Hydraulic fracturing and U.S. water policy

March 5th, 2013

J. Wesley Burnett, West Virginia University, United States

The recent boom in the development of natural gas from shale is a game changer for U.S. domestic energy. Large domestic reserves of shale gas reduce dependency on foreign producers, as is currently the case for crude oil. The U.S. Energy Information Administration (EIA) estimates that the U.S. contains approximately 500 trillion cubic feet of unproved technically recoverable resources from shale gas.1 At current rates, that is enough gas from shale alone to supply the entire country for approximately twenty-one years.2

The large increase in shale gas development has been made possible through the development of two principle technologies: horizontal drilling and high-volume, hydraulic fracturing (HVHF) fluid. Horizontal drilling or directional drilling allows producers to access far more natural gas from relatively thin shale deposits within the earth.4 HVHF involves injecting a large volume mixture of water, sand, and other chemicals deep into the earth. The high pressure from the fluid causes shale rock formations to fracture so that natural gas can be released and extracted. HVHF fluid is mostly composed of water (generally ninety-eight to ninety-nine percent) and can contain some potentially hazardous (and possibly carcinogenic) chemicals including benzene and lead.5

The contention over hydraulic fracturing surrounds public fears over contamination of drinking water sources. This sentiment was captured in the anti-fracking film by Josh Fox called Gasland – the film received a 2010 special jury prize for a documentary at the Sundance Film Festival and was nominated by the Academy Award for Best Documentary in 2011.7 According to a recent report from the Natural Resource Defence Council (2012), HVHF fluid can contaminate drinking water on the surface or below the ground surface.8 Potential surface contamination can occur because of: (1) spills or leaks from storage tanks, valves, or transportation pipes, or (2) mismanagement of fracturing waste or “flowback” fluid which is often stored in surface pits. Contamination to below ground surface can occur due to (1) migration of fluid to neighbouring oil or gas wells, (2) improper construction, cementing, and casing of the well, and (3) migration of fluid to other natural fracture networks.

In addition to potential contamination, HVHF fluid also requires large volumes of water taken from fresh water sources, and if the water is contaminated it cannot be returned to water bodies without extensive treatment. When a well is injected with HVHF fluid some of it returns to the surface as flowback, but not all fracturing fluid injected into a geologic formation are recovered.10 If the flowback fluid is contaminated then it may need to be returned underground using a permitted underground injection well.

The natural gas industry often claims that there is no evidence of contamination to freshwater aquifers. For example, Rex Tillerson, chief executive of ExxonMobil, offered the following statement at a recent Congressional hearing on drilling: “There have been over a million wells hydraulically fractured in the history of the industry, and there is not one, not one, reported case of a freshwater aquifer having ever been contaminated from hydraulic fracturing. Not one.”11 Urbina (2011) contends that the lack of documented cases exist because the industry often settles suspected cases through lawsuits with private landowners, in which case the details of such cases are sealed from public disclosure. In fact, a U.S. Environmental Protection Agency (EPA) 1987 Congressional report documented a case of contaminated well water from HVHF fluid in West Virginia.12 Additionally, a Duke University study found that drinking water methane concentrations were seventeen times higher in active drilling locations.13

What is unclear in the U.S. at this point is the nation’s system of federalism in regulating HVHF. For example, it is not clear what role, if any, the EPA will play in regulating this practice. Much to the ire of environmentalists, the practice of hydraulic fracturing is largely exempt from the Safe Drinking Water Act (SDWA) as superseded by the Environmental Policy Act of 2005. Legislation, dubbed the FRAC (fracturing responsibility and awareness of chemicals) act, was introduced to both houses of Congress to enable the EPA to obtain jurisdiction over hydraulic fracturing under the SDWA; however, to date no major legislation has passed in either house.14 The EPA’s ability to regulate HVHF under the Clean Water Act is limited to the disposal of flowback into surface waters in the U.S.15 Therefore, the regulation of HVHF has largely been relegated to state and local governments.

Many critics argue that environmental regulations imposed by the federal government would be much stricter than state-level enforcement.16 Critics have argued that the SDWA provides the EPA with leverage against states’ inaction in protecting water sources. In the absence of federal legislation, some fear a “race to the bottom” in which individual states may purposively impose lax environmental regulations to attract natural gas development. The justification for environmental regulations under federal control “reflect commonly understood collective action problems, including negative environmental externalities, resource pooling, the ‘race to the bottom,’ uniform standards, and the ‘NIMBY’ (not in my back year) phenomenon.”17 What is clearly needed in this case is a model of “cooperative federalism” in which the federal government offers some guidance in the potential environmental impacts from shale gas development, but leaves regulation to local governments to provide a more comprehensive, protective, and accountable regulation of the industry.18

The U.S. will likely be the bellwether for other countries as Germany, Hungary, Romania, Poland, China, and Australia are participating in discussions regarding the application of hydraulic fracturing to extract their shale gas reserves.19,20 How will the policy debate in the U.S. unfold? It is difficult to tell. Perhaps Benkin (1992) states it best: “ the choice of regulatory forum often seems to determine the outcome of the controversy. That may explain why Americans have traditionally shed so much metaphorical and genuine blood deciding what are essentially jurisdictional disputes between governmental institutions.”21

References:

