Shale Gas and Oil in the Spotlight: 2011 Litigation, Legislation, and

Report
Shale Gas and Oil in the Spotlight:
2011 Litigation, Legislation, and
Regulation
Professor Hannah Wiseman
Key points
• Development of oil and gas from shales and tights sands is rapidly
expanding, largely as a result of “slickwater” hydraulic fracturing (2-5
million gallons of water per well + 0.5% chemicals by weight).
• Unconventional development in shales and tight sands involves many
stages, not just fracing.
• Potential environmental effects: largely arise because fracing enables the
drilling of thousands of new wells, but also from new activities introduced by
fracing: chemical transportation and disposal of new wastes, for example.
• The states have primary responsibility for controlling the environmental
effects of oil and gas development, and state regulations vary substantially.
• Law suits, state legislation, modified state regulations, and federal
regulation of fracing are slowly emerging.
The rapid expansion of shale and tight
sands development enabled by fracing
http://www.eia.gov/energy_in_brief/images/charts/large-ppt24.jpg
The numbers
• The Energy Information Administration believes
that the United States has 2,543 trillion cubic
feet (Tcf) of natural gas, 862 Tcf of which are
trapped within shales.
• This quantity of gas at 2010 U.S. consumption
rates could supply more than 100 years of gas.
• Don’t forget oil: fracturing is also ramping up
production of oils from shales, particularly in the
Bakken Shale (North Dakota, Montana).
• About 90% of new gas wells are hydraulically
fractured.
The many stages of shale or tight
sands development
•
•
•
•
•
•
•
•
•
•
Conduct seismic testing
Construct an access road and well pad
Drill, case, and cement a well
Store drilling wastes on site (fluids, drill cuttings in
open surface pits or tanks)
Dispose of drilling wastes
Transport water and chemicals to the site
Perforate and fracture the well
Capture produced water and flowback water
Dispose of flowback
Enter the production phase and restore the site
Conducting seismic testing
• Identify best areas for production through
seismic testing (use “thumper” truck or blast a
shot hole to create underground vibrations,
record and chart data).
http://www.netl.doe.gov/technologies/oilgas/petroleum/projects/ep/images/ThumperTruck2.jpg
Potential effects
• Potential damage to homes, structures if not
conducted properly
• Erosion and sedimentation, soil compaction
from trucks
• Unplugged shot holes as safety hazard
• Water contamination from stream crossings ,
blasting in or near wetlands
http://www.fe.doe.gov/images/programs/sequestra
tion/thumper_trucks.jpg
Seismic testing regulation
Arkansas
Required
200 ft.
distance
between
shot hole
and
building or
water well
Oklahoma
Texas
New York
Pennsylvania
200 ft. (500
ft. for
Superfund
site)
--
250 ft. (roads No minimum
and trails in
distance;
state parks)
provides
maximum peak
particle velocity
at closest
building
Arkansas, Colorado, Louisiana, Montana, North Dakota, Texas,
and Wyoming require that shot holes be plugged.
Maryland allows its DEP to deny a seismic permit if testing
“posses a substantial risk of causing environmental damage
that cannot be mitigated by the applicant.”
Constructing a well pad and access
road
• Access road 0.1-2.75 acres
• Well pad 2.2-5.7 acres (average 3.5)
http://208.88.130.69/uploadedimages/Issues/Articles/Apr-2011/0411-Shale-MarcellusPennsylvania.jpg
Potential effects
• Erosion and sedimentation, pollution of
nearby waters
– Michigan May 2011: access road “badly eroded,”
violation noted, no enforcement
– Pennsylvania “failure to minimize erosion” noted
at more than 30 Marcellus sites in 2011
• Onsite spills from equipment (diesel, etc.)
• Habitat fragmentation, other wildlife impacts
http://aarconinc.com/images/thumbs/marcellusshale.jpg
Federal law
• Construction general permit required for oneacre sites and greater (stormwater) – typically
state-administered
• Consultation with Fish and Wildlife Service
and potential incidental take permit necessary
if endangered or threatened species are on or
near the site.
