Oil & Gas Law Brief

The University of Texas Energy Institute released a report on hydraulic fracturing yesterday at a meeting of the American Association for the Advancement of Science.  The report concludes that there have been no confirmed cases of groundwater contamination caused by the hydraulic fracturing process, and that hydraulic fracturing itself poses little risk to groundwater.  The report's conclusions include the following:

• allegations of groundwater contamination frequently result from the presence of methane that is found naturally in the groundwater in many places, and the presence of methane in those circumstances is unrelated to oil and gas activity
• there have been no documented cases of the hydraulic fracturing process itself causing groundwater contamination   
• aspects of oil and gas activity other than hydraulic fracturing sometimes lead to contamination
• the aspects of oil and gas activity that sometimes cause contamination include poor well construction (including the casing and cementing of wells), surface spills, and blowouts    
• the oil and gas regulations of most states were written before shale gas development became common, and many of those regulations could use updating, and  
• improvements could be made in casing and cementing regulations.

Yesterday, Scott Anderson of the Environmental Defense Fund wrote a blog post that discussed the report.  He began by acknowledging that the Environmental Defense Fund had been involved with shaping the Energy Institute's study.

The report’s conclusions are those of the authors, though Environmental Defense Fund (EDF) helped the University of Texas at Austin define its scope of work and reviewed drafts during the course of the project." 

He also acknowledged that prior inquires also have failed to find any confirmed examples of groundwater contamination that was caused by fracturing: "As has been the case in other inquiries, the University of Texas study did not find any confirmed cases of drinking water contamination due to pathways created by hydraulic fracturing." 

Mr. Anderson noted, however, that this does not mean that it is impossible for hydraulic fracturing to cause contamination.  He also discussed the report's conclusions that aspects of oil and gas activity other than hydraulic fracturing sometimes cause contamination, that "gaps" exist in the oil and gas regulations of some states, and that the regulations in many states should be updated.

The Energy Institute's report is called "Fact-Based Regulation for Environmental Protection in Shale Gas Development." 

The National Ground Water Association (NGWA), a nonprofit group of groundwater professionals, recently issued a statement announcing that it has produced a position paper on hydraulic fracturing.  The position paper calls for further research regarding hydraulic fracturing, but also suggests that water conservation efforts and issues relating to aspects of oil and gas activity other than hydraulic fracturing are more significant than hydraulic fracturing itself.  The other aspects of oil and gas activity discussed by the position paper include steps in the well construction process, such as casing and cementing, and management practices relating to spill prevention.  The NGWA's position paper states:

NGWA recognizes that hydraulic fracturing of oil and gas wells is a mature technology and has been a widespread practice for many decades.  While no widespread water quality or quantity issues have been definitively documented that are attributable to hydraulic fracturing and related activities at oil and gas sites, there have been isolated cases where faulty casing installations (including poor cement bonds) or poor management of materials/chemicals at the surface are suspected as having negatively impacted groundwater, surface water, or water wells."

NGWA's position paper offers suggestions for groundwater and drinking water protection, and those suggestions similarly focus on aspects of oil and gas activity other than a possibility that hydraulic fracturing itself might cause groundwater contamination.  The NGWA's recommendations focus on

• ensuring proper construction of oil and gas wells
• monitoring of water usage rates
• encouraging the investigation of the feasibility of using brackish water or other alternatives to fresh water for hydraulic fracturing
• properly sealing any old, abandoned wells 
• implementing best management practices to avoid spills
• disclosure of the chemicals used in hydraulic fracturing 
• testing of nearby waterwells before and after oil or gas wells are drilled (NGWA explained that, because certain chemicals associated with oil and gas activity sometimes are found naturally in groundwater, before and after testing of water wells could assist in resolving "future contamination complaints"), and
• ensuring proper construction of water wells.

The NGWA's position paper is largely consistent with statements previously made in the Oil & Gas Law Brief, which has stated that issues relating to well construction, well control, and spill prevention merit more attention than hydraulic fracturing. 

A controversial EPA draft report regarding the possibility that hydraulic fracturing has affected groundwater near Pavillion, Wyoming finally will be receiving peer review.

EPA released the draft report to the public last month.  In it, the EPA discusses its study of groundwater in the vicinity of Pavillion and states the Agency's conclusion that hydraulic fracturing likely contributed to groundwater contamination near Pavillion.  The draft report generated substantial attention because, if the EPA's conclusions hold up, the report apparently would provide the first documentation of an instance in which hydraulic fracturing has affected groundwater.  The draft report also became controversial because many people raised significant questions about various aspects of the methodology used by the EPA in its Pavillion study and about the reasoning that went into the EPA's conclusions (see Oil & Gas Law Brief posts dated December 12 and December 26, 2011).

