reports. Labor leaders want the industry to become a reliable job provider, to the point that one union leader thinks the state should give tax rebates to companies willing to hire local workers. Overall, about half of Pennsylvania’s Marcellus Shale field and production workers still come from out of state. Energy companies say that they need to minimize costs and put a lot of upfront capital into equipment and infrastructure because the industry in the state is a fledgling one, so they’ve resisted an extraction tax and anything else that would create extra expense. But some labor leaders don’t like the hat-in-hand act from the same companies predicting the Marcellus field will be a multitrillion-dollar bonanza, according to the newspaper.  Pittsburgh Post-Gazette (8/29)


Drilling Violations and Accidents

PA Fracking Blowout Spews Fluid onto State Forest Lands: Talisman Energy has resumed its Marcellus drilling operations in Pennsylvania, a week after one of the company’s gas wells experienced a blowout that caused an uncontrolled discharge of sand and fracking fluids onto state forest lands in Tioga County, Gannett reports. As a result of the incident, Talisman shut down all of its hydraulic fracturing operations in North America while it conducted an internal investigation into the cause of the Jan. 17 blowout. Those operations have since resumed, with Talisman’s Pennsylvania drilling program being the last to be brought back online. Meanwhile, the Pennsylvania Department of Environmental Protection has requested Talisman provide answers to nine questions related to the blowout as part of its investigation into the incident. The investigation could result in civil penalties levied against Talisman, says the newspaper. Press Connects/Gannett (1/25).

High Accident Rate in WV Shale Gas Drilling Causes Concern: After three significant drilling accidents in one West Virginia county over the past four months, local concern is mounting as a large number of natural-gas producers moves into the state to drill in the Marcellus Shale, The News Register reports. The Marcellus Shale Coalition, an industry group based in Pennsylvania, indicates that they are addressing the problems, but a DEP spokesperson said that natural-gas drillers in West Virginia have committed 471 violations since Jan. 1, 2009.  News Register (9/26)


General Environmental Concerns

Gas Drilling Tactic Fuels a Boom and Health Concerns: Residents in northwestern Louisiana rejoiced two years ago when gas companies poked into the mammoth natural gas deposit 2 miles under their homes, sparking a modern-day gold rush, USA Today reports. The financial benefits have been undeniable. Last year, Haynesville Shale drilling brought $10.6 billion in new business sales to the state, $5.7 billion in household earnings and 57,000 new jobs across the state, according to a study commissioned by the Louisiana Oil and Gas Association. But after cows started to die and methane seeped into the drinking water, some question whether the money landowners get for leasing their mineral rights is worth the risk, says the newspaper.  The percentage of natural gas drilled from shale formations using hydraulic fracturing is expected to climb from 14% last year to 23% in 2020, and the increased activity has brought a greater strain on state regulators. In Louisiana, 38 oil and gas inspectors are responsible for monitoring the state’s 19,000 producing natural gas wells, including 781 in the Haynesville Shale area, according to the state Department of Natural Resources. USA Today (12/14)

Western Maryland Wrestles with Energy Future: While Maryland’s energy future might lie in harnessing the breezes off Ocean City, the frontier for now is in the same place it’s always been — in the mountains of Western Maryland — where the region’s winds and coal and natural gas reserves are drawing prospectors, The Baltimore Sun reports. That’s unsettling to some environmentalists and Western Marylanders, who fear the impact of new and traditional energy development on the region’s rich natural resources, its outdoors-oriented tourist industry and its rural quality of life. The strongest reactions have been elicited by new activity in the region’s Marcellus Shale gas deposits.  While hundreds of landowners have already signed leases or sold outright the mineral rights beneath their property, others are worried by reports of gas leaking into wells and drilling fluids spilling into streams, the newspaper says. Baltimore Sun (12/13)

