[Senate Hearing 112-227]
[From the U.S. Government Publishing Office]
S. Hrg. 112-227
SEAB SUBCOMMITTEE'S 90-DAY REPORT
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
TO
RECEIVE TESTIMONY ON THE SECRETARY OF ENERGY ADVISORY BOARD'S SHALE GAS
PRODUCTION SUBCOMMITTEE'S 90-DAY REPORT
__________
OCTOBER 4, 2011
Printed for the use of the
committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota JOHN BARRASSO, Wyoming
MARY L. LANDRIEU, Louisiana JAMES E. RISCH, Idaho
MARIA CANTWELL, Washington MIKE LEE, Utah
BERNARD SANDERS, Vermont RAND PAUL, Kentucky
DEBBIE STABENOW, Michigan DANIEL COATS, Indiana
MARK UDALL, Colorado ROB PORTMAN, Ohio
JEANNE SHAHEEN, New Hampshire JOHN HOEVEN, North Dakota
AL FRANKEN, Minnesota DEAN HELLER, Nevada
JOE MANCHIN, III, West Virginia BOB CORKER, Tennessee
CHRISTOPHER A. COONS, Delaware
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
McKie Campbell, Republican Staff Director
Karen K. Billups, Republican Chief Counsel
C O N T E N T S
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STATEMENTS
Page
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Holditch, Stephen A., P.E., Department Head, Petroleum
Engineering, Texas A&M University, College Station, TX......... 8
McGinty, Kathleen A., Senior Vice President and Managing
Director, Strategic Growth, Weston Solutions, Inc., West
Chester, PA.................................................... 15
Murkowski, Hon. Lisa, U.S. Senator From Alaska................... 2
Yergin, Daniel, Chairman, IHS Cambridge Energy Research
Associates..................................................... 4
Zoback, Mark D., Benjamin M. Page, Professor of Earth Sciences,
Department of Geophysics, Stanford University, Palo Alto, CA... 11
APPENDIX
Responses to additional questions................................ 45
SEAB SUBCOMMITTEE'S 90-DAY REPORT
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TUESDAY, OCTOBER 4, 2011
U.S. Senate,
committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 10:06 a.m. in
room SD-366, Dirksen Senate Office Building, Hon. Jeff
Bingaman, chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. OK. The hearing will begin.
Thank you all for coming today.
The purpose of this hearing is to receive testimony on the
Secretary of Energy advisory board's shale gas production
subcommittee's 90-day report.
In recent years, a number of factors have raised the
prominence of natural gas as a resource. New applications of
technologies such as horizontal drilling and hydraulic
fracturing have led to more domestic natural gas production and
have led to a reassessment of the U.S. technically recoverable
resources.
The international focus on reducing greenhouse gas
emissions has favored the lower carbon intensity of natural gas
for power generation. The recent tragedy in Japan at the
Fukushima nuclear plant has led both the Japanese and the
German officials to speak--speak strongly about fuel switching
to natural gas to replace, or at least, to supplement their
remaining nuclear fleet.
Concerns about our dependence on foreign oil have led some
to propose switching our cars and trucks from imported gasoline
and diesel fuel to domestic natural gas. Proponents of domestic
manufacturing have argued that a larger, more stable gas supply
at competitive prices will lead to a resurgence of investment
in manufacturing in this country.
The promise of the expanded domestic natural gas resources
comes with a responsibility to address environmental concerns
as well as human health and safety issues. Those concerns arise
with increased natural gas exploration and production,
particularly in areas that have not previously experienced a
natural gas boom. The public has increasingly expressed
concerns about the wastewater management of flow back fluids
from natural gas wells, as well as the potential for
groundwater contamination. Residents who live on top of, or
adjacent to, the shale gas resources have also expressed
concerns about the potential for noise pollution, diminished
air quality and contamination of water resources.
Recently, there's been increased scrutiny of fugitive
methane emissions occurring during the natural gas extraction
process. Methane is such a potent greenhouse gas that if even a
small fraction of the overall natural gas extracted escapes to
the atmosphere, the overall greenhouse gas emissions from
natural gas usage increase substantially.
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, while many other experts have disputed these claims. If
natural gas is to be used as a lower carbon alternative to
other fossil fuels, the issue of fugitive emissions is--is one
that we must quantify, and understand more fully and address
appropriately.
I expect environmental, and human health and safety
concerns related to developing unconventional gas resources can
be managed, but only if they are addressed through a
transparent, diligent and safe approach to well-site and
wastewater management throughout each stage of the gas
extraction process.
I believe that that is what we will be addressing here
today as we hear from the Secretary of Energy' advisory board
shale gas production subcommittee members concerning their
recently released 90-day report. We're very--very fortunate to
have this panel of experts.
Before I introduce them, I'll call on Senator Murkowski for
her comments.
STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR
FROM ALASKA
Senator Murkowski. Thank you, Mr. Chairman.
Appreciate you scheduling the hearing this morning. A
special thanks to all of our witnesses for joining us.
I want to particularly acknowledge you, Dr. Yergin. Your
latest book, ``The Quest,'' about global energy issues is one
that, well I have to admit, I haven't started reading it yet;
several of my staff have. In fact, I think that the staff
director here for the committee is particularly groggy this
morning as he was going through it last night. I'm told that
the early reviews are favorable. I also understand that it does
include a chapter on shale gas and how that resource will
factor into just about every major energy decision that we will
make in the coming year. So I'm looking forward to that.
I do appreciate the chance to learn more about the
Secretary of Energy advisory board's recent report. to spend
some time thinking about the future of one of our nation's most
promising resources.
Natural gas is clean-burning and abundant. It's well
understood. It's scalable. It's clearly in our best interest to
takes steps to ensure that we maintain a stable and an
affordable supply into the future by encouraging its safe and
responsible development. That's the point of our being here
this morning.
While this hearing doesn't necessarily mean that this
committee endorses, or even agrees with, everything within the
report, it certainly does confirm the importance of the subject
and the reality that the report embraces.
We've witnessed some game changing technological
innovations that have unlocked tremendous volumes of previously
inaccessible natural gas. These resources are already
benefiting our nation by further diversifying our energy
supplies, growing our economy and creating thousands upon
thousand of well-paying American jobs.
I do think it's important to remember that success stories
in the energy world have historically involved ingenuity and
innovation by a few where many have seen previously impossible
challenges. So whether we're talking about something like
constructing the Trans Alaska pipeline up north or, as we'll
discuss today, cracking the code on how to economically and
safely develop our unconventional gas resources. I think that
America should encourage and allow for this kind of ingenuity
and innovation in the private sector. We should look for the
same types of individuals to overcome the challenges that crop
up with all of the activity surrounding such a great level of
development.
As I've said many times before, responsibly developing all
of our resources is of paramount importance to us as a nation,
and I think natural gas is certainly no exception there. We
cannot realize the many benefits of our tremendous natural gas
resource unless we commit to safe, environmentally acceptable
production and delivery within a framework of appropriate
regulation and access.
I do welcome the efforts of the subcommittee to proactively
find ways to increase the transparency and improve the
efficiency of the extraction process.
Mr. Chairman, I'll conclude by, again, thanking you for
scheduling this hearing. Many of our members, myself included,
are champions of natural gas. I think greater use of natural
gas would move our nation in the right direction in terms of
energy security, economic growth and environmental protection.
I think these are 3 vitally important goals and every one of
them should be achievable.
With that, I thank you and I look forward to the testimony.
The Chairman. Thank you very much.
Let me introduce our witnesses today.
First is Dr. Daniel Yergin, who's Chairman of the IHS
Cambridge Energy Research Associates and the author of this
book that Senator Murkowski just referred to which we all
congratulate him on.
The second is Dr. Stephen A. Holditch, who is Department
Head and Professor of Petroleum Engineering at Texas A and M
University in College Station, Texas.
Third is Dr. Mark Zoback, who is the Benjamin M. Page
Professor at the Department of Geophysics at Stanford. Thank
you for being here.
Finally Katie McGinty--Kathleen McGinty, who is the Senior
Vice President and Managing Director of Strategic Growth with
Weston Solutions in West Chester, Pennsylvania. Thank you very
much for being here.
Why don't each of you take 5 or 6 minutes, and summarize
your--the main points you think we ought to understand on this
subject and we will, of course, include the full written
statement that you've prepared for our record.
Dr. Yergin, why don't you begin?
STATEMENT OF DANIEL YERGIN, CHAIRMAN, IHS CAMBRIDGE ENERGY
RESEARCH ASSOCIATES
Mr. Yergin. Mr. Chairman, ranking members--Mr. Chairman,
ranking members, members of the committee.
I want to say on behalf of all the members of the
subcommittee, we really appreciate this opportunity to come and
share with you what we learned in the 90 days that we spent
working on this study.
The study--we were tasked with--and also by the way,
Senator Murkowski, Senator Bingaman, let me thank you for your
gracious words about ``The Quest''. So thank you.
We were tasked with developing a study by President Obama
in his March 31, 2011, speech in which he declared that recent
innovations have given us the opportunity to tap large reserves
perhaps a century's worth of shale. But in order to facilitate
this development, ensure environmental protection and meet
public concerns, he instructed Secretary Chu to establish--to
ask the subcommittee, which had already been established, to
address the safety and environmental performance of shale gas
production.
Senator Bingaman, you've sketched out were the major
environment concerns that we focused on water quality, air
quality and community impact. Our conclusion is that these
environmental--the need for environmental protection can be met
if approached properly. To that end, we made 20 recommendations
concerning best practices, technological innovation, and
regulatory processes.
We do so with the recognition that almost overnight, in
energy terms, shale gas has become a major and critical
national resource. Senator Murkowski remarked on that things
seem to happen overnight and they don't, and there was 25 years
of really hard work and innovative effort that went into shale
gas before it achieved the prominence that it did. There was a
sense that it was a few people who really carried it on. But
today, shale gas accounts for 30 percent of U.S. natural gas
production and is expected to rise dramatically in the
foreseeable future. Of course, natural gas is one of our
backbones. It's a quarter of our total energy.
If we went back 5 years ago, none of this would've been
expected. Instead, it would've been thought that we would've
been importing very large amounts of LNG, perhaps $100 billion'
worth of imports a year for that. Now, we are mostly self-
sufficient in terms of natural gas. Natural gas prices have
fallen substantially, meaning lower bills for industry, for
homeowners. Several hundred thousand jobs have been created in
the last few years. Natural gas consuming industries have
invested literally billions of dollars in the last few years
because of this resource in a way that they would not have
expected to half a decade ago. The development of shale gas has
represented major new revenue sources. The State of
Pennsylvania and localities in Pennsylvania last year took in
$1.1 billion in shale gas revenues in the State.
This is part of what was also described in concurrently in
a National Petroleum Council study ``Prudent Development,''
which was released on September 15th to the Secretary of Energy
which talked about, and it used the word surprising
reassessment--upward reassessment of U.S. oil and gas
resources, the result of technological advance.
Now, of course, the rapid development of shale gas in the
last few years has created this series of environmental issues
and concerns which are the topic of our report. My colleagues
will--subcommittee colleagues will speak about the specific
environmental issues and how to mitigate them those water
quality, air quality and community impact.
Altogether we have 20 recommendations. One of the starting
points that runs through the whole thing is the need for much
more complete measurement of water quality, air quality and
specifically methane that the Chairman referred to. Many of the
recommendations focus on best practices and technological
innovation. They also emphasize the importance of community
engagement and the need for disclosure and transparency. They
recognize a central responsibility of State regulation in this
area.