In addition, several people criticized the EPA for releasing the draft report before subjecting it to peer review.  As noted on the EPA's own website, the Office of Management and Budget issued a bulletin to federal agencies in 2004 directing that "important scientific information shall be peer reviewed by qualified specialists before it is disseminated by the federal government."  The bulletin explains that, "Peer review is one of the most important procedures used to ensure that the quality of published information meets the standards of the scientific and technical community."  The peer review process "can filter out biases" and "clarify assumptions."  Further, the process "may encourage authors to more fully acknowledge limitations and uncertainties."

The EPA did not subject its draft report to peer review before releasing it to the public.  In a statement to the press announcing release of the draft report, the EPA suggested, however, that the draft report would be subjected to peer review later.  The press statement did not discuss the nature or timing of the peer review process. 

The EPA has now provided some detail on an upcoming peer review of the Agency's Pavillion study and draft report.  EPA Administrator Lisa Jackson explained in a recent letter to Wyoming Governor Matthew Mead that the EPA plans to convene a panel of five to seven experts with expertise in relevant scientific and engineering disciplines to meet publicly and consider "charge questions" that will be posed to them regarding the Pavillion study.  The EPA will draft a proposed "charge" and solicit feedback regarding the draft from interested parties.  The expert panel will be selected by an EPA contractor, based on public nominations received during a 30-day nominating process.  The EPA has published a Federal Register notice soliciting nominations.  

Jackson's recent letter to Mead defends the EPA's conclusions, but notably, Jackson also states that the "causal link" between contamination and "fracturing has not been demonstrated conclusively" at Pavillion.  Further, in an apparent reference to the fact that hydraulic fracturing was performed at much shallower depths at Pavillion than in most shale formations, Jackson stated that the EPA's Pavillion "analysis is limited to the particular geologic conditions in the Pavillion gas field and should not be applied to fracturing in other geologic settings." 

The Agency made a similar observation in its press release announcing the release of the EPA's draft report.  That press release states that the fracturing near Pavillion was being performed at shallow depths, and that the depth of the Pavillion gas field actually overlaps that of an underground source of drinking water.  The press release went on to state that the EPA's conclusions are "specific to Pavillion" and that the Pavillion gas field has "production conditions different from those in many other areas of the country." 

The "Conclusion" section of the draft report similarly states that, "Hydraulic fracturing in the Pavillion gas field occurred into zones of producible gas located within an Underground Source of Drinking Water (USDW)."  The fracturing occurred, though, at depths greater than those to which domestic water wells are actually drilled.

Jackson's letter to Mead suggests that the letter was prompted by letters from Mead to Jackson in December 2011 and earlier in January 2012.

In April 2011, Robert W. Howarth and two other professors from Cornell published a study in which they concluded that shale gas has a higher greenhouse gas ("GHG") footprint than coal.  Earlier this month, a different group of Cornell professors that included Lawrence Cathles published a study in which they conclude that Howarth's analysis is "seriously flawed" and that shale gas has a GHG footprint that is only one-third to one-half that of coal.  Now, Howarth and his original collaborators have responded with a paper that defends their original study.  So, how do Howarth and his co-authors respond to the criticisms leveled by Cathles?

One of Cathles' primary criticisms is that Howarth "significantly overestimate[]" the emissions of natural gas that occur during shale gas extraction.  Cathles asserted that a large portion of Howarth's overestimation results from his assumption that companies always vent the natural gas that accompanies water to the surface during flowback (see the January 16, 2012 post in the Oil & Gas Law Blog for a detailed discussion of what this assumption is all about and for more details regarding the Cathles article). 

Cathles states that, despite Howarth's assumption that companies always vent, the reality is that often companies do not vent during flowback.  Howarth concedes in his new paper that companies do not always vent, but he cites an EPA estimate that companies vent 85% of the time.  Howarth states that he could reduce his estimate of emissions by 15% to account for the fact that companies do not always vent, but given other uncertainties in the available data, he sees no reason to make that correction.

There is, however, a more significant problem with Howarth's assumption that companies always vent during flowback.  The EPA has published regulations that generally would prohibit venting altogether, and those regulations are scheduled to become final on April 3, 2012, a mere ten weeks from now.  Howarth's new paper acknowledges those proposed regulations, and the fact that the EPA estimates those regulations will cut emissions of natural gas during flowback by 95%. 