1. EIA (2012), ‘Annual energy outlook 2012: with projections to 2035’, U.S. Energy Information Administration, available online at: http://www.eia.gov/forecasts/aeo/pdf/0383(2012).pdf

2. EIA (2012), ‘Natural gas consumption by end use’, U.S. Energy Information Administration, accessed online August 7, 2012 at: http://www.eia.gov/dnav/ng/ng_cons_sum_dcu_nus_a.htm

3. EIA (2011), ‘Lower 48 states shale plays’, U.S. Energy Information Administration, available online at: http://www.eia.gov/oil_gas/rpd/shale_gas.pdf

4. EIA (July 12, 2011), ‘Technology drives natural gas production growth from shale gas formations, U.S. Energy Information Administration, available online at: http://www.eia.gov/todayinenergy/detail.cfm?id=2170

5. Committee on Energy and Commerce (April 16, 2011), ‘Committee Democrats release new report detailing hydraulic fracturing products’, available online at: http://democrats.energycommerce.house.gov/index.php?q=news/committee-democrats-release-new-report-detailing-hydraulic-fracturing-products

6. D. Stephens (October 25, 2011), ‘Hydraulic fracking has rewarded oil and gas investors’, available online at: http://technorati.com/business/finance/article/hydraulic-fracking-has-rewarded-oil-and

7. Walsh, B. (February 26, 2011), ‘A documentary on natural gas drilling ignites an Oscar controversy’, Time Magazine: Science and Space, available online at: http://science.time.com/2011/02/26/a-documentary-on-natural-gas-drilling-ignites-an-oscar-controversy

8. NRDC (July 2012), ‘Water facts: Hydraulic fracturing can potentially contaminate drinking water sources’, Natural Resource Defence Council, available online at: http://www.nrdc.org/water/files/fracking-drinking-water-fs.pdf

9. FracTracker (2012), ‘Pictures: ‘Open pit’ by Mark Schmerling’, available online at https://www.fractracker.org.

10. EPA (June 2010), ‘Hydraulic fracturing research study’, U.S. Environmental Protection Agency, available online at: http://epa.gov/tp/pdf/hydraulic-fracturing-fact-sheet.pdf

11. Urbina, I. (August 3, 2011), ‘A tainted water well, and concern there may be more’, The New York Times, available online at: http://www.nytimes.com/2011/08/04/us/04natgas.html?_r=1.

12. EPA (December 1987), ‘Report to Congress: Management of wastes from the exploration, development, and production of crude oil, natural gas, and geothermal energy’, U.S. Environmental Protection Agency, available online at: http://www.nytimes.com/interactive/us/drilling-down-documents-7.html#document/p1/a27935

13. Osborn, S.G., Vengosh, A., Warner, N.R., and Jackson, R.B. (2011), ‘Methane contamination of drinking water accompanying gas well drilling and hydraulic fracturing’, Proceedings of the National Academy of Sciences, DOI: 10.1073/pnas.1100682108, available online at: http://www.nicholas.duke.edu/cgc/pnas2011.pdf

14. Lustgarten, A. (June 9, 2009), ‘FRAC ActCongress introduces twin bills to control drilling and protect drinking water’, Propublica, available online at: http://www.propublica.org/article/frac-act-congress-introduces-bills-to-control-drilling-609

15. EPA (2012), ‘Regulation of hydraulic fracturing under the safe drinking water act’, U.S. Environmental Protection Agency, accessed online August 7, 2012 at: http://water.epa.gov/type/groundwater/uic/class2/hydraulicfracturing/wells_hydroreg.cfm

16. Kay, D. (2012), ‘Energy federalism: who decides?’, Cornell University Department of Development Sociology, Research and Policy Brief Series, available online at: http://devsoc.cals.cornell.edu/cals/devsoc/outreach/cardi/programs/loader.cfm?csModule=security/getfile&PageID=1071714

17. Glicksman, R.L. and Levy, R.E. (2008), ‘A collective action perspective on ceiling preemption by federal environmental regulation: the case of global climate change’, Northwestern University Law Review, 102(2), pp. 579-648.

18. Cricco-Lizza, G. (2012), ‘Hydraulic fracturing and federalism: injecting reality into policy formation’, Seton Hall Law Review, 42(2), pp. 703-740.

19. Rahm, D. (2011), ‘Regulating hydraulic fracturing in shale gas plays: The case of Texas’, Energy Policy, 39, pp. 2974-2981.

20. Crouch, B. (May 12, 2012), ‘Shale gas to put South Australia on front foot as global energy superpower’, Adelaide Now, available online at: http://www.adelaidenow.com.au/business/shale-gas-to-put-south-australia-on-front-foot-as-global-energy-superpower/story-e6frede3-1226353827258

21. Benkin, I.D. (1992), ‘Who makes the rules? Federal and state jurisdiction over electric transmission access’, Energy Law Journal, 13(1), pp. 45-60.

J. Wesley Burnett, Ph.D., is an Assistant Professor at West Virginia University in the Division of Resource Management. His research focuses on energy, environmental and natural resource economics. Dr. Burnett can be contacted at jwburnett@mail.wvu.edu.

The views expressed in this article belong to the individual authors and do not represent the views of the Global Water Forum, the UNESCO Chair in Water Economics and Transboundary Water Governance, UNESCO, the Australian National University, or any of the institutions to which the authors are associated. Please see the Global Water Forum terms and conditions here.