Our subcommittee chairman, Professor John Deutch who
couldn't be here, wrote in his letter to the--to the committee
that, ``The subcommittee believes that these recommendations if
implemented combined with a continuing focus on and clear
commitment to measurable progress in introducing best practices
based on innovation and field experience represent important
steps toward meeting public concerns and ensuring that the
nation's resources are being responsibly developed.''
But there are a couple of recommendations that I'd just
like to highlight. We all realize, and you all know better than
anybody, the difficult decisions that have to be made about the
Federal budget and the challenges this creates, both for the
Congress and the administration. There are 2 areas of very
modest fund raise--of funding that we--that would pay back to
the Nation and in terms of Government revenues a hundredfold.
One is the need to support at a modest level what's called
STRONGER or the State Review of Oil and Natural Gas
Environmental Regulations. This is very important because the
States are both the frontline and the backbone of regulation,
and this enhances their performance. Similar support should be
provided to the Ground Water Protection Council. The other
refers to what both the Chairman and the Ranking Member
discussed in terms of technology.
The second is to provide targeted Federal R and D support
in developing the technologies that address the environmental
issues and promote continuous improvement and best practices.
This includes the Research Partnership to Secure Energy for
America.
These are both very small sums of money but these
investments would pay, as we concluded, enormous returns first
and foremost in meeting the environmental objectives and
facilitating the great potential that's been identified as
shale gas would contribute to energy security, economic
development and job creation. As a result of all of this,
generate a lot of revenues that would flow to the Federal
Government, to State and local governments.
So thank you very much for the opportunity to join this
morning and to my colleagues.
[The prepared statement of Yergin follows:]
Prepared Statement of Daniel Yergin, Chairman, IHS Cambridge Energy
Research Associates
I appreciate the opportunity to appear before the Senate Energy
committee for this discussion of what we learned from the Secretary of
Energy Advisory Board Subcommittee 90-Day Report on shale gas
production.\1\
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\1\ Secretary of Energy Advisory Board, Shale Gas Production
Subcommittee 90 Day Report, US Department of Energy, August 18, 2011.
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I am Daniel Yergin, chairman of IHS Cambridge Energy Research
Associates. I am the author of a new book, The Quest: Energy, Security,
and the Remaking of the Modern World, which describes the development
of shale gas, among other topics.\2\
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\2\ Daniel Yergin, The Quest: Energy, Security and the Remaking of
the Modern World (New York: Penguin, 2011), Chapter 16, ``The Natural
Gas Revolution'' (www.danielyergin.com)
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It was a privilege to serve on this Subcommittee, which was
constituted in January 2011. The Subcommittee was tasked with
developing a study report by President Obama in his March 31, 2011,
speech, in which he declared that ``recent innovations have given us
the opportunity to tap large reserves-perhaps a century's worth'' of
shale. In order to facilitate this development, ensure environmental
protection, and meet public concerns, he instructed Secretary of Energy
Steven Chu to have this subcommittee address the safety and
environmental performance of shale gas production.
We focused on three major environmental concerns: water quality,
air quality, and community impact. Our conclusion is that the need for
environmental protection can be met if approached properly. To that
end, we made 20 recommendations regarding best practices, technological
innovation, and regulatory processes.
We do so with the recognition that almost overnight, in energy
terms, shale gas has become a major and critical national resource. Two
years ago, the very concept of shale gas was hardly known, either in
the Nation or in Washington DC, and even the spelling of ``fracking''--
or ``fraccing,'' or ``fracing''--has been a subject of dispute.
Today shale gas accounts for about 30 percent of total US natural
gas production, and this is expected to rise dramatically in the
foreseeable future. Natural gas itself is one of the backbones of our
economy, providing about a quarter of the country's total energy.
This abundance of natural gas is very different from what was
expected a half decade ago. It was then anticipated that constraints on
domestic natural gas production would result in high prices for
consumers and the migration of gas-using industries-and the jobs that
go with them-out of the United States to parts of the world with
cheaper supplies. The United States was also expected to be importing
substantial amounts of natural gas in the form of liquefied natural gas
(LNG). That would have added as much as $100 billion to our trade
deficit.
None of that has occurred . . .
Instead,
The United States has become, except for imports from
Canada, mostly self-sufficient save for some LNG imported to
cope with pipeline constraints and seasonality.
Gas prices have fallen substantially, lowering the cost of
gas-generated electricity and home heating bills.
Several hundred thousand jobs have been created in the
United States.
Gas-consuming industries have invested billions of dollars
in factories in the United States, something which they would
not have expected to do half a decade ago-creating new jobs in
the process.
The development of shale has created significant new revenue
sources for states-for the state of Pennsylvania and localities
in that state, for example, $1.1 billion in revenues in 2010.
Shale gas-the unconventional natural gas revolution-has been called
the biggest energy innovation of the past few decades. The chairman of
our Subcommittee, Professor John Deutch of the Massachusetts Institute
of Technology, has described shale gas as responsible for ''perhaps the
biggest shift in energy-reserve estimates in the last half
century.''\3\
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\3\ John Deutch, ``The Good News about Gas,'' Foreign Affairs,
January--February 2011.
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The new National Petroleum Study Prudent Development: Realizing the
Potential of North America's Abundant Natural Gas and Oil Resources,
submitted to the Secretary of Energy on September 15, details what it
describes as the ''surprising'' upward reassessment in US oil and gas
resources-the result of technological advance.\4\
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\4\ National Petroleum Council, Prudent Development: Realizing the
Potential of North America's Natural Gas and Oil Resources, Report
Submitted to the Secretary of Energy on September 15, 2011.
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Shale gas only burst into public view in 2008 and 2009. Yet as I
describe in The Quest, this was the result of a quarter century of
technological development and progress and innovation-a process that
had involved much disappointment and trial and error until the end of
the 1990's.
In the past few years, the rapid development of shale gas has also
created environmental concerns and issues, which are the topic of our
report. Commercial development of shale gas had begun in traditional
oil and gas-producing states. But these concerns became much more
visible when development spread into the ''Mighty Marcellus''--that is,
the Marcellus Shale that is found in Pennsylvania, West Virginia, and
New York State. Although western Pennsylvania had been the birthplace
of the oil and gas industry, that was a long time ago and under very
different conditions. In modern times, this was a new activity,
particularly on this scale, and in a more densely populated region.
My Subcommittee colleagues will speak about the specific
environmental issues and how to mitigate them. These concern water
quality, air quality, and community impact. Professor Steven Holditch,
chairman of the petroleum engineering department at Texas A&M, has 40
years' experience with the science of hydraulic fracturing. Mark
Zoback, professor of earth sciences and geophysics at Stanford
University, is an expert on the forces in the earth that control
geologic processes. And Kathleen McGinty was Secretary for
Environmental Protection for the State of Pennsylvania and served as
chair of the White House Council on Environmental Quality.
Altogether, as noted, the report contains 20 specific
recommendations about these issues. One of the starting points is the
need for much more complete measurement of water quality, air quality,
and specifically methane. Many of the recommendations focus on best
practices and technical innovation. They also emphasize the importance
of community engagement and the need for disclosure and transparency.
They recognize the central role of state regulation in this arena.
As Professor John Deutch wrote to the committee: ''The Subcommittee
believes that these recommendations, if implemented, combined with a
continuing focus on and clear commitment to measurable progress in
introducing best practices based on technical innovation and field
experience, represent important steps toward meeting public concerns
and ensuring that the nation's resources are being responsibly
developed.''
We came at this report from a variety of perspectives and, as we
examined the issues and listened to public testimony, came to a
consensus on our recommendations.
But there are a couple of recommendations that I would like to
highlight. We recognize the difficult decisions that have to be made
about the Federal budget and the challenges this creates for both the
Congress and the Administration. But there are two areas of modest
funding that would pay back to the nation-and government revenues-many
hundredfold.
The first is to support at a modest-level STRONGER-the State Review
of Oil and Natural Gas Environmental Regulations. This is very valuable
because the states are both the frontline and the backbone of
regulation. Similar support should be provided to the Ground Water
Protection Council.
The second is to provide Federal R&D support on developing the
technologies that address the environmental issues and promote
continuous improvement and best practices. This includes support for
the Research Partnership to Secure Energy for America.
These two investments would pay enormous returns, first and
foremost in meeting environmental objectives and facilitating the
achievement of the great potential of shale gas, and by so doing would
contribute to energy security, economic development, and job creation-
and, as a result of all this, generate considerable revenue flows to
Federal , state, and local governments.
Dr. Daniel Yergin is chairman of IHS Cambridge Energy Research
Associates. His new book The Quest: Energy, Security, and the Remaking
of the Modern World has just been published (www.danielyergin.com). The
Quest addresses the natural gas revolution in Chapter 16.
Dr. Yergin is a member of the Secretary of Energy Advisory Board.
He previously chaired a US Department of Energy Task Force on Energy
R&D. He is a member of the National Petroleum Council and vice chair of
its new study Prudent Development: Realizing the Potential of North
America's Abundant Natural Gas and Oil Resources.
Dr. Yergin received the Pulitzer Prize for his book The Prize: the
Epic Quest for Oil, Money and Power.
The Chairman. Thank you very much.
Dr. Holditch, why don't you go right ahead?
STATEMENT OF STEPHEN A. HOLDITCH, P.E., DEPARTMENT HEAD,
PETROLEUM ENGINEERING, TEXAS A&M UNIVERSITY, COLLELGE STATION,
TX
Mr. Holditch. Thank you and good morning. I'm very pleased
to be here.
Shale gas is for real. Shale gas currently supplies about
30 percent of the natural gas we use in the United States. A
Department of Energy report in 2009 and recent developments
that have occurred since then seem to say there's over 900 TCF
of technically recoverable resource just in the shale gas plays
that have been developed over the last 5 or 10 years. Not all
of this 900 TCS--TCF of technically recoverable gas is
economically recoverable, but the way to convert it from
technically recoverable to economically recoverable is to
increase the technology used to extract the gas so that we can
get more gas out per well and reduce the cost per well. We do
that with--with research.
It's clear to me that the United States has a real
opportunity to develop its unconventional gas reservoirs, shale
gas, tight gas and coal bed methane to dramatically improve the
energy security of the United States. The U.S. can use the
abundance of natural gas to generate electricity and we can use
it for motor fuel which would reduce oil imports. Natural gas
should be used with wind, solar and geothermal to create a
clean energy package for the electric grid because when the
wind's not blowing and the sun's not shining, you need the
natural gas to supplement the electricity. So it's a--it's a--
it's not wind or solar or natural gas, it's all 3 combined is
what we have to do.
However, shale gas development must be done correctly. In
our 90-day report, we recognized there are real issues with
water, air, air emissions, and community impact and these must
be addressed by the oil and gas community. I think we all agree
on the committee and--and most folks do. You can't really
improve something that you can't measure. So our committee
has--has recommendations in there on--on what we need to do to
improve our measurements, and from that we'll have data to
improve our actions.
If you read recent news articles on hydraulic fracturing,
the process is often described as pumping in a mixture of water
and toxic chemicals under high pressure under the earth. This
description is far from the truth. Most fracture treatments
consist of 99.5 percent pure water and sand, and only 0.5
percent of what we pump in the ground are chemicals. Many of
these chemicals are gelling agents to increase the viscosity,
surfactants and bactericides. The--the gelling agents are just
thickening agents like guar gum, which is used in a lot of food
products. Surfactants are just your Dawn dishwasher liquid. The
biocides are just the Clorox, the same chemicals we have in our
homes. So these chemical are pumped in the ground. They are
needed but they're in very minute quantities and they're really
not all that--that dangerous on their own.
