Shale gas panel offers olive branch to industry

When a government task force said natural gas drilling wasn’t inherently dangerous to water supplies — but still urged tougher standards for the practice — most environmentalists said the industry had gotten a free pass.

Industry leaders, however, complained that the group had overlooked existing regulations and voluntary improvements — including best practices espoused by the American Petroleum Institute — that are already designed to make drilling safer.

Today, members of the panel defended their approach and offered an olive branch to gas producers.

“We’re not recommending that for the existing standard-setting groups, there be something new on top of that,” said Daniel Yergin, the head of IHS-CERA, and a member of the Energy Department’s shale gas advisory board at a Senate Energy and Natural Resources Committee hearing. “We’re trying to create an ongoing process for discussion among the players and participants in this,” whether they are regulators, drillers or local residents.

The advisory panel’s interim report, issued in August, may have recommended a national database on water use in shale gas production and reduced emissions at drilling sites, but, Yergin said, that doesn’t mean it believes an outsider needs to step in.

“It wasn’t to say that there needs to be somebody else setting standards,” Yergin told the Senate energy committee.

Kathleen McGinty, the former head of Pennsylvania’s Department of Environmental Protection, said the advisory panel needs “to be more precise in our discussion about the effort to identify best practices and this inclusiveness we call for.”

The Energy Department panel is set to issue its final conclusions and recommendations for shale gas production in November, but its interim report issued in August provides a broad outline of where the group is headed. Energy Secretary created the group in May and tasked it with making recommendations to improve the safety and environmental performance of natural gas production from shale formations.

A chief focus has been on hydraulic fracturing, a technique where mixtures of water, sand and chemicals are forced underground at high pressures to break up the dense shale rock and extract the natural gas locked within it. The combination of forcing with horizontal drilling techniques is seen as essential to unlocking a 100-year supply of the fossil fuel in the United States.

But “we cannot realize the benefits of our tremendous natural gas resources unless we committ to safe, environmentally (sound) production and delivery,” said Sen. Lisa Murkowski, R-Alaska.

Sen. Jeff Bingaman, D-N.M., the head of the Senate Energy and Natural Resources Committee, said it is critical for industry and government to accurately assess the methane emissions from natural gas drilling, amid concerns that the fossil fuel might produce more from extraction to combustion than coal and other alternatives.

“Some experts have claimed that fugitive emissions from natural gas extraction are routinely high enough that switching to natural gas could actually be worse than continuing to use coal,” Bingaman said. “If natural gas is to be used as a lower carbon alternative to other fossil fuels, the issue of fugitive emissions is one that we must quantify (and) understand.”

Concerns about greenhouse gases associated with shale drilling are beginning to overshadow earlier fears about the exact contents of hydraulic fracturing fluids pumped deep underground. For years, environmentalists have said the chemicals used in the process — including diesel at times — can be spilled at the surface or leach underground and contaminate drinking water supplies.

The Energy Department panel largely dismissed those concerns in its August report. But it said there are legitimate worries about natural gas escaping from poorly designed and cemented wells, which might allow it to migrate to groundwater supplies.

“Contrary to common perception, frac fluids per se are very unlikely to contaminate drinking water,” McGinty said. “However the methane being released from the shale formation can migrate into those drinking resources.”

That means that it is “critically important” for regulators and industry to take baseline measurements and study the geology of regions where drilling is set to take place, McGinty added.

Mark Zoback, a professor of geophysics at Stanford University, stressed that “good well construction” is essential. “A well that is improperly cased and cemented has the potential to leak gas whether it is hydraulically fractured or not,” he said.

But Bingaman said industry should already have its mind around the best methods for properly designing and securing wells. We don’t need more research “on how to properly case and secure a well,” he said. “People know how to do that.”

The question, Bingaman said, is how to make sure it’s getting done.

Zoback insisted the answer was in sharing information and better training of regulators.

“The types of pressure tests and other tests that are done” to verify the soundness of cement at wells “take some degree of training to interpret and to acknowledge whether in fact the well is ready to go,” he noted. Regulators need to be up to speed on that, Zoback added.

Industry officials have resisted calls for federal regulation of shale gas drilling and hydraulic fracturing, insisting that states are better poised to keep an eye on that work. The advisory committee members testifying today echoed that view.

“There’s a gap in perceptions,” Yergin said. “There’s this view that oil and gas activities are not regulated. But we were all impressed by the quality and experience of the states in regulating oil and gas.”

Wide variations in geology among shale gas formations mean that what works best in the Northeast might not make sense in Texas, Murkowski said. The U.S. shouldn’t “try to apply a one-size-fits-all” approach to shale gas extraction.