Minimum distance between well pad, well, or
pits and domestic and natural resources
Arkansas
Oklahoma
Texas
New York
Pennsylvania
Dwellings
and other
structures
200 ft.
-habitable,
300 ft. other
structures
200 ft.
100 ft.
200 ft.
Private
water
wells
--
300 ft. (land
application of
wastes)
--
500 ft.
200 ft.
Streams
Closed-loop
system if
w/in 100 ft.
of stream
and use oilbased
drilling
fluids
100 ft.
(between land
application
and perennial
stream); 50 ft.
(intermittent
stream)
--
150 ft. (well); 150 ft.
500 ft.
(fueling
tanks)
DRBC: 500 ft.
New York: proposed additional
protections during construction phase
• Special general construction permit for oil and
gas drilling site construction
• State Pollutant Discharge Elimination System
permit for stormwater discharges within 500
feet of principal aquifers (Preliminary Revised
Supplemental Generic Environmental Impact
Statement September 2011)
Drilling, casing, and cementing a well:
procedure and potential effects
• Shale and tight sands wells often are very deep
(thousands of feet) and are often, but not always,
drilled horizontally.
• Operators must case (“line”) a drilled well with
steel tubing to keep the wellbore from caving in, to
allow oil or gas to flow up through the well, and to
prevent substances in the well, such as oil and gas,
from “communicating” with (mixing with)
underground resources, such as fresh water.
• If pressure builds up in the well during drilling, the
well can “blow out,” thus compromising the casing
and possibly causing pollution.
Potential effects during drilling, casing, and
cementing, continued
• Fuel pumps may malfunction, causing spills.
• Drilling mud and fluids may spill.
• Improper casing may cause natural gas to contaminate
drinking water.
– New Mexico August 2010: fuel pump split, spilling 1,000 gallons
of diesel; 100 gallons recovered. Violation noted, no
enforcement.
– Louisiana June 2009: casing valve at well head was open,
causing drilling mud to drip out. Administrative order and
settlement. November 2009, spill of oil-based drilling mud
migrated to natural drainage. Admin. order.
– Pennsylvania July 2009 : due to improper casing, methane
contaminated stream tributaries and water wells . $44,125
settlement. May 2011: Chesapeake fined $900,000 for methane
contamination of water wells.
Note that some methane migrates
naturally to water wells (and not as a
result of gas well drilling)
No federal regulation of drilling, casing,
cementing except for federal leases
• States are responsible for writing and enforcing
the drilling, casing, and cementing of oil and gas
wells.
• The federal government may add drilling, casing,
and cementing protections for leases on federal
lands, however. The BLM plans to finalize best
management practices, for example, which will
address well integrity. (Initial DOI forum in DC in
November 2010, regional BLM forums held in
2011.)
State casing and cementing requirements
Arkansas
Oklahoma
Texas
New York
Pennsylvania
Depth of
100 ft.
surface
casing
below
lowest
fresh
groundwat
er
50 ft. or 90
ft. below
surface,
whichever
deeper
Below all
known or
reasonably
estimated
groundwater
75 ft. or into
bedrock,
whichever
deeper; 100
ft. in primary
and principal
aquifers
50 ft. or into
consolidated
bedrock,
whichever
deeper
Cementing Correction
of surface of cement
casing
deficiencies
required
before
fracturing
Cement
must set at
least 8 hrs.
before
drilling.
Allow surface
casing to set
until
compressive
strength 500
psi in critical
cement zone
No casing
disturbance
until achieves
compressive
strength of
500 psi
Relies on
American
Petroleum
Institute
cementing
specifications
Ohio has one of the deepest surface casing requirements (500 feet
below lowest freshwater).
Storing drilling wastes on site:
potential effects
• Stored in pits or steel tanks. Open pits can
attract birds.
• Improperly constructed pits can leak, either by
overflowing or allowing leakage through a
torn liner.
• Fluids can spill during transfer from well to
storage pit.
http://www.fws.gov/mountain-prairie/pressrel/oilBirds.JPG
Examples of surface spills during drilling
fluid transfer or waste storage or transfer
• Pennsylvania February 2011: $188,000
penalty for failure to contain materials in
tanks.