But the SEAB subcommittee, we recommended that the industry
should measure and post on a publicly available Website the
volume and the composition of what's being pumped in the
ground. Then we should measure and determine the volume and the
composition of what flows out of the well. The industry should
track the water from the time it's--it's initially collected
until it's finally disposed of. We need to be collecting the
information on what goes in the ground, what comes out of the
ground because then we'll know exactly what's happening, and if
there are--they'll more than likely there won't be issue but if
there are issues, we've measured them and we can fix them.
In my opinion, currently drilling and hydraulic fracturing
activity in the shale gas does not really affect drinking water
aquifers. I've been working on hydraulic fracturing for over 40
years. My master's thesis in 1970 was on hydraulic fracturing
of low permeability gas reservoirs, and there's absolutely no
evidence that fractures can grow from miles under the ground up
to the surface to the aquifers.
So I think we--we just really need to concentrate on--on
what the issues are and deal with them. As you might expect
from a university professor, I can see a number of areas where
additional research would be useful. There's a lot of
information in our report, which I will not cover, but let me
just mention a few bullet points on some of those research
areas.
We need to improve the technologies used to clean water
that is produced from the ground so that it can be--we can
remove the impurities and reuse the water. There's a lot of
companies actually working on that right now.
We need to improve the chemistry of the fracture fluid
additives so that we can use saline water rather than fresh
water so we're not computing with other uses for fresh water.
We need to continue the development of microseismic
technology to remotely map these fractures and--and know what
they're doing. As my colleague said, we recommend continued
funding of organizations such as STRONGER and FracFocus.org. At
Texas A and M University, we have a project called
Environmental Friendly Drilling which is partially funded by
the Research Partnership to Secure Energy for America. If the
Environmental Friendly program is doing all the right things in
emissions testing, clean up technology of produced fluids, and
they even have a project on developing disappearing roads. So
additional funding to this Environmental Friendly Drilling
program or other programs like that could--could make a
successful program--program and improve it measurably.
Thank you.
[The prepared statement of Mr. Holditch follows:]
Prepared Statement of Stephen A. Holditch, P.E., Department Head,
Petroleum Engineering, Texas A&M University, College Station, TX
Good Morning. I am Stephen A. Holditch and I am the Head of the
Department of Petroleum Engineering at Texas A&M University. I am
serving on the Secretary of Energy's Advisory Board Shale Gas
Subcommittee. I have been working on how to develop low permeability,
unconventional gas reservoirs using hydraulic fracturing since 1970.
The following testimony represents only my views of the issues and my
interpretation of what the report suggests. This testimony does not
speak for the other members of the subcommittee.
Shale gas is for real
Shale gas currently supplies around 30 percent of the natural gas
we use in the United States. A Department of Energy Report in 2009, and
recent developments suggests that new Shale Gas Development in the last
10 years has added over 900 Tcf\1\ of Technically Recoverable Resources
(TRR) from Shale Gas.\2\ Not all of the 900 Tcf is currently
Economically Recoverable Resources (ERR), but under the correct cost
and price structure, much of it can be converted from TRR to ERR.
Research into new drilling and completion technology is needed to
increase shale gas recovery. In 1997, Rogner estimated the gas in place
in Shale reservoirs worldwide was over 16,000 Tcf. On the basis of the
research we have conducted at Texas A&M University, we think the number
should be closer to 50,000 Tcf of gas in place in Shale reservoirs
worldwide.
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\1\ Tcf is the terminology for Trillion Cubic Feet at standard
pressure and temperature.
\2\ OGIP refers to the original volume of gas contained in a
reservoir before production begins. Using current technology, and
disregarding costs, prices, and other investment criteria, the
proportion of OGIP that can be technically produced is called
Technically Recoverable Resouosrces (TRR). TRR is gas that we know
where the gas is located and we have developed the technology to
produce the gas; however, the gas may or may not be economic to produce
under existing gas prices of drilling costs. TRR is also gas that can
be produced but no pipeline exists to market the natural gas. When the
economic conditions allow the natural gas to be produced at a profit, a
portion of TRR can be economically produced and is referred to as
Economically Recoverable Resources (ERR). ERR is usually booked as
proved reserves. TRR can be thought of as possible or probable
reserves. OGIP is the total resource base.
---------------------------------------------------------------------------
It is clear to me that the United States has a real opportunity to
develop it's unconventional gas reservoirs (shale gas, coal gas and
tight gas) to dramatically improve the energy security in the United
States. The U.S. can use the abundance of Natural Gas to generate
electricity and for motor fuel, which should reduce oil imports.
Natural gas should be used with wind, solar, and geothermal energy to
create a clean energy package for the electric grid.
In addition, the same technology we are using in Shale Gas
reservoirs, namely horizontal drilling and hydraulic fracturing, are
currently being used in South Texas, West Texas, the Bakken Formation
in Wyoming and North Dakota, and most recently in Ohio to increase oil
production in the United States. Oil production in the Lower 48 states
has increased during the past year for the first time in decades.
Shale gas development must be done correctly
The oil and gas industry understands, and the SEAB Subcommittee
Shale Gas Production 90-Day Report clearly states, that there are real
issues with water, air emissions, and community impact that must be
addressed by the oil and gas companies. The SEAB Subcommittee suggested
that the industry should improve what it measures and disclose all non-
proprietary data on publically available websites. I am of the opinion
that `you cannot improve what you do not measure'.
In my testimony today, I will deal with water issues, air quality
issues and research that could help improve the development of shale
gas.
Water and Fracture Fluids
If you read recent news articles on hydraulic fracturing, the
process is often described as pumping in a mixture of water and toxic
chemicals under high pressure. This description is far from the truth.
Most fracture treatment fluids consist of 99.5 percent percent pure
water and sand. About 0.5% of the fluid is made up of gelling agents,
surfactants, and biocides. Virtually all of these chemicals can be
found in a typical home. Gelling agents are typically guar gum, which
is used in many food products to viscosify the product. A surfactant is
just soap, like Dawn dishwashing fluid. Biocides are use to kill
bacteria, like the Clorox we use in our homes. Granted, we do not want
to drink these fluids, but they are all found in our homes. However,
the concentration of these `chemicals' is very minute and does not pose
a danger to fresh water aquifers, if the field operations are conducted
properly.
The SEAB Subcommittee recommended that the industry should measure
and post on a publically available website
the volume and composition of what is pumped into the wells
during fracturing operations,
the volume and composition of what flows back to the surface
during clean up operations, and
the industry should track water movement from initial
collection to final disposal.
The SEAB Subcommittee also believes the industry should take
baseline measurements of all water wells in the vicinity of any shale
gas well prior to drilling. In fact, most operators already do this.
It is my opinion that current drilling and hydraulic fracturing
activity does not adversely affect shallow drinking water aquifers. I
have been working in hydraulic fracturing for 40+ years and there is
absolutely no evidence hydraulic fractures can grow from miles below
the surface to the fresh water aquifers. However, for other reasons,
there could be problems in aquifers. If problems do occur in fresh
water aquifers, then a thorough investigation of the development
history in the area needs to be conducted to find the problem. Once the
problem is understood, it can be fixed.
Air Emissions
It appeared to me during the course of the work by the SEAB
subcommittee, that the issues involving air emissions have not received
the same focus as the issues involved with water. When you move into a
new geographic area to develop shale gas, the number of diesel engines
used to power drilling rigs and the truck traffic involved in the
operations can be significant. Again, as with water and fracture
fluids, it is not possible to make intelligent changes to improve the
situation if you do not make measurements. In the case of air
emissions, we need to do a better job of taking base line air quality
measurements prior to shale gas development operations, and continue
monitoring air quality during and after development. If there are no
real issues with emissions, fine. If problems are discovered, fine
also, because now we know and we can take steps to solve the problems.
We were told that if pad drilling is used to drill 6-8 wells per
pad, the truck traffic involved with the operations can be reduced by
over 50 percent. Also, in South Texas, some companies are converting
rigs and trucks to run off of natural gas, rather than diesel. There
are other issues involving air emissions that others on the
subcommittee can discuss in more detail.
Research, Development and Data Bases
As you might expect from a University Professor, I can see a number
of areas where additional research would be useful. For brevity, I am
including a bulleted list of the most important areas. Some of these
area are already under development by industry, but additional research
funding would speed along the technology.
We need to improve the technologies used to clean the water
produced after a fracture treatment to remove impurities and
make the water available for re-use.
We need to improve the chemistry of the fracture fluid
additives so that we can use saline water for fracturing rather
than fresh water.
We need to develop more affordable technology to monitor air
quality and methane emissions during the entire life of a shale
gas well, from drilling to production.
We need to continue development of micro-seismic technology
to remotely map the hydraulic fractures as they are being
created.
We recommend the continued funding and development of
organizations such as Stronger and data bases such as
FracFocus.org to allow data from shale gas wells to be posted
online for any interested party to review.
At Texas A&M University, we work in a project called
Environmentally Friendly Drilling (EFD) that is funded in part
by the DOE through the Research Partnership to Secure Energy
for America (RPSEA) and also by the oil and gas industry. EFD
is doing all the right things in terms of air emissions
testing, cleanup technology for produced fracture fluids, to
working on how to build disappearing roads. An increase in
funding for EFD could take a successful program and improve it
measurably.
The Chairman. Thank you very much.
Mr. Zoback.
STATEMENT OF MARK D. ZOBACK, BENJAMIN M. PAGE, PROFESSOR OF
EARTH SCIENCES, DEPARTMENT OF GEOPHYSICS, STANFORD UNIVERSITY,
PALO ALTO, CA
Mr. Zoback. Good morning. It--it's a pleasure to be here
and to have the opportunity to comment on our subcommittee's
report.
For about the past 30 years, I've been trying to quantify
the forces in the earth that control earthquakes, hydraulic
fracturing propagation and other geologic processes. For about
the last 5 years or so, my Ph.D. students and I have been doing
research on optimizing production from shale gas and shale oil
reservoirs.
To be brief, I'm going to limit my comments to--to 3
topics: avoiding gas leakage from wells and potential
contamination of shallow aquifers, minimizing the use of fresh
water during hydraulic fracturing and the handling of the
contaminated water that flows back out of the well after
hydraulic fracturing has been completed.
Let me say at the outset that like the other members of our
committee, I--I personally believe there is no question that
shale gas resources can be developed in a manner utilizing
horizontal drilling and multistage hydraulic fracturing that
protects the environment and minimizes the impact on nearby
communities.
But as everyone knows, there have been a number of
accidents and incidents associated with shale gas development.
These accidents have--have done damage to water supplies, have
caused environmental harm and have raised concerns, logically,
among the public about whether these resources can be developed
safely.
It's unfortunate that almost everything that has occurred
and has gone wrong with shale gas development has been referred
to as hydraulic fracturing. As Dr. Holditch just testified, the
chemicals used in hydraulic fracturing are relatively benign,
steps are being taken to make them even safer and our committee
recommends full disclosure of the composition of hydraulic
fracturing fluids.
What is important to emphasize is that the most important
step that can be taken to prevent gas leakage and to prevent
surface aquifers now and in the future is good well
construction. A well that is improperly cased and cemented has
the potential to leak gas whether it is hydraulically fractured
or not. It is critical for State and Federal regulators to work
closely with private industry to design and construct optimally
secure wells with multiple barriers of casing in cement to
prevent gas leakage and to protect water supplies over the
potential 20 to 30 year lifetime of these wells.
The second point I wanted to make concerns conservation of
water resources. As millions of gallons of fresh water are
utilized in each well that is hydraulically fractured, it's
possible to make significant advances to conserve water
resources by carrying out fewer hydraulic fractures in a given
well and by pumping smaller volumes. These are, again, areas
where research would have a major payoff.