A Dream Dashed by the Rush on Gas: Chris and Stephanie Hallowich say they tried to choose carefully when they were seeking out their dream home in southwestern Pennsylvania, . But even as they began to build it, the bucolic view was being replaced by an industrial panorama, National Geographic reports. Four natural gas wells, a gas processing plant, a compressor station, buried pipelines, a three-acre plastic-lined holding pond and a gravel road with heavy truck traffic surround them, thanks mainly to deals struck by the previous owner of their property that they say they did not fully understand.  Along with the discovery of potential neurotoxins in their well water, which they claim results from the drilling, they also worry about the air after suffering a range of symptoms when gas was released during apparent equipment malfunctions. A University of Pittsburgh environmental researcher who studies the industry’s impact believes the Marcellus air pollution risk is largely being overlooked.  National Geographic (10/17)


Water Use and Quality

PA’s Marcellus Wastewater Stats Flawed: The Pennsylvania Department of Environmental Protection’s statistics on Marcellus Shale natural gas activity contain serious flaws and inconsistencies, and do not accurately report the volume of wastewater being reused in the industry’s much-touted recycling efforts, The Philadelphia Inquirer reports. The DEP’s most recent statewide statistics on wastewater production overstate by nearly two times the amount of wastewater produced during the last six months of 2010 largely because one of the 39 operators who filed reports last month inadvertently entered the wrong data in its forms. The miscue couldn’t have come at a worse time for the industry and the Pennsylvania DEP. On Monday, the federal Environmental Protection Agency put Harrisburg on notice that the EPA would increase its scrutiny of how Pennsylvania managed shale-drilling wastewater after news media reported that inadequately treated Marcellus wastewater may be polluting the state’s rivers. Philadelphia Inquirer (3/9)

Drilling Down:  Articles in the Drilling Down series from The New York Times examine the risks of natural-gas drilling and efforts to regulate this rapidly growing industry. New York Times (2/27, 3/2, 3/4, 3/8)

OH EPA Tries to Limit Brine Dumps in Rivers: Fast-growing interest in natural-gas drilling could create a flood of cash for Ohio cities eager to treat wastewater used to coax the gas from deep inside Utica and the Marcellus Shale, The Columbus Dispatch reports. But what’s good for the cities might be bad for the state. The process could pollute Ohio streams and rivers, environmental officials say. East Liverpool, Steubenville and Warren want to take the millions of gallons of salty, toxic wastewater that such wells produce and run it through their sewage-treatment plants. However, Ohio Environmental Protection Agency officials say they want strict limits on the amount of brine the cities want to dump in the Mahoning and Ohio rivers. The Columbus Dispatch (2/13)

Gas Fracking May Already Be Lowering Water Tables in South Texas: Veteran oilman John Braudaway has enough oilfield wisdom to know that the frenzy around the Eagle Ford Shale is different than any boom he’s seen since the 1950s, The San Antonio Current reports. This time around, there’s the potential that hydraulic fracturing will have long-term effects on South Texas water tables in a region that has long struggled with drought. Many welcome the boom, but the water issue keeps confronting the oil industry. Water wells that serve the oil industry are not required to report usage figures needed to estimate desired future condition for long-term planning efforts by the state’s Water Development Board. “It’s something the Legislature will eventually have to address,” the board president of a water district in an affected county told the newspaper. San Antonio Current (1/5)

A Short List of Fracking-Related Troubles: The following shale-gas drilling problems occurred in recent years, The San Antonio Current reports:
Colorado — A three-year study in Garfield County detailed the migration of methane from fracking operations through natural faults into potable water supplies, but state regulators also fingered faulty casing work,  the newspaper says.
Pennsylvania —Residents of Dimock, PA, sued a Houston-based company after a range of chemicals used in fracking were linked to contaminated water wells. Pennsylvania’s Department of Environmental Protection fined the company more than $240,000, and the price tag associated with trucking in clean water to homeowners has been placed at more than $10 million, the newspaper says.
Wyoming — In September 2010, the EPA discovered that water wells in Wyoming were contaminated with 2-butoexythanol phosphate, a common fracking fluid with a range of harmful human-health impacts, and instructed community residents not to drink their water, says the newspaper.  San Antonio Current (1/5)