• Louisiana March 2009: produced water
overflowed from tanks and entered swampy
area. Administrative order.
http://www.osha.gov/SLTC/etools/oilandgas/images/rig_reserve_p
it.jpg
Federal regulation
• Most oil and gas exploration and production
(E&P) wastes, including some wastes
containing hazardous substances, are
exempted from hazardous waste regulation
under the Resource Conservation and
Recovery Act; states regulate handling,
storage, and disposal.
• Non-exempt hazardous wastes must be
handled and disposed of under RCRA.
http://www.shippinglabels.com/img/lg/D/Vinyl-Hazardous-Waste-Label-D1745.gif
State regulation of drilling waste storage
Arkansas
Oklahoma
Spill/leak
prevention
Tanks with
produced
fluids must be
surrounded
by
containment
structures
--
Reserve pit or
drilling pit liner
and freeboard
20-mil
synthetic, 2 ft.
Geomembrane
liner if near
water, 2 ft.
Texas
--
2 ft. only for
brine
evaporation
pits
New York
Pennsylvania
Troughs, drip
pads, pans
beneath tank fill
ports; secondary
containment for
large tanks and
small tanks w/in
500 ft. of water
resources
Preparedness,
Prevention,
Contingency Plan
for spill prevention
30-mil synthetic,
2 ft.
Synthetic,
permeability of no
greater than 1 x 10-7
cm/sec, 2 ft.
Disposing of drilling wastes: potential
effects
• Improperly-cased underground injection
control wells may leak and contaminate
underground drinking water sources.
– Texas Heritage Consolidated bankruptcy case
November 2010: UIC well (with wastes from
Crittendon field) leaked into Midland’s Cenozoic
Pecos Alluvium Aquifer, contaminating the city’s
drinking water supply. Operator filed for
bankruptcy.
Disposing of drilling wastes: potential
effects, continued
• Salty produced water improperly applied to
roads and other surfaces could pollute surface
waters and soils
– New Mexico June 2002: $7,500 penalty for
application of produced water to a road; July 2004
violation noted when 480 barrels of produced water
were applied to a road without a permit.
• Improperly buried drill cuttings—particularly if
they were drilled using salty or oil-based drilling
fluids—could pollute surface waters or soils.
Disposing of drilling waste: potential
effects, continued
UIC wells drilled in or near fault zones can cause localized,
mostly small earthquakes. Oklahoma Geological Survey
(Aug. 2011) points to several cases, concluding:
"Cases of clear anthropogenically-triggered seismicity
from fluid injection are well documented with correlations
between the number of earthquakes in an area and
injection, specifically injection pressures, with
earthquakes occurring very close to the well.”
More research needed.
http://www.ogs.ou.edu/pubsscanned/openfile/OF1_2011.pdf
Federal regulation
• States regulate most disposal, which occurs on
road surfaces, drill sites, in centralized E&P
facilities, through wastewater treatment plants,
or in underground injection control wells.
• The EPA regulates underground injection control
wells under the Safe Drinking Water Act; most
states have primacy and are responsible for
issuing and enforcing UIC permits under the
SDWA.
State regulation of drilling waste disposal
Arkansas
Oklahoma
Texas
New York
Pennsylvania
Pit on site or
land application
Drill
cuttings
from oilbased
drilling
Class I
Commercial
landfill or
pit or land
other ADEQ- application
approved
methods
Burial on
site
Solid waste
disposal
facility
Waterbased
drilling
fluids
Landapplied,
sent down
well bore,
dried and
buried on
site, UIC
well, etc.
Landfarmin
g if low
chloride,
burial of
dewatered
high
chloride
(Likely
Discharge to
landfill
land only with
disposal
permit
required; not
wholly clear
from SGEIS.)
Produced
water
Same as
Discharge to UIC wells
water-based land with
drilling
restrictions
fluids
Commercial
pit,
commercial
soil farming,
land
application
Road
spreading
after NORM
analysis,
POTW
POTW after
treatment
Fracturing a well: potential effects
• Chemicals may spill during transport.