As Dr. Holditch pointed out, in many parts of the country
industry has moved to drilling multiple wells from a single
pad. Pad drilling not only greatly improves the efficiency
and--of drilling and fracturing operations, it minimizes land
use, lowers the overall impact of drilling operations on local
communities and makes regional planning easier to lessen the
cumulative impact of shale gas development activities in any
given area.
In some cases, pad drilling creates the opportunity for
temporary pipelines to be used instead of having to truck all
the water in. In one case I know about in Canada, water wells
were drilled into deep saline aquifers to provide the drilling
pad with enough low quality water, water that was unfit for
domestic consumption or irrigation, to carry out 150 hydraulic
fracturing operations. The flow back water was then returned to
the saline aquifers and no fresh water was used at all.
The third and final point I'd like to make concerns the
water that flows back after hydraulic fracturing. In some
cases, very little water flows back; in other cases, as much as
25 to 50 percent of the injected water flows back contaminated
with brine, metals and potentially dangerous chemicals that are
actually picked up in the shale itself.
As Dr. Holditch mentioned, our committee has recommended
that the volume, composition and disposition of these waters be
carefully monitored and disclosed via publicly available
Websites. Our committee has also noted the recycling of
hydraulic fracturing fluid, which is especially prevalent in
the Northeast, is a welcome development and will hopefully be
used more and more throughout the industry. Reuse of flow back
water avoids a number of potential problems associated with
transport and injection of the--as well as the expense and
extensive water treatments, so again, another area where
research and development would have a big payoff.
So as we said in the conclusion of our subcommittee's 90-
day report, the public deserves assurance that the full
economic, environmental and energy security benefits of shale
gas development will be realized without sacrificing public
health, environmental protection and safety.
Mr. Chairman, thank you for the opportunity to speak to the
committee this morning. I personally believe we are well on our
way to identifying the kinds of actions needed to provide the
public with--with this type of assurance.
[The prepared statement of Mr. Zoback follows:]
Prepared Statement of Mark D. Zoback, Benjamin M. Page, Professor of
Earth Sciences, Department of Geophysics, Stanford University, Palo
Alto, CA
My name is Mark Zoback, I am a Professor of Geophysics at Stanford
University and a member of the Secretary of Energy's Advisory Board
Shale Gas Subcommittee. For your general information, I am also serving
on a National Academy of Engineering committee that has been
investigating the Deepwater Horizon accident. My field of expertise is
in quantifying the forces in the earth that control earthquakes,
hydraulic fracture propagation and other geologic processes. I started
doing research on hydraulic fracturing over 30 years ago and my PhD
students and I have been carrying out a number of collaborative
research projects, mostly with private industry, to better understand
how to optimize production from shale gas reservoirs.
As you have had the opportunity to read our 90-day report and
you've already heard from Professor Holditch, there are only a few
additional points I'd like to make. In fact, I will limit my comments
to issues related to three topics--avoiding gas leakage from wells and
potential contamination of shallow aquifers, minimizing the use of
fresh water during hydraulic fracturing, and the handling of the
contaminated water that flows-back out of shale gas wells after
hydraulic fracturing.
Let me say at the outset that like the other members of our
subcommittee, I believe that utilization of domestic shale gas and, as
Dr. Holditch mentioned, domestic shale oil, resources are extremely
important to our nation. I personally believe that there is no question
that they can be developed in a manner (utilizing horizontal drilling
and multi-stage hydraulic fracturing) that protects the environment and
minimizes impact on nearby communities. Moreover, because of the
abundance of gas and oil resources found in organic-rich shales
globally, the standards and procedures we use to develop these
resources in an environmentally responsible way in the United States
could have far-reaching affects.
Preventing Gas Leakage and Water Contamination
As everyone knows, there have been a number of accidents during
shale gas development operations. These accidents have caused damage to
water supplies and understandably have raised concerns among the public
about whether shale gas can be developed safely. It is unfortunate,
however, that the concern about the safety of shale gas development has
focused almost entirely on hydraulic fracturing. As Dr. Holditch
testified, the chemicals used in hydraulic fracturing fluids are
relatively benign, steps are being taken to make them even safer, and
our committee recommends full disclosure of the composition of
hydraulic fracturing fluids. What is important to emphasize is that the
most important step that can be taken to prevent gas leakage and
protect subsurface aquifers, now and in the future, is good well
construction. A well that is improperly cased and cemented has the
potential to leak gas whether it is hydraulically fractured or not. It
is critical for state and Federal regulators to work closely with
private industry to design and construct optimally secure wells, with
multiple barriers of casing and cement to prevent gas leakage and to
protect water supplies over the potential 20-30 year lifetime of these
wells. This is one area where groups such as STRONGER (the State Review
of Oil and Natural Gas Environmental Regulation) might be particularly
helpful.
Conservation of Water Resources
The second point I want to make concerns conservation of water
resources, as millions of gallons of fresh water are utilized during
multi-stage hydraulic fracturing in every shale gas well that is
drilled. It is possible that significant advances can be made to
conserve of water resources by carrying out fewer hydraulic fractures
in a given well and by pumping smaller volumes.
As Dr. Holditch pointed-out, in most parts of the country industry
has moved to drilling multiple wells from a single pad. As he said, pad
drilling not only greatly improves the efficiency of drilling and
fracturing operations, it minimizes land-use, lowers the overall impact
of drilling operations on local communities and makes regional planning
easier to lessen the cumulative impact of shale gas development
activities in a given area. In some cases pad drilling creates the
opportunity for temporary pipelines to be used to provide water
(instead of trucking it in) and in one case that I know about in
Canada, water wells were drilled into a deep saline aquifer to provide
a drilling pad with enough low quality water, unfit for domestic
consumption or irrigation, to carry out 150 hydraulic fracturing
operations.
Dealing with Flow-Back Water
The third point I want to make concerns the water that flows back
after hydraulic fracturing. While the amount of flow-back water after
fracturing varies from region to region, 25-50 percent of injected
water flows back in some areas and can be contaminated with brine,
metals and potentially dangerous chemicals picked up from the shale. As
Dr. Holditch mentioned, our committee has recommended that the volume,
composition and disposition of these waters be carefully monitored and
disclosed via a publicly available website. Our committee also noted
that the re-cycling of flow-back water for use in subsequent hydraulic
fracturing operations, is becoming increasingly more common in the
northeast, is a welcome development. Re-use of flow-back water avoids a
number of potential problems associated with transport and injection or
the expense and difficulty of extensive water treatment operations.
This too is an area where research and development could be
particularly valuable.
As we said in the Conclusion of our sub-committee's 90-day report:
The public deserves assurance that the full economic, environmental and
energy security benefits of shale gas development will be realized
without sacrificing public health, environmental protection and safety.
Mr. Chairman, thank you for the opportunity to your committee today. I
personally believe we are on our way to identifying the kinds of
actions needed to provide this assurance.
The Chairman. Thank you very much.
Kathleen McGinty, we're glad to have you here. Go right
ahead.
STATEMENT OF KATHLEEN A. McGINTY, SENIOR VICE PRESIDENT AND
MANAGING DIRECTOR, STRATEGIC GROWTH, WESTON SOLUTIONS, INC.,
WEST CHESTER, PA
Ms. McGinty. Thank you very much, Mr. Chairman and members
of the committee.
It's a pleasure to join you and my fellow task force
members as well.
As its been said, shale gas is a game changer economically
in terms of the promise of air quality benefits in the
production of energy, especially electricity and also, I think
in a positive way in terms of geopolitics, around energy.
Shale gas, though, is an industrial activity and so there
are impacts. Our conclusions were that those impacts could be
managed. To say they could be is not to say they are managed.
It's to say that this is not a once-and-done. But with all
stakeholders vigilant and participating through a process that
would emphasize measurement, disclosure, inclusion and
continuous improvement that we can see the production and the
benefits of this resource to our environment and economy
without the attendant negative consequences that have been of
concern.
So for example on water, as has been referenced, our
conclusion was that contrary to common perception, frack fluids
per se are very unlikely to contaminate drinking water.
However, the methane being unleashed from the shale formation
can migrate into those drinking water resources. So 2 things
that we talk about in the report important to that. One,
upfront characterization of the geology; in my home State of
Pennsylvania, critically important. Why? Because shale
operations are unfolding where we have had historic well
development long before any standards were in place, and so the
methane can find those old pathways and travel through them.
The second thing important is what Dr. Zoback referred to
in terms of proper well casing and cementing. Put those
measures together and the chance of methane contaminating
drinking water dramatically reduces.
Air quality, there too, a potential significant benefit as
natural gas powers and provides electricity. However Senator
Barrasso, even in places, rural places we've wound up with
L.A.-style smog resulting from some of the intensity of these
operations. Now is that not manageable? It is manageable. In
States like Wyoming and Colorado have really stepped up and, in
fact, have already dramatically taken on this challenge through
2 or 3 important measures.
So with respect to conventional air pollutants, significant
progress in fuel switching in terms of engines, in terms of
trucking, in terms of efforts that can clean up the power
sources used at the well-sites. Filters being deployed on
equipment to reduce particulate matter that otherwise becomes
part of a pollution challenge.
A significant movement toward something that's being
referred as green completions. Now, this can be challenging
from an infrastructure point of view because what's required is
to have the gathering and some of the midstream pipeline
infrastructure in place at the time of well completion.
Important to air quality because the methane pollution that's
of concern seems to happen mostly just at that time of well
completion. So if that methane, instead of being vented or
flared can be captured and put to productive use, one, there's
an economic upside to capturing that resource. Two, it very
significantly takes on the methane problem otherwise of
concern.
Third, we looked at community impacts, quality of life and
the--the cumulative impact of significant industrial activity
where it was not common practice. Here too, efforts can improve
the situation, especially through several initiatives. One is
better sharing of information. The variety of States already do
collect almost on a well by well basis significant information
about how much water is being used at that well, what the
production profile has been at that well. States are moving now
to also note whether there have been violations of
environmental regulations associated with that well.
What we found, though, is the data bases don't talk to each
other very well. They can be intimidating or difficult for a
community to access. So investment in those data bases to
answer the public's questions about the performance of those
wells, very important.
Last I'll just highlight, again, in bolstering the public's
confidence baseline data to see, what was the condition of air
quality and water quality before shale activities started?
Sometimes that's an eye opener in terms of historic challenges
that are there before shale operations.
Finally, finally what we have seen is when the process is
open and neighbors get to participate in the permitting and in
the welcoming of these operations, a lot of the issues with
respect to quality of life can be handled straight on, and
enable the industry to grow in a way that is fully welcomed by
the community.
Thank you, Mr. Chairman and members of the committee.
[The prepared statement of Ms. McGinty follows:]
Prepared Statement of Kathleen A. McGinty, Senior Vice President and
Managing Director, Strategic Growth, Weston Solutions, Inc. West
Chester, PA
Mr. Chairman and Members of the committee: My name is Kathleen
McGinty. I am Senior Vice President of Weston Solutions, Inc. an
environmental company focused on and investing in sustainable property
redevelopment, clean energy and clean water. Previously I was Secretary
of Environmental Protection for the Commonwealth of Pennsylvania and
Chair of the White House Council on Environmental Quality. It is an
honor to appear before you today and to join my colleagues who served
with me on the Secretary of Energy's task force on shale gas.
The task force is gratified by the largely positive response to our
work. There are some corrections and some amplifications that are in
order as we take our interim report to final, but many commentators
have emphasized the need for implementation and their own intention to
move forward. In this testimony I am pleased to share with you the key
issues we identified and the best practices we recognized as effective
in addressing those issues.