Howarth then states, however, that the proposed regulations will only require recovery of the natural gas when a pipeline connection is available.  Howarth's statement is true, but potentially misleading, because even when a pipeline connection is not available the regulations generally will prohibit venting.  In those circumstances, companies will be required to flare the natural gas unless doing so would present a safety risk, and the products of such flaring have a substantially lower GHG footprint than the natural gas that is flared.  Observers expect that the EPA's proposed regulations will go into effect as planned.  If that happens, Howarth's assumption that companies always vent will be a serious flaw in his analysis.

Cathles also criticized Howarth for his assumption that natural gas flows to the surface throughout flowback at the same rate that it flows after flowback is complete.  Cathles states that this assumption leads to an overestimation of gas flow because water that is present during flowback depresses the flow rate of natural gas, particularly at the beginning of flowback.  Howarth concedes that water significantly restricts the flow of natural gas in the initial portion of flowback, and even that the fluid flowing to the surface is all water at the very beginning of flowback.  He suggests that his assumption is justified because natural gas flows freely by the end of the flowback period.    

In addition, Cathles and his colleagues state that Howarth's study overestimated the amount of natural gas that leaks during storage, transmission, and distribution of the gas to market.   Howarth acknowledges that the estimates of leakage rates he used in his study are much higher than the EPA's estimates of leakage rates, but he states that he thinks the EPA's estimates are too low.  He asserts that the EPA's estimate of leakage rates are too low because the estimates are based on studies conducted at "model" facilities that he implies were younger than the facilities that often are used for natural gas storage and distribution.  

Cathles asserted that another flaw in Howarth's analysis is that he fails to account for the fact that natural gas-fired power plants are more efficient at converting heat energy to electricity than coal-fired plants.  Howarth's reply is that most natural gas is used for generating heat, rather than in generating electricity, and therefore it is appropriate to ignore the difference in efficiency between gas-fired and coal-fired power plants.  Howarth's response may be valid to the extent someone wants an estimate of the life cycle GHG footprint of shale gas when it is used for generating heat.  But a major issue that has been raised in public discussions is how the GHG footprints of natural gas and coal compare when they are used as fuels for the generation of electrical power, and for that comparison, an accurate consideration of the differences in power plant efficiencies is essential.  

Finally, Cathles and his colleagues stated that Howarth erred by using a 20-year time horizon rather than a 100-year time horizon.  This issues arises because a comparison of the relative GHG footprints of coal and shale gas requires consideration of both carbon dioxide and methane.  This requires selection of a particular time horizon because methane has a stronger GHG footprint than carbon dioxide, but methane breaks down in the atmosphere over time, whereas carbon dioxide accumulates in the atmosphere.  Howarth chose a 20-year time horizon for the main comparisons he made in his study, but Cathles and his colleagues state that a 100-year time horizon is more appropriate. 

Howarth concedes that researchers "quite commonly us[e] only the 100-year time frame."  Nevertheless, Howarth defends his use of a shorter time frame.  He states that some studies have estimated that the earth is about 18 yeas away from a "tipping point" in which rising temperatures would cause significant methane release from the melting of permafrost, which could reinforce a trend toward global warming.  Howarth states that this makes a short time horizon critical, even though the GHG footprint of methane is considerably lower when looking at longer time horizons.

In their new paper, Howarth and his colleagues state that they "stand by" their prior "analysis and conclusions," and that they believe that "most" of Cahtles' criticisms "have little merit."  Howarth's reply provides some interesting information, though some of his rebuttals are unconvincing.

Several months ago, a group of Cornell University professors led by Robert Howarth published an article stating that shale gas has a higher greenhouse gas (GHG) footprint than coal.  But subsequent studies reached the opposite result, concluding that shale gas has not just a lower, but a much lower GHG footprint than coal.  Now, a new study from Cornell University concludes that the earlier Cornell study by Howarth was "seriously flawed," and that shale gas has a GHG footprint that is only one-third to one-half that of coal.

The new Cornell study was conducted by L.M. Cathles III and others, who published an article online in the journal Climatic Change Letters on January 3, 2012.  The authors begin by noting certain facts that no one disputes.  First, shale gas burns much more cleanly than coal.  Unlike the burning of coal, the combustion of shale gas (natural gas produced from shale) does not produce sulfur, mercury, ash, and particulates. Further, on an energy equivalent basis, the burning of shale gas produces much less carbon dioxide than coal.  After noting these undisputed facts, Cathles and his colleagues discuss several errors made by Howarth ─ errors that led to his erroneous conclusion that shale gas has a large GHG footprint even though it burns so cleanly. 