PA Firm Ordered to Stop Accepting Marcellus Wastewater:  Regulators ordered a Montgomery County wastewater-treatment operation last year to stop accepting liquids from a Marcellus Shale natural gas driller after discovering that hundreds of truckloads had been improperly imported into the Delaware watershed, The Philadelphia Inquirer reports. The Delaware River Basin Commission ordered a private industrial treatment facility and the Hatfield Township Municipal Authority to cease accepting the fluids from northern Pennsylvania. A spokesman for Cabot Oil & Gas, the Texas gas driller that produced the wastewater at its Susquehanna County well sites, said the contractor that treated its wastewater sent it to the Philadelphia area without Cabot’s knowledge, the newspaper says. Philadelphia Inquirer (1/5)

Cabot to Pay $4.1 Mln in PA Gas Contamination: Cabot Oil & Gas agreed to pay residents of the town of Dimock $4.1 million in compensation for contamination of their water wells with natural gas under a deal it made with state regulators, Reuters reports. The deal helps resolve an ongoing conflict in the town in northeast Pennsylvania that became one of the first to raise concerns about the environmental impact of the shale gas boom in Pennsylvania’s Marcellus Shale. The amount paid to each of 19 affected families will equal twice the value of their homes, with a minimum payment of $50,000, according to the settlement reached with Cabot by the state’s Department of Environmental Protection. The company will also pay the state $500,000 to offset the expense of investigating gas leaks that have affected residents of the northeast Pennsylvania town for two years, says the news service. Reuters (12/15)

Oil and Gas Producers Seek New Water Solutions: At the new Red Desert Water Reclamation facility near Rawlins, Wyoming, tankers pull in with produced water from the natural gas fields and unload their cargo into a concrete pool.  After oil is skimmed off, the water is either pumped into a temporary holding pond or sent directly to a reverse osmosis treatment plant, The Billings Gazette reports. Red Desert offers an environmentally preferable alternative to the evaporation ponds and injection wells typically used for wastewater.  Its revenues come from three services — hauling water, selling recovered oil and selling treated water back to drilling companies for reuse, the newspaper says. Plans are also underway to use some reclaimed water to grow native grass varieties for seed mixtures used in restoring drilling sites for additional revenue. Red Desert expects to open similar operations elsewhere in Wyoming and may also deploy a mobile water-treatment service. Individual oil and gas producers have attempted various water treatment methods, but few have proven economically viable, industry officials told the newspaper. The Billings Gazette (12/7)


Air Quality

WY Plagued by Big-City Problem: Smog: Wyoming, famous for its crisp mountain air and breathtaking, far-as-the-eye-can-see vistas, is looking a little bit like smoggy Los Angeles these days because of a boom in natural gas drilling, The Washington Post reports. Folks who live near the gas fields in the western part of this outdoorsy state are complaining of watery eyes, shortness of breath and bloody noses because of ozone levels that have exceeded what people in L.A. and other major cities wheeze through on their worst pollution days. Washington Post (3/8)

Drilling Isn’t Harming Air, Says PA DEP:  A PA Department of Environmental Protection report on natural gas drilling concludes wells are releasing gas into the air – but not at a dangerous level, reports WITF, a Public Radio Capital News service. The survey observed four Susquehanna County sites from August to October, and although it found elevated levels of methane, propane, butane and other gasses in the air, nothing surpassing the warning levels for “air-related health issues.”  The DEP took pains to point out the report is meant as a snap-shot, not a definitive conclusion, says the news service.  Earlier, DEP released the results of air tests at Greene and Washington County drilling sites, where similar results were found, WITF says. WITF (2/1)

EPA Says State Air Quality Drilling Rules Too Lenient:  Federal environmental officials said Thursday they plan to reject Montana air quality rules that allow oil and gas companies to obtain emissions permits after they have already started drilling, The Associated Press reports. The Environmental Protection Agency said the rules do not meet requirements of the Clean Air Act. Adopted in 2005 and 2006, the rules give companies 60 days after drilling a well to register with the Montana Department of Environmental Quality. The consequences of an EPA rejection remain uncertain, says the news service. While the rules would remain in effect at the state level, the EPA could step in to require companies to apply for permits before drilling. The Associated Press/Great Falls Tribune (1/7)