THE RESOURCE AND THE INDUSTRY
Mr. Chairman, let me begin by underscoring the point made by my
colleagues in their prepared testimony: shale gas resources are
abundant in the United States. Shale gas has already generated
significant economic opportunity, substantially changed the equation
with respect to energy security, and has begun to reshape electricity
markets in a way that offers air quality benefits. This point with
respect to the robustness of the resource, while perhaps evident, bears
stating. Even until quite recently questions were presented as to
whether shale wells might produce in a robust manner initially, but
then decline rapidly, or alternatively, if they would have staying
power. Experience to date in the field shows a very strong pattern of
production.
As my colleagues have also noted, with the production of this
resource comes environmental and quality of life issues that are real
and demanding of attention. Simply put, shale gas production is an
industrial activity. As such, it will have impacts that need to be
managed with seriousness of purpose and enduring commitment.
In our report, we offer a framework to guide efforts to minimize
adverse effects: practices and impacts should be Measured and
Disclosed, and performance must be Continuously Improved.
WATER
The quantity of water consumed in shale operations is modest
compared with other water uses and is typically a small fraction of
total water consumed in a given area. Still, shale operations consume
water in quantities significantly greater than conventional gas
operations (an order of magnitude greater), and the continued growth of
the industry means that its demand for water will similarly continue to
grow. A conservation-oriented approach toward water then is appropriate
and important.
Our task force found that the recycling of produced and flowback
water is an increasingly common practice in the shale industry and a
positive step in managing water needs. Getting to the next level of
treatment and eventual discharge of fluids (meeting discharge
standards) is harder. Many companies are active in the space and much
innovation is occurring around the development of mobile treatment
platforms. Yet, the economics are difficult, particularly in areas
where water resources are abundant and/or where there is the option of
disposing used water in underground injection wells. It seems that some
financial, regulatory and/or resource availability driver will be
needed to support adoption of this next level of water treatment and
conservation.
Water quality--in addition to water quantity--concerns apply to
shale operations. Much has been said about the composition of
fracturing fluids in this regard and our task force called for full,
with modest exception for truly proprietary information.
Much attention has also been trained on the fear that fracturing
can and has contaminated drinking water. Here, our conclusions diverge
from common perception. We found that shoddy shale operations can
adversely impact water quality in at least two key ways I will discuss
here. Yet, fracturing per se seems not to be the culprit.
Instead, the two leading areas of concern are: well development,
and surface handling of water.
My colleague Dr. Zoback has spoken to the need for robust practice
in well casing and cementing in order to prevent methane migration from
the gas formation to ground water. T his is ``job one'' and perhaps
``first among equals'' of the measures that can ensure water-safe
operations.
Other best practices related to this should be highlighted as well.
In our report we spoke about the need for rigorous geologic and
hydrologic characterization in advance of and during well drilling. The
goal here is to discover potential communication pathways and
vulnerable water resources. In my home state of Pennsylvania, these
practices have been found to be particularly important since shale
activity is unfolding in areas that historically have seen extensive
mineral extraction activity, with wells and mines developed before
modern standards were in place and abandoned without proper closing and
capping. Moreover, alluvial and other ``tricky'' formations have been
encountered that could enable migration. Indeed, long before shale
operations commenced, methane detection and management has been a
significant concern in many communities across the commonwealth as
homes and businesses have dealt with sometimes explosive levels of
methane, fugitive from these historic operations. Advanced
characterization of the soil, rock and water as well as techniques such
as microseizmic testing, the use of cement bond logs, and the onsite
presence of individuals with expertise in ``reading muds'' (and knowing
if problem areas are being encountered) are best practices in ensuring
against the escape of methane and other contaminants.
As noted, our task force found that surface operations are as
important as practices ``down hole'' in preventing water contamination.
We had the opportunity to visit well operations that are demonstrative
of the state-of-the-art. It is evident that conventional measures
designed to protect against erosion and sedimentation (silt fences and
the like) are not sufficient at well sites. Instead, at sites we
visited, special mats are being deployed to cover the well pad area;
double berms are being built; and catchment areas are being put in
place to trap fluids and muds, fuels and spills so they do not run off.
These measures and one other are important in protecting surface
resources and in bolstering the public's confidence: disclosure of
produced water composition and tracking of and disclosure of the
disposition of produced and flowback water. Our task force's
recommendations in this regard build on the movement in industry and by
regulators to disclose fracturing fluids. We think that knowing what is
coming out of the well (in addition to what is going in) is important,
so we call for disclosure of what is produced. We also think that
knowing where the fluids go during their life cycle is important. So,
we identify the tracking and manifesting of shale fluids as a best
practice.
AIR
Air quality is an issue growing in importance in shale operations.
Wyoming and Colorado have moved forward with significant requirements
to stem polluting practices, and U.S. EPA has proposed new regulations
as well.
Here's what we found: two types of pollution challenges present
with respect to shale operations. Conventional pollutants like volatile
organics and oxides of nitrogen combine to cause ozone problems in some
areas. A second problem relates to the greenhouse gas impact from the
methane, itself.
On the first, initiatives are underway by some in industry and by
regulators to clean up emissions from generating equipment, compressor
stations, and the like, even as filtering equipment is recommended to
capture particulates, and some are switching from diesel to gas to
power operations and potentially to run vehicles.
The greenhouse gas impact of methane is a different story. Methane
is a potent greenhouse gas, with a global warming potential that is
some 21 times that of carbon dioxide. The methane/greenhouse gas
problem largely occurs at the time of well completion and is caused by
the venting of those first pulses of methane produced by the fractured
formation, before the well is either shut in or fully operational (and
tied to the mid- and downstream- transmission network). (Fugitive
methane from processing and transportation infrastructure can add to
this greenhouse gas pollution impact).
Some operators flare this gas. This is a better approach than
venting from a greenhouse gas perspective (since the methane is then
converted to carbon dioxide). However, pollution is still a concern
with combustion, and neighbors often do not like the sight of the
flares. Moreover, there is economic loss of the gas, itself with
flaring.
``Green completions'' incorporate measures into the well completion
process that address this problem. Specifically, in green completions,
gas and hydrocarbon liquids are physically separated from other fluids
and delivered directly into equipment that holds or transports the
hydrocarbons for productive use. There is no venting or flaring. This
practice then links upstream activities with mid- and dowstream-
efforts, a practice that works well in some areas but will require
acceleration of effort in other areas to permit and build the needed
gathering and distribution infrastructure. Several states and EPA are
calling for green completions in their regulations.
A final piece to the air issue that we dealt with in our report
relates to the life cycle carbon footprint of methane. Relatively
little analysis has been done to date and the studies that are out
there differ significantly in their conclusions. The questions center
on how much methane becomes fugitive from shale operations and the
associated downstream equipment, as well as how to understand the
methane impact when it is used in power plants and other equipment that
might be more efficient than equipment burning other fuel sources. Some
studies take this end use into account and come up with a positive
assessment of methane's greenhouse gas performance, others do not and
reach a different conclusion. We therefore call for an effort to
collect data in a robust and systematic way and then to report out
results after rigorous peer review. The task force is encouraged to see
that some Industry and environmental groups are already at work looking
at how best to build an effort of this nature.
COMMUNITIES, QUALITY OF LIFE AND CUMULATIVE IMPACT
The task force heard testimony from individuals who were grateful
for the employment opportunity shale development had offered them,
particularly in the economic downturn the country has suffered. Others
had strongly negative or mixed views. Concerns often centered around
quality of life in towns that had not been the scene of intensive
industrial activity prior to shale production. Truck traffic, noise,
and the pollution issues addressed above were among the most common
complaints. Concern was also heard from neighbors and from conservation
groups that habitat was being fragmented with adverse impact on
wildlife, or sensitive streams were threatened.
Our task force felt that it is extremely important to address these
concerns. We recommended four kinds of approaches that are needed to
deal respectfully and effectively with concerns that are legitimate and
heartfelt and to bolster the public's confidence that the industry is
conducting itself responsibly.
First, information disclosure and effective sharing of information:
here, the task force recognized that there already are repositories of
data that speak to the industry's performance. Some of those data bases
(for example, some of the information collected by states), are hard to
access or complex in their presentation of data. We recommend
investment in efforts that systematize and simplify the availability of
this information.
Meanwhile, we found that the initiative ``FracFocus''
(www.fracfocus.org) is very effective in the collection and
presentation of fracturing fluid data--painstakingly reported on a well
by well basis. FracFocus has come together in a remarkable way and in
short order. However, we felt the focus of FracFocus is too narrow and
we called for a broader array of chemicals to be disclosed on this
website (all chemicals, not just chemicals of concern to OSHA). At the
same time, we heard testimony from the Groundwater Protection Council
and its associated organizations who have built FracFocus that they
would like to expand their reach to air emissions and other issues of
concern. The task force was encouraged by and supportive of this
direction and would encourage public funding for the effort.
Second, baseline data: to understand the relative contribution
shale activities are making to pollution challenges, it is important to
understand what air and water quality was in a given area before shale
production commenced. In some jurisdictions the collection of this data
is becoming the norm (e.g. in Pennsylvania since the data can be used
in defense against a pollution charge), in addition, some industry
groups are organizing to collect and disseminate this information. Care
can and should be taken to protect the privacy of individual homeowners
(by releasing data in an aggregated fashion, for example). But knowing
whether methane in drinking water was pre-existing or caused by a shale
operation is critical to assessing the real impact of this industry and
again, to winning the public's confidence in the industry. The task
force therefore called for the regular collection and communication of
baseline information.
Third, mechanisms to define and demonstrate continuous improvement
by the industry: STRONGER (State Review of Oil and Natural Gas
Environmental Regulations (www.strongerinc.org)) is an effective
organization whose reach the task force felt should be expanded. This
coming together of state regulators, industry and nongovernmental
groups in a joint peer review of the adequacy of various state oil and
gas regulatory programs is an encouraging demonstration of the ability
of varied stakeholders to find common ground. Moreover it seems that
the states who have their programs reviewed by STR0NGER take the
critiques seriously and implement suggested changes.
STRONGER operates on a very modest budget, however, and is only
able to do a limited number of reviews at any given time. So the task
force recommends increased funding for STRONGER to grow its
capabilities.
At the same time, we thought a new effort by industry, joining
together with nongovernmental organizations and experts in government
and academia, aimed at defining best practices, tailoring them to the
different conditions in different regions of the country, and providing
metrics through which progress can be measured would be an important
new initiative. There is much to build on here, including the work of
the American Petroleum Institute in identifying best practices. Making
this work more broadly inclusive of stakeholders and experts, making it
specifically relevant to the diversity of shale formations, and making
it measurable as to outcome would do much to ensure progress and
bolster confidence.
And fourth, providing the mechanism for public engagement: the task
force encourages jurisdictions to create the space for neighbors to
have meaningful voice in the process of having the shale industry
become present in their community. Different approaches might prove
effective here. Upfront engagement and/or in the permitting process
might help establish where shale development will be welcomed and where
it will be discouraged. Discussion of issues like how to manage truck
traffic to enhance safety (e.g. by avoiding school bus routes) and/or
to minimize nuisance, might help avoid quality of life concerns.
Scientific efforts to define sensitive ecosystems and water bodies can
be helpful in gaining agreement among stakeholders to protect fragile
resources.
The issues are many and varied and the mechanisms for engagement
can be equally diverse. However, the task force calls for efforts to
enable people and companies to talk and have their respective
viewpoints heard, understood, and dealt with in meaningful way.
CONCLUSION
Shale gas is a game changer in energy with significant promise
economically, in terms of national security, and in improving
environmental quality. Real issues attend this industrial activity
however. The task force believes these issues can be managed if there
is measurement, disclosure, and deep commitment to continuous
improvement. We are gratified by the largely positive response to our
report and encouraged especially that individuals and organizations are
moving forward to identify and implement best practices that ensure the
responsible conduct of shale operations across the country.