– 2005-2009, more than 780 gallons of more than 2,500
different types of hydraulic fracturing products were
used in wells around the country. Most widely-used
chemical was methanol. U.S. House of
Representatives Committee on Energy and Commerce,
Minority Staff Report April 2011.
• The well may blow out during fracturing.
– In April 2011, a well in Pennsylvania blew out during
the fracturing process, causing several thousand
gallons of fracturing fluids to enter a nearby creek. In
May 2011, Maryland’s attorney general threatened to
sue.
Fracturing a well: potential effects,
continued
• Fracturing fluids may spill on site when being
transferred or stored
– New Mexico March 2009: 800 barrels of fracturing
fluid spilled out of tanks when valve was opened
– New Mexico May 2009: 15 barrels of fracturing
fluid spilled when operator mistakenly placed fluid
in tank that had a leak
State regulation of fracturing
Chemical
disclosure
Arkansas
Oklahoma
Texas
New York
Pennsylvania
All chemical
additives,
including rate
and
concentration
(agency)
Volumes of
frac fluid and
proppant
used (agency)
All chemical
ingredients
(public)
Every additive
product (will
be public)
Chemicals or
additives utilized
(agency)
Arkansas, Wyoming, Montana, and North Dakota have recently updated their oil
and gas regulations to specifically govern the practice of fracturing—requiring
improved casing and blowout prevention, for example. Oklahoma regulations
point oil and gas operators to the portions of the regulations that apply to
fracturing.
Several states, such as Texas and West Virginia, require reporting of water
quantities used for fracturing.
Disposing of fracturing wastes:
potential effects
• Both produced water (which comes up naturally
from the formation during the drilling stage) and
flowback water can contain low levels of
naturally-occurring radioactive materials (NORM).
• Flowback water contains low concentrations of
fracturing chemicals.
• Wastewater treatment plants may be
inadequately equipped to treat large quantities of
flowback water.
Federal regulation
• The EPA sent a letter to the Pennsylvania DEP in
March 2011 expressing concerns that
wastewaters from Marcellus drilling and
fracturing weren’t being adequately treated by
wastewater treatment plants and could be
discharging low levels of radioactive wastes into
rivers.
• The Pennsylvania DEP responded in April 2011,
indicating that it had tested the water quality in
the rivers below the discharge points and have
found no violations.
Federal regulation of fracturing waste
disposal, continued
• Request of Pa. DEP and Governor Corbett: After May
19, 2011, stop sending fracturing wastewater to
“grandfathered” POTWs in Pennsylvania.
• In May 2011, the EPA sent a Section 308 Clean Water
Act request to the six largest energy companies
operating in Pennsylvania’s Marcellus, asking for
detailed information on how they have been disposing
of their wastewater. The EPA also sent a follow-up
letter to the DEP, continuing to express concerns about
Marcellus wastewater treatment.
• In October 2011, the EPA promised to regulate
wastewater from fracturing in shales under the Clean
Water Act by 2014.
Lawsuits RE: fracturing waste disposal
• July 2011, Pennsylvania environmental groups
(represented by Pittsburgh Law environmental
clinic) sued a municipal wastewater treatment
plant, alleging Clean Water Act violations for
accepting Marcellus drilling and fracturing
waste and inadequately treating the 80,000100,000 gallons/day of wastewater that it
discharges in the Monongahela River.
State regulation of fracturing waste
disposal
Flowback
Arkansas
Oklahoma
Texas
New York
Only
specifies
that no
permanent
disposal in
pits is
permitted.
Recycling,
burial,
noncommer
cial pits,
injection
(but see
statement
by
Commission
er Jeff
Cloud: only
recycling or
injection)
Likely only POTWs
UIC wells or
recycling
Pennsylvania
Previously
POTWs, now
recycling, outof-state POTWS
Overall trends
• Many states moving toward disclosure (see
also FracFocus).
• Several states initiating lawsuits (New York,
potentially Maryland).
• EPA regulating wastewater and VOC air
emissions.
• Several states are updating regulations to
recognize fracturing.

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