A Short List of Fracking-Related Troubles: The following shale-gas drilling problems occurred in recent years, reports The San Antonio Current:
North Texas — The director of air-quality research at the Houston Advanced Research Center reported last summer that industry is regularly underestimating air emissions from fracking and natural-gas development in the Dallas-Fort Worth area. Formaldehyde readings in one industry study reached 126 parts per billion, an “astoundingly high number,” he said. Beyond immediate public-health impacts associated with breathing formaldehyde, the chemical is also a powerful precursor to the creation of ground-level ozone. San Antonio Current (1/5)



AR Quakes Decline Since Hydrofracking Injection Wells Were Closed: The number and strength of earthquakes in central Arkansas have noticeably dropped since the shutdown of two injection wells in the area, although a state researcher says it’s too early to draw any conclusions, The Associated Press reports. The wells are used to dispose of wastewater from natural-gas production. The Center for Earthquake Research and Information recorded around 100 earthquakes in the seven days preceding the shutdown earlier this month, including the largest quake to hit the state in 35 years — a magnitude 4.7 on Feb. 27. A dozen of the quakes had magnitudes greater than 3.0. In the days since the shutdown, there have been around 60 recorded quakes, with only one higher than a magnitude 3.0. The majority were between magnitudes 1.2 and 2.8. The Associated Press

W.Va. Studying Link between Quakes, Disposal Wells: Eight small earthquakes in central West Virginia since April have Chesapeake Energy and the state Department of Environmental Protection discussing the possibility of seismic monitoring near a disposal well for gas-drilling fluids, The Associated Press reports. Oklahoma-based Chesapeake Oil & Gas has injected more than 10.6 million gallons of brine and hydraulic fracturing fluid into the well since March 2009. Some geologists suspect high pressure and wastewater have lubricated old fault lines, allowing them to slip and trigger small earthquakes, the news service says. Chesapeake isn’t so sure, but has agreed to reduce the volume of injected fluid. The compliance manager for the DEP said no link has been proven, and no seismic events have been reported at 70 similar disposal wells around West Virginia, but the state still will investigate. Associated Press/Herald Dispatch (9/1)


 “Greener” Hydrofracking

Wastewater Recycling No Cure-All in Gas Process: As drilling for natural gas started to climb sharply about 10 years ago, energy companies faced mounting criticism over an extraction process that involves pumping millions of gallons of water into the ground for each well and can leave significant amounts of hazardous contaminants in the water that comes back to the surface, The New York Times reports. So, in a move hailed by industry as a major turning point, drilling companies started reusing and recycling the wastewater. But, in Pennsylvania, for example, natural-gas companies recycled less than half of the wastewater they produced during the 18 months that ended in December, according to state records.  Nor has recycling eliminated environmental and health risks, says the newspaper. Some methods can leave behind salts or sludge highly concentrated with radioactive material and other contaminants that can be dangerous to people and aquatic life if they get into waterways. New York Times (3/2)

Closed-Loop Systems: Innovative Way to Dispose of Marcellus Drilling Debris: As Marcellus Shale horizontal wells get bigger, they are producing vast quantities of drilling debris, The Philadelphia Inquirer reports. State regulations allow cuttings to be stored in lined pits near the well site, but horizontal drilling produces so much material that it cannot be easily buried at some drilling sites. Anadarko decided last year to convert all its Marcellus operations into closed-loop systems, eliminating pits and collecting debris in steel containers that are carted to landfills. “Closed-loop drilling has potential to eradicate the need for a drilling waste pit, which in turn would eliminate earth disturbance and possible erosion and sediment-control issues,” said a Department of Environmental Protection spokesperson, though DEP is not considering requiring the practice statewide, the newspaper says. The Delaware River Basin Commission has drafted regulations that would ban so-called reserve pits in the environmentally sensitive Delaware watershed. Philadelphia Inquirer (2/13)