The Chairman. Thank you and thank you all for your
excellent testimony.
Let me start with 5 minutes of questions, and then we'll
have a round of 5 minute questions from the committee here.
This focus on sound well-casing and cementing that, I
think, several of you referred to, Dr. Zoback, I think you had
a main point on that. I assume that this is not a question of
having to do more research as to how you properly case and
cement a well. People know how to do that. The question is: how
can you be sure that each time a well is drilled, it is
properly cased and cemented? I would assume that that involves
training of drilling operators. Did you folks look at that
issue and make any recommendations or conclusions about what
more is needed to be done in that regard?
Mr. Zoback. Senator, you're exactly right. This is the--the
proper way to drill, case and cement a well is something
industry knows very well. Whether it's carried out as well as
it should be in each and every case is--is--is a--is an open
question.
One of the things our committee called for was the--the
proper exchange of information and making sure that both
industry and State regulators were carrying out these
operations in the best possible way. So that when there are
geologic surprises in a given area that would require a--a
casing program to be locally adapted, that information isn't
just known to one--one operator who's encountered it. But that
information is immediate--immediately made known to everyone
and the reg--it's something the regulators look for.
Training of the regulators is--is another important issue
and how to work with the--the--the companies to make sure that,
for example, when the casing and--and the cement have been, you
know, installed they are, in fact, functioning as--as they are
designed to function. The types of pressure tests and other
tests that are done is--is something that takes some degree of
training to--to interpret and--and to acknowledge whether or
not, in fact, the well is ready to go.
So, these are all areas where we thought this--this process
of--of exchanging information, developing standards and
communication between different States and between the
companies and the regulators in a given place would have--would
have a lot of impact.
Mr. Chairman. Let me ask about work the EPA is doing. They
recently issued draft rules to control air emissions from oil
and gas production, and transmission and storage. Do these
rules go far enough in addressing the concerns you talk about
in your report or are they not relevant to that? What's your
view on that?
Ms. McGinty. Senator, they are very relevant to one aspect
of the air quality issues. Actually, both those issues with
respect to air quality that we've touched on, both in terms of
the ozone-related air quality issues as well as the methane-
related air quality issues. The way they go about addressing
those challenges is to begin to layout a sense of performance
measures with respect to the equipment that is used at well-
sites. They also point to this idea or this requirement of
green completions to capture that methane pulse that otherwise
is vented at the time that the well is completed.
I think that the measures seem to be the right measures,
the kind of measures that can and would meaningfully reduce
pollution. The--if there's concern about those measures it's
the--the permitting aspects that might be associated with--with
the implementation of those measures. So I think that's still
being worked through.
The Chairman. Let me also ask about this. My understanding
is EPA is doing its own study on the whole issue of hydraulic
fracturing and it's not expected to be out until the spring or
summer of 2014. How does this--how does what you folks are
doing here in this current study that you've just talked to us
about, how does that relate to what they're doing, or is there
interaction there? Were they involved in any of your--your
conclusions?
Mr. Yergin. Let me say, certainly we met with EPA. They
came and to the hearings that we held. We held discussions with
them to understand what their objectives are. I think Professor
Holditch, aren't you involved in the EPA study----
Mr. Holditch. No.
Mr. Yergin [continuing]. Too? But we were aware that it's
2014 is a long time horizon for it.
The Chairman. Dr. Holditch, did you want to make a comment?
Go ahead.
Mr. Holditch. Yes, sir. They--the--what they decided to do
was to take 5 or 6 case histories where there had been reported
issues with groundwater contamination, and they were going to
study those in great detail and try to find out exactly what
happened. They just concluded it was going to take them several
years to dig into the problems in enough depth to come up with
a solution. So they're just looking at some case histories.
The Chairman. But--but they're looking at those case
histories in order to come up with some general
recommendations, or rules, or regulations that would apply. Is
that right or not?
Mr. Holditch. I'm not sure what their ultimate goal is.
They--they're just trying to find--we have some contaminated
freshwater aquifers. They're trying to determine how it was
contaminated and if it is linked to any shale gas drilling. It
could be more than likely a bunch of old wells that were
drilled 20, 30, 40 years ago could be the issue more than the
new wells, or it could be things such as abandoned mines. So
they're just trying to find out what happened and then I guess
based on the basis of that will determine what to do next.
The Chairman. Alright. Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman.
Just to follow up on that. I'm also told that in addition
to the EPA fracking study, that BLM is preparing their fracking
regs. Has there been any coordination with BLM in terms of
where they're going, any sharing of the data or information?
Dr. Zoback.
Mr. Zoback. Yes, we--we've also met with BLM and we
discussed with them, in fact, most closely the way in which
their inspectors interact with the oil and gas operators on
Federal lands. So, we've been in communication with them and
we're aware of what they're doing and they're certainly aware
of--of our subcommittee's activities.
Senator Murkowski. I recognize that we're all looking at
where the Federal dollars are coming from to do all of these
assessments. It would certainly seem to make sense that there
be some level coordination, or at least sharing of the
information there between EPA, you and the BLM.
Let me ask about gap analysis here with what the States are
doing in terms of regulation and the feds. In the report you,
as a subcommittee, indicate that you're not going to weigh-in
on whether or not the States or the Federal Government should
have the lead in regulating natural gas development.
But just from a practical perspective, wouldn't it make
sense to determine first whether or not the States are doing an
adequate job in terms of the regulation? Or whether the State-
Federal mix is working? Do we need to basically do some kind of
a gap analysis here to determine whether the regulations are
effective before we make recommendations to change any of the
regs? This goes out to the whole panel here cause I think this
is----
Mr. Holditch. OK.
Senator Murkowski [continuing]. What we want to know here.
Mr. Holditch. Let--let me just say one short thing about it
and then some of the other panelists. You know, I've lived my--
worked my whole career in--in the State of Texas. The Texas
Railroad Commission does an extremely well job of--of
regulating the oil and gas industry. They had--you cannot drill
a well and set surface casing without informing the Railroad
Commission. You can't pump a cement job without informing the
Commission. They do a very good job of regulating.
We also had other regulators from Arkansas, and Colorado,
and Oklahoma and other States testify in front of us, the--
the--the historic oil producing States. They all indicated that
they think they're doing a--a very good job too.
So there might be some States with less history in the oil
and gas industry who might need to, you know, step up their
regulations on oil and gas drilling and completions and
permitting. But--but the consensus that I--I--I observed from
these public meetings we had were that--that the--the oil
States where a lot of this work is going on seems to feel like
they're doing an adequate job of regulating and--and I see no
reason to challenge that.
Mr. Yergin. Senator Murkowski.
Senator Murkowski. Thank you.
Mr. Yergin. If I could add to that. To use your phrase
``gap,'' I think there's a gap in perceptions because I think
there's this view that oil and gas activities are not
regulated. But, in fact, what I was--we were all, I think, very
impressed by the quality and the focus and the experience, the
long experience of the States in terms of regulating oil and
gas. Even ultimately that responsibility would devolve back to
them as well.
So I think Katie McGinty can certainly address
Pennsylvania, but I think that there's a very strong
tradition--tradition and that's--and that's really the backbone
of it. I think it's not as well-recognized, in fact, in some--
some circles. So I think there is a--a very strong fabric
there.
Senator Murkowski. I appreciate that distinction and I'd
ask you, Ms. McGinty, because Pennsylvania has taken some
pretty aggressive steps, in a short period of time whether it's
strengthening its water withdrawal regs, strengthening its
drilling standards, the buffer between operations and streams,
or increasing the fees. Pennsylvania----
Ms. McGinty. Right.
Senator Murkowski [continuing]. Clearly has stepped it up,
if you will. Was there discussion amongst the subcommittee in
terms of what, for instance, States like Pennsylvania have done
to address the concerns as to whether or not as a State you're
adequately covering all the regulation that's necessary?
Ms. McGinty. Yes, Senator, you know, I think your original
question is a good one. At some point, someone should delve
into in more detail than we did who's the optimal actor to do
this job or that job?
We came away with a sense that, one, there was much effort
underway. Two, that additional steps needed to be taken. Three,
some of the people of responsible parties were, indeed, taking
them.
So even as we gather here today just yesterday, the
Governor of Pennsylvania announced additional protections,
further setbacks and buffers that will be required around
private drinking wells, public water resources, and rivers and
streams.
In our report, we also point to areas where in terms of
your phrase, a gap, where we think there is a gap where more
work is needed. So in disclosure, we've made a lot of progress
now along the fracturing fluids themselves. Texas has passed a
law; many States have passed a law. It's becoming common
practice that all of those chemicals will be disclosed.
But we said it should go further and what comes out of the
well and the produce of flow back water, the contents of that
should be disclosed as well and there are other examples in the
report. So the gap we saw was the gap of the need for
continuous improvement where it exists. Where do we need to
bolster our efforts? As compared to this particular regulator
or that particular regulator needs to do more than that entity
is doing today.
Senator Murkowski. Thank you. Mr. Chairman.
The Chairman. Senator Wyden.
Senator Wyden. Thank you, Mr. Chairman.
I want to thank all of you for your professionalism and
it's been very helpful.
Let me begin, if I might, with--with you, Dr. Yergin. I
have been reading more about the practice of flaring, the
burning off of natural gas that is uncovered during oil
production. Did your committee look at this issue, and in your
view is this an issue that policymakers ought to be digging
into now?
Mr. Yergin. I think should really turn that question to
Professor Holditch who is the one who's the most deeply
experienced with that.
Senator Wyden. Professor.
Mr. Holditch. Flaring is--is regulated. If you drill a new
oil well and you don't have a pipeline in there for the natural
gas, you can flare the well under permit for just a short time.
Then if you don't get a pipeline in, you have to shut the well
in.
We did talk about flaring in our subcommittee, and the
consensus was it would be--we don't want to flare gas. We want
to--only--only when necessary. It's better to--to capture the
gas and sell the gas. But--but flaring is actually preferred
over just venting the gas. So--so it is an issue that is
regulated by the States and--and it's usually a win for
everybody. If you can sell the gas you'll--you get more revenue
and you do less harm to the environment. So flaring is
something that needs to be watched.
Senator Wyden. Let me--let me turn to you, Dr. Yergin on
a--on a policy matter sort of for the future, and you and I
have--have touched on it. So there is this host of issues, you
know, fracking, the issue of water, the impact on communities.
There are a variety of issues. You have talked, I think, very
eloquently about this sort of patchwork of rules and--and
regulations, State approaches, Federal approaches, a variety
of--of different regulatory approaches.
My sense is that the Federal Government, because the
Federal Government owns oil shale lands and gas shale lands,
would be a very good place to try to bring together all of the
stakeholders, industry folks, scientists, environmental people
and try to come up with the kind of comprehensive approach that
could give us new information about best practices. To really
look at the various practices that are now underway by industry
and, in effect, use those, you know, Federal lands as a kind of
laboratory to come up with the best practices.
I've talked to Secretary Salazar about this. I think
they're interested in it. But I'd be interested in--in your
thoughts about, you know, the Federal Government making a
significant contribution in this area by looking at these
Federal lands as a place to develop the kind of best practices
and--and protocols frankly that, I think, you all touch on in
the report.
Mr. Yergin. Best practices is a theme that runs throughout
the report and it's also recognition that best practices aren't
static, they--they evolve over time. So I think, as you say,
Federal lands and Government's ownership of them is one arena
for that.
One of the strong recommendations that we also made is kind
of a regional approach to addressing best practices, not only
on Federal lands, but in different regions that the issues in
Pennsylvania will be different than the issues in Texas. So I
think as a focus for the--for going forward with this endeavor
that that's a very good one around which to--to build it.