First, Howarth and his collaborators "significantly overestimate[d] the fugitive emissions associated with unconventional gas extraction."  In large part, Howarth's overestimation of emissions is the result of  unrealistic assumptions regarding flowback.  "Flowback" is a step that occurs after hydraulic fracturing is complete, when operators allow the shale formation's pressure to push the hydraulic fracturing water back to the surface, where it is recovered.  Significant quantities of natural gas accompany the flowback water.  Howarth assumed that companies always vent that natural gas to the air.  And, because the principal component of natural gas is methane (a greenhouse gas), Howarth concluded that such venting causes shale gas to have a large GHG footprint.

But natural gas is a valuable product and many companies recover and sell that natural gas, rather than venting it.  Sometimes it is not possible to recover and sell the gas because a pipeline connection is not yet available, but in those circumstances companies often flare the gas, rather than venting it, because it would be a safety hazard to vent such a large amount of natural gas at the well site.  Indeed, as previously noted in the Oil & Gas Brief, some states require companies to recover or flare that gas, rather than venting it (the combustion products have a much lower GHG effect than the natural gas itself).  Howarth's assumption that companies always vent natural gas during flowback is simply wrong.  Moreover, the U.S. Environmental Protection Agency is scheduled to finalize regulations to prohibit such venting altogether by April 3, 2012, just a few months from now.   

In addition, Howarth overestimated the amount of natural gas that comes to the surface during flowback.  He assumed that natural gas flows to the surface during flowback at the same rate at which it flows when the natural gas well is first put into production, after flowback is complete.  But during flowback, the well contains significant water, and that water holds the flow rate of natural gas below the rate at which gas will flow after flowback water is removed from the well.        

Cathles and his colleagues explained that Howarth also overestimated the amount of natural gas that leaks during storage, transmission, and distribution of the gas to market.   The EPA estimates that losses during those steps amount to 0.73% of the gas produced, but Howarth assumes losses during those steps will be 2 to 5 times higher than that, between 1.4 and 3.6%.

Another flaw in Howarth's analysis is that he fails to account for the fact that power plants that use natural gas are more efficient at converting heat energy to electricity than coal fired plants.  Howarth compared natural gas and coal on an equivalent heat energy basis, but a greater portion of the heat of combustion will be converted to electricity when using natural gas than when using coal. 

Finally, Cathles and his colleagues described an additional problem with Howarth's analysis.  When comparing the life cycle GHG footprints of coal and shale gas, one must consider the GHG effects of both carbon dioxide and methane.  This is necessary because both shale gas and coal produce carbon dioxide when burned, and because fugitive emissions (leaks) from natural gas piping and equipment result in releases of methane. 

But the need to consider both carbon dioxide and methane complicates the analysis.  A molecule of methane has a stronger GHG effect than carbon dioxide, but when carbon dioxide is emitted to the atmosphere, it remains there for a long time.  In contrast, methane breaks down over time.  Thus, the relative sizes of the GHG footprints of carbon dioxide and methane depend upon the time horizon chosen. 

Climate change is a long term process, and Cathles stated that most researchers use a 100 year time horizon when comparing the relative GHG effects of methane and carbon dioxide.  But Howarth chose a 20 year time horizon.  The shorter time horizon does not adequately account for the breakdown of methane, and thus overestimates the GHG effect of that compound.  Because a portion of the GHG footprint of natural gas comes from methane, Howarth's inappropriate use of a 20 year time horizon caused him to overestimate the GHG footprint of a given quantity of shale gas.

Other studies have reached conclusions similar to those of Cathles, who states that the GHG footprint of shale gas is one-third to one-half that of coal.  A study performed by researchers at Carnegie Mellon, whose work was funded by the Sierra Club, concluded that life cycle GHG footprint for shale gas is 20 to 50% lower than that for coal.  A study done in collaboration between Worldwatch Institute and Deutsche Bank concluded that the GHG footprint for shale gas is 47% lower than for coal.  A study by IHS Global Energy Research Associates did not calculate relative GHG footprints, but it noted some of the same problems with the Howarth study as Cathles identified.    

The Cathles team consisted of Lawrence M. Cathles III, Larry Brown, Milton Taam, and Andrew Hunter.  Howarth's co-authors included R. Santoro and Anthony Ingraffea.  The authors of the Worldwatch article were Mark Fulton, Nils Mellquist, Saya Kitasei, and Joel Bluestein.  The IHS paper was written by Mary L. Barcella, Samantha Gross, and Surya Rajan.