Shale Drilling is Going Greener: As oil and gas companies come under increasing pressure to reduce the environmental impact of hydraulic fracturing, drillers are also rethinking the current model to cut costs, the Houston Chronicle reports. For example, oil-field services giant Halliburton announced a plan to significantly reduce the surface footprint and environmental impact of its hydraulic fracturing operations by 2013 — by making equipment more efficient, reducing personnel and traffic at well sites, and cutting the amount of fresh water used, the newspaper says. Other companies have also taken steps, from launching technology that recycles wastewater streams to rolling out pumping equipment that lessens the need for so many trucks on-site. “We welcome innovations by industry to minimize their environmental footprint, but the key is that these can’t be things that some companies use sometimes in some places, as is happening now,” a senior attorney with the Natural Resources Defense Council told the newspaper. Houston Chronicle (12/18)

Edible Ingredients Used to Drill for Gas:  Drilling companies are touting new, “environmentally friendly” formulas to quell fears that they are contaminating water supplies during hydrofracking, The Wall Street Journal reports. Baker Hughes launched a line of products called BJ SmartCare that lets well owners customize their fluids based on factors such as toxicity and flammability, though it declined to specify all ingredients. Drilling supplier Flotek said it completed successful field trials of new biodegradable fracturing chemicals extracted from citrus products. Halliburton said its CleanStim, made solely of compounds used in processed foods, will add about 5% to 10% to drilling costs, while Baker Hughes said BJSmartCare “minimally” affects drilling costs.  But the Environmental Working Group, a research and advocacy organization, told the newspaper that although eliminating toxins is a positive step, the risk of polluting water remains, because fracking itself unleashes petroleum-like condensate from gas reservoirs that could penetrate aquifers or spill into surface waters. Wall Street Journal (12/15)


New Shale Gas Territory

Quebec Halts Fracking for Oil and Gas: Quebec’s natural resources minister announced Wednesday that the Quebec government would no longer authorize any gas or oil hydraulic-fracturing operations in the province, although fracking could be done for scientific purposes, The Montreal Gazette reports. A panel of independent experts, members of which the government has yet to name, will determine whether an individual fracking operation will add to scientific knowledge about the impact of the controversial technique used to extract natural gas from shale rock formations. While awaiting results from a recommended strategic environmental evaluation of the process, the province’s Environment Minister Pierre Arcand said fracking could continue at the 31 wells already drilled in Quebec.  Quebec’s former premier says the energy industry failed to sell Quebecers on the merits of shale gas because it moved too quickly in a province with virtually no history of gas production, The Globe and Mail reports. Montreal Gazette (3/17)/ The Globe and Mail (3/15)

Algeria Eyes Huge Domestic Shale Gas Reserves: Oil and gas producer Algeria is sitting on huge undeveloped reserves of shale gas that the country now intends to develop with the help of international partners, the OPEC member’s energy minister said, Reuters reports. The African nation of Algeria, already a major exporter of oil and natural gas, could become an even bigger exporter in the coming years as it develops up to 1,000 trillion cubic feet of natural gas trapped in shale rock more than 3,280 feet below the surface. Reuters (3/9)

Drillers Set Sights on Shale Reserve Deeper than the Marcellus: Another underground strip of shale in Pennsylvania, much deeper than the Marcellus formation, is drawing attention from natural-gas drillers, The Pittsburgh Tribune-Review reports. Utica shale has potential, like Marcellus, to become a major fuel resource. The rock layer stretches far beyond the edges of the Marcellus, covering most of Pennsylvania, New York and West Virginia, along with eastern Ohio and parts of other states. “A number of companies are taking a careful look at this shale, and in eastern Ohio there’s been a fair amount of leasing” for well development, said a Penn State University geoscientist Monday. Pittsburgh Tribune-Review (2/22)

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