Senator Wyden. Would any of the other panel members like to
touch on this? Ms. McGinty?
Ms. McGinty. Sure. Thank you, Senator. I think it's a--a
great idea and I do think that BLM in our conversations with
them has an eye on trying to do just that to move the industry
forward and to enable production, but to help discover what
these best techniques are.
I do think the one footnote in caution is the one that Dan
was just point to, which is the geologic differences make----
Senator Wyden. Right.
Ms. McGinty.--A world difference in terms of the kind of
measures that are needed to ensure water safe and air safe, if
you will, production efforts.
Senator Wyden. I think that's a point well taken. I was
struck by Senator Murkowski's, you know, point with respect to
information sharing and the question of the agencies in a lot
of these instances not sharing, you know, information. It would
seem to me that if you looked at Federal lands particularly in
the kind of context that Dr. Yergin and you, Ms. McGinty, have
mentioned that we would try it in a variety of different, you
know, regions. We could pick up on the useful idea Senator
Murkowski's talking about which is sharing information.
Ms. McGinty. Um-hmm.
Senator Wyden. Look at best practices, get all the Federal
agencies really singing from the same, you know, hymnal and
walk away after a period of time with some ideas that could be
recognized, in effect, as the gold standard and widely
supported by a variety of stakeholders. So I'm going to
probably be contacting some of you about this--in the future.
But I thank you for your good work and my time has expired, Mr.
Chairman.
The Chairman. Senator Barrasso.
Senator Barrasso. Thank you Mr. Chairman and thanks for the
opportunity to emphasize the importance that American natural
gas plays in America's economy.
The development of our natural gas can go a long way toward
getting America back to work. It's going to create lots of jobs
in many of our local communities and it will generate much
needed revenues, as we heard today for State and local
governments as well as for the Federal Government. It will also
enhance America's national security. Increasing the development
of American natural gas is a win-win proposition. It should be
embraced by all of us. The Shale Gas Production Subcommittee
recognizes this in its report, and I commend you for doing so.
Of course, the focus of the report is not the promise of
American natural gas. The focus is the environmental impacts
associated with developing and using this resource-specifically
recommendations to reduce those impacts. To this end, the
report could have I think, done much more to underscore the
success that States have had in regulating oil and gas
development. Take, for example, the issue of disclosing
fracking fluid composition.
The report recommends that regulatory entities should
immediately develop rules to require disclosure of all
chemicals used in hydraulic fracking fluids on both public and
private lands. The State of Wyoming has done that on both
public lands and with our private lands. Wyoming implemented
the disclosure regulation over a year ago. Not only that,
Wyoming has made this disclosure part of the approval process
on applications for permits to drill and nearly all of this
information is available to the public. The report, however,
makes only a passing reference to State regulations in this
area.
My point is simple. States have vast experience regulating
oil and gas development. They're best situated to regulate this
sector of our economy and Washington should continue, I
believe, to allow States to regulate oil and gas development
without creating additional levels of bureaucracy.
Dr. Yergin, it's always a privilege to have you before the
committee. I have enjoyed the visits that we have had. As one
of the foremost experts on the history of oil and gas
development, can you give the committee maybe a better
understanding of the central vote that States have played in
regulating oil and gas development?
Mr. Yergin. That--that goes back to Senator Murkowski's
comments as well. I think that one of the really strong things
that came through is the--is this the depth, the seriousness
and the historical experience that States bring to this. As the
discussion was continuing, I was also thinking if one chooses
community engagement, States are much closer to the communities
than the Federal Government.
So and that's why one of the recommendations we made was
for the supporting of the--of the collaboration and exchange of
knowledge and information among the States. But I certainly
come out of this, the night--the--the time that we spent on
this very impressed by the--by the extent and the seriousness--
and the seriousness of the States. As I said before, I think
there's a tendency to assume that this isn't going on but it's
been going on for decades. As you said, the States are--are--
are at the leader and--and--and bring that long experience to
it.
Senator Barrasso. So then, if Washington steps in, begins
to regulate areas historically regulated by the States, is
there a danger of creating excessive regulations and
discouraging the development of the resources?
Mr. Yergin. Certainly you can end up having a kind of
superstructure on top of a superstructure that would make
investment more difficult, that would greatly take much longer
time to get things done, and also sort of get further away from
the communities.
Senator Barrasso. Professor Holditch, in your written
testimony,you said you have been working in hydraulic
fracturing for 40-plus years and there is absolutely no
evidence hydraulic fractures can grow from miles below the
surface to the fresh water aquifers. That is a very strong
statement.
Professor Zoback, in your written testimony you said,`` It
is unfortunate..., that the concern about the safety of shale
gas development has focused almost entirely on hydraulic
fracturing.'' Would either of you like to elaborate a bit on
those comments?
Mr. Holditch. I--I--I've been working in this area. I've
been--I've built hydraulic fracture mathematical models. I've--
I've analyzed hundreds of wells. I've been out in the field and
these fractures grow hundreds of feet up or down. They don't
grow thousands of feet up or down. As soon as you quit pumping
and the pressure's relieved, the fractures close so it's just
virtually impossible for--for that to happen.
Now once you start flowing the well back and you come up
the casing, there could be issues, perhaps, but not during the
hydraulic fracturing process as far as I know based on my 40-
plus years of working in the area.
Mr. Zoback. I guess my comment would be that when you--when
you look at the reported cases in--of environmental impact
associated with shale gas development and they fall largely
into 3 categories. One is leakage along well casings and the
hydrocarbons come up and can contaminate the surface aquifers,
or they can come all the way to the surface sometimes and cause
problems.
The second problem has been leakage and spills, containment
areas, reservoirs where flow back water and other--other
dangerous substances are contained, have been--have reached
uncontaminated water supplies.
There have been blowouts during the drilling of these shale
gas wells, nothing catastrophic, but still serious incidents.
All of these things are things we have to work to prevent and
to minimize and none of these things have anything to do with
hydraulic fracturing.
So hydraulic fracturing has sort of become a--a bumper
sticker for everything that we need to watch out for and that's
the problem. It--there--there are, you know, significant
environmental impacts associated with shale gas development and
we must minimize those impacts as we move forward. But simply
the constant reference to hydraulic fracturing misrepresents
what those impacts are and where the attention needs to be
paid.
Senator Barrasso. Thank you for the clarification. Thank
you, Mr. Chairman.
The Chairman. Thank you.
Senator Franken.
Senator Franken. Thank you, Mr. Chairman.
Thank you for this--for this hearing and I'd like to thank
all--all of those testifying for your testimony and for your
work.
Dr. Yergin, you--you mentioned 2 main recommendations,
funding regulatory entities like STRONGER is one, and
Government funding of R and D, is that right?
Mr. Yergin. Right.
Senator Franken. OK. You said that the--the payoff for
these reg--these--this funding would be hundredsfold in your
testimony, right?
Mr. Yergin. Right.
Senator Franken. OK. So this is Government funding?
Mr Yergin. Yes.
Senator Franken. That's right? OK. We don't have natural
gas--we don't have fracking in--in Minnesota. We do have a
medical device industry which has user fees and pays for its
regulation. I was wondering why this has to be Government
funding. I mean, we're all concerned about money here. Are--are
the oil and gas companies, are--are they doing OK?
[Laughter.]
Senator Franken. Do they need--do they need help?
Mr. Yergin. This isn't for the oil and gas companies. The--
what we're addressing is 2 things. One is going back to the
topic that has come up which is the States and facilitating a
collaboration among the States so that they can share best
practices and knowledge among them, and that's what STRONGER is
about. That's what groundwater's about. So, I mean, this is
talking, you know, cut--a few million dollars. These are not
big sums, but it's to keep these----
Senator Franken. But you want that to be Government, paid
by the Government.
Mr. Yergin. No, we recommended----
Senator Franken. As opposed to----
Mr. Yergin [continuing]. We reckon--it has been paid by the
Government and recommend that it should be. That it's----
Senator Franken. Should be paid by the Government.
Mr. Yergin [continuing]. It's a Government activity. You
know, as you know, there's----
Senator Franken. Does it help facilitate the oil and gas
recovery from the earth--from the earth?
Mr. Yergin. What it does is it facilitates the regulatory
process that--that we've been discussing this morning.
Senator Franken. Right, and does that regulatory process
help facilitate the extraction of oil and gas?
Mr. Yergin. Yes, and it----
Senator Franken. OK, so in other words this--this money
that you want the Government to pay to help facilitate the
extraction of oil and gas should be paid by the Government and
not the oil and gas companies. That's your--that's your view.
Mr. Yergin. I think that's----
Senator Franken. Is that correct?
Mr. Yergin. I think--I would think the committee recommends
that yes this is an activity that is a useful Government
activity.
Senator Franken. OK. I----
Mr. Yergin. The best we can do----
Senator Franken. Actually, that wasn't my question. I
understand that it's useful, and it's useful to the oil and gas
industry. I was wondering why it isn't useful for the oil and
gas industry to foot the bill for it considering that we--we've
had this, you know, we've had a lot of budget discussions of
late. Why are you recommending that the Government pay for the
oil and gas?
Mr. Yergin. I think it was not me recommending it. It was
the committee that recommended the oil----
Senator Franken. OK. Can any other member of the committee
care to this discuss this? Kathy.
Ms. McGinty. Senator, if I might just add to the--the--the
perspective that you're--you're sharing and I understand it. We
had another concern or an objective in mind which is that as
much as when you're looking at whether regulations are adequate
or what is a best practice and what's not, the industry needs
to be at the table and we need their expertise.
Our objective also was to provide the forums that average
citizens could participate, that academicians who have
expertise could participate. We kind of wanted to open the
doors. We've talked about inclusive processes and that was a
key recommendation that we made.
You know, there are industry groups out there that have
done good work in setting out what they think are best
practices. They typically or sometimes have not been developed
in the context that have enabled the public to have a seat at
the table and so some of these form stronger than others to
enable those groups to participate.
Senator Franken. Let me make the analogy again to the
medical device industry.
Ms. McGinty. Um-hmm.
Senator Franken. We're about to have hearings on--on that.
The Food and Drug Administration gets money from the industry.
They're--they have a very adversarial relationship sometimes
with the industry that, I mean, doesn't stop the funding coming
from the industry. Why wouldn't the industry pay for this?
Mr. Holditch. Can I make a comment?
Senator Franken. Yes, Mr. Holditch. All I'm trying to do is
say that----
Mr. Holditch. Yes, sir.
Senator Franken [continuing]. That we have a budget crisis
now.
Mr. Holditch. Yes.
Senator Franken. The--I know that--I didn't mean to be
sarcastic about how the oil and gas industry is doing. We know
they're doing very well. You're talking about funding R and D,
and funding regulation that you say would benefit hundreds-
fold.
Mr. Holditch. Let--let--let me----
Senator Franken. Yes, sir. Go ahead. I'm sorry, Dr.
Holditch.
Mr. Holditch. There--there's a common misconception that--
that when the Department of Energy decides to fund research
you're--you're--you're--you're supplying money to the big oil
company. Why should you give money to Big Oil?
The--the bottom line is most of the money the Department of
Energy allots for research, which is quite small, goes to
universities. I have a thousand students in my department. I
have a hundred Ph.D.'s. These are going to be the scientists
and engineers that find the energy to power this country over
the next 50 years. A good deal of the Federal money that goes
to oil and gas research, goes to universities like Stanford,
and Texas A and M, and University of Texas at Austin. We're
using it for not only some oil and gas research, but we're
using it to turnout the next generation of engineers to--that
will find the--the energy we require to power this country.
Senator Franken. Yes, but I was talking about what Dr.
Yergin had suggested and he was talking about funding
regulation of this particular in--of--of strong, you know,
funding of STRONGER which is the State. What is it? What does
STRONGER stand for?
Mr. Yergin. Let's see.
Ms. McGinty. It's an acute----
Senator Franken. It's an acronym.
Ms. McGinty. Yes. It's a peer review process that has the
State's and other stakeholders review whether a particular
State's regulations are adequate.
Senator Franken. I'm sorry to go over my time but I'm just
trying to--
Mr. Yergin. I don't know. Can I----
Senator Franken [continuing]. Just I--I only had--
Mr. Yergin [continuing]. Can I--can I--can I clarify the--
Senator Franken [continuing]. Really had one question.
Mr. Yergin. During the Clinton administration, I chaired a
task force for the Department of Energy on energy R and D.
Energy R and D is something that the Federal Government has
funded very strongly since the Second World War. It goes back
to George Washington.
We're not saying that, in this case, that they should fund
R and D for oil and gas extraction. We're saying there are a
series of questions about methane, about water quality. What
you're really doing is funding scientists and graduate
students, people writing Ph.D.'s, people to understand what's
happening to the water or what's happening to the air. So
that's when we talk, and how to manage those issues. So
that's--we were--that's what we were talking about in the R and
D side on, focused on the issues that are of public concern.
Senator Franken. I--I actually, I totally understand that.
I totally understand what you're saying and I'm not sure that
you totally understand what I'm saying 'cause what you're
saying is that you want R and D specifically tied to the
results, the harmful results of fracking and of--of gas
extraction. You want specific funding, in fact money,
Government funding for a regulation of this. Yet, you want the
Government to pay for it as opposed to the industry to pay for
it. This and----
Mr. Yergin. If----
Senator Franken [continuing]. It bothers me because in the
industry that I was talking about, in the medical device
industry, the medical device industry pays user fees to the
FDA, which certainly very often has an adversarial
relationship. I don't understand why you--why the industry
itself can't pay for this especially at a point where they seem
to be making profits hands over fist----
Mr. Yergin. But Senator Franken----
Senator Franken. At the same time, we have this budget
crisis.
Mr. Yergin. Senator Franken, doesn't the Federal
Government, the National Institutes of Health spend an enormous
amount of money on medical R and D in the country?
Senator Franken. Yes, but it--it isn't specifically to
regulate the----
Mr. Yergin. OK.
Senator Franken. OK. I--I--I--I'm way over my time and I
certainly believe in the DOE should be spending money on
research. Don't get me wrong. I--I--I believe we should be
spending more money on basic R and D and--and more money on
getting Ph.D.'s to--for our students and more money at
universities. I'm just saying in this specific instance, it's
hard for me to understand why the industry shouldn't pay for
this--this regulation and research that will provide
hundredsfold returns for the industry, as you said. Thank you.
The Chairman. Why don't we go ahead with Senator Hoeven's
questions?
Senator Hoeven. Thank you, Mr. Chairman.
Hydraulic fracturing, I believe, is very important to the
future energy development of this country and--and meeting our
energy needs both in oil and in natural gas. Appreciate the
tremendous experience that all of you bring to this study.
In our State, though we've been an oil and gas producing
State for some time, nothing of the magnitude that we are now,
and it's directly related to our ability to do hydraulic
fracturing, as you're aware, in the Bakken Formation.
For the last decade, I served as Governor of the State of
North Dakota. When I started, our oil was--our oil production
was much smaller and it was declining and companies, if they
were still in our State, they were leaving it. We worked very
hard to create a good environment so they would come invest and
figure out how to do hydraulic fracturing economically. They
knew the oil was down there. Doctor Price--you're all,
obviously, very aware of Dr. Price's study. They knew there
were oil reserves down there. The issue was being able to
produce them economically and that meant figuring out the
technology to do hydraulic fracturing, which now they do on a
regular basis. Our State produces about 450,000 barrels a day
and we'll pass California pretty soon and be the third largest
producing State in the country. I don't know that we can catch
Alaska; they--they produce a lot but we're--we're running hard.
So when you say the State has a lot of experience in this
area, thank you. That's right. In looking at your
recommendations, how do we make sure that we continue to allow
States to be the primary regulator, do the good job that they
are doing and not get into a one-size-fits-all because
hydraulic fracturing is different in different locations? The
geology is different, the product they're pursuing is
different, the elevations are dramatically different. We're
talking about producing oil 2 miles underground, a long way
from any potable water source that's used versus shallow gas
and so forth.
So when you make recommendations, I understand, certainly,
the national data base. We'd have to have some discussion about
who does that, particularly with States as primary regulator,
but when we talk about air emissions, when we talk about water
management systems, even when we talk about management and
disclosure on hydraulic fracturing fluids. Explain to me what
these recommendations, how we walk this forward in a way where
the States remain the primary regulators, continue to work with
the industry and don't get into, again, the Federal Government
coming in and saying, ``OK. This is how everybody's going to do
it whether it makes sense or whether it's economic or not,''
because that's the exact kind of thing that was driving our
countries--our companies to other countries to produce oil and
gas.
We need the investment in these new technologies here which
will not only produce far more energy for this country, but do
it with better environmental stewardship. I'd just like you to
take a swing at that because, obviously, we've got this report
now, next step. How do we do this in a way that encourages
energy development with States as the primary regulator rather
than a one-size-fits-all? Again, it tends to dampen our efforts
to produce more energy in this country.
Mr. Yergin. Let me----
Senator Hoeven. Dr. Yergin, if you'd start.
Mr. Yergin. Yes, I'll start. First of all let me say, we're
all in awe of North Dakota and what's been accomplished.
Senator Hoeven. We're off to a great start, Dr. Yergin, I
must say.
Mr. Yergin. Right. It's quite an amazing story that, as you
say, you'll soon be third, but North Dakota, the fourth largest
oil producing. Bakken, just a few years ago, was 10,000 barrels
a day. So it's a combination of technology, entrepreneurship
and a sound regulatory environment. So it's extraordinary.
I think, you know, in terms of answering it, we have one
person at the table who's been both a Federal and a State
regulator, Katie McGinty, and maybe you'd like to take the
swing first.
Ms. McGinty. Thanks Dan. Senator, thank you for your
question.
I--I--2 things. First what's not said in our report, we
didn't come up with any conclusion that was that the deckchairs
need to be shuffled around. In fact, I'd say while it was not
our charge to look at that, there was nothing in the testimony
we heard or the substance that we focused on and in the what
needed to be done that led to a--a glaring conclusion that
there was an actor missing from the scene. So I think one thing
that's significant is, again, what we--what we don't say. We
did not reach any conclusion like that.
But I--but I do want to underscore, Senator, I think your
point in terms of how do we ensure that things continue to
grow, and we continue to see the opportunity that you've
realized in your State and many States are seeing as well?
That's what these recommendations are about. They're about
the--the continuous improvement that is always needed to ensure
the public's confidence and to ensure that the industry is, in
fact, moving forward in a responsible way.
We think these recommendations are at the heart of that:
improving the equation on water quality, air quality. You know,
the States are doing a good job. We've referenced Wyoming and
Colorado's work in putting new requirements in place on air
quality. So we don't make a recommend that a different entity
ought to do it, but we do recommend--make recommendations that
say, more needs to be done.
Senator Hoeven. Go ahead, Dr. Zoback.
Dr. Zoback. One of the unique things about these shale
reservoirs is that geologically, they have one thing in common
and--and that is they are roughly 1 million times less capable
of allowing fluid to flow through them than a standard oil and
gas reservoir. This is why hydraulic fracturing is needed. So
it's been the development of this technology that has unleashed
this--this--this resource.
The--as my colleague Ms. McGinty pointed out, we recognize
that the differences, geologic differences from place to place
sort of put the States in the right position to do this, to do
the regulation because we didn't see a one-size-fit-all
solution. This is why we endorse groups such as STRONGER to
allow the States to learn from each other and take what is a--a
national resource at some level. The shale gas reservoirs are
found in 23 different States, but also to have it regulated on
a more local level where the local expertise can adapt the
regulations to local conditions.
Senator Hoeven. Dr. Holditch.
Mr. Holditch. I've been working on the technology of
drilling, completing and fracturing wells for a long time, and
I think it's very clear the technology changes with time. The
technology changes depending on the geology and the geography.
You--you can't drill a--a--a Haynesville shale well the same
way you drill a Bakken shale well or you drill a well in
Arkansas. So local control, local understanding of best
practices is--is really the best way to go.
As--as we saw in our public meetings, virtually all of the
industry and virtually all of the regulators, the State
regulators think everything is just fine right now with the--
with--with the--with the process, we're going to have to keep
updating the regulations, for example, on fracture fluid
disclosure. But there's nothing broken with the system now. We
just have to turn our crosshairs on some few different problems
and make sure we--we solve those problems.
Senator Hoeven. Yes. Mr. Chairman, I'll wrap up there. I
see I'm over my time, but I think that's the right place to end
up. That's very important in terms of implementing these
recommend--recommendations, that we do it in a way where we
empower the States and empower the industry to continue to move
forward, but accomplish some of these objectives versus kind of
fallback to EPA stepping in and saying, ``Now everybody's going
to do it this way.''
So I would just encourage you as you interact with the EPA
that that remain part of your message. I would look--I would
appreciate any, if you have any written comments that you would
like to submit to my office that we could look at to try to
move the EPA in that direction, I--I'd appreciate very much
receiving them.
Thank you for your work.
The Chairman. Senator Udall.
Senator Udall. Thank you, Mr. Chairman.
Thanks to you, and the ranking member, for holding this
important hearing.
I want to thank the panelists for your great work on the
subcommittee itself.
I like, I think most if not all of the members of this
committee, support developing shale gas resources to reduce our
dependence on foreign oil and to help us transition to clean
and renewable energy sources. But we've got to take the
necessary steps to address the public's concerns about fracking
in particular. I think you all would agree.
I've emphasized that one well contaminated or one person
made sick is one too many. But I also would tell you, as Ms.
McGinty and others talked about the situation in Colorado, that
natural gas production is a strong economic driver across our
country. There's a potential to create even more jobs, which is
the focus, certainly, of the Congress and of Americans at
large.
In your report, I think it's fair to say, you highlight and
then you emphasize that there's a critical need to adopt best
practices in areas such as well development, construction with
the focus on casing, cementing and pressure management, as well
as minimizing water use and limiting vertical fracture growth.
If I could, I'd like to follow up on Senator Wyden's
question. How do you suggest developing and implementing best
practices to provide quality assurance for well construction?
Will you propose, the subcommittee, an action plan for forming
a national organization to develop these best practices? Then,
what concrete steps should the Government and industry take in
the short term to better inform the public about shale gas
development and the environmental impact? Easy, short
questions. Doctor?
Mr. Holditch. Yes. Let me just say one, short little thing
and then maybe the other on the subcommittee would like to add
to it.
I--in--one of the biggest issues any time you drill any
well for any reason is to protect the--the freshwater aquifers.
In--in Texas, we have maps of all the aquifers. When you permit
a well, you have to know, they tell you exactly how deep you
have to go to set casing. When you get to that depth, you call
up the Railroad Commission. They send someone into the field
and make sure the casing is run properly, and make sure it's
cemented properly and--and if it's not, you have to take
remedial stapes.
So there are procedures for protecting the groundwater that
are done State by State very well in--in--in all of the
producing States. Those are the best practices that we need to
make sure they get to other States that don't have this
experience that--that--that we have in the oil producing
States. That's where some regional centers of excellence where
best practices are--are put together; this--this organization
STRONGER actually does some of that.
So I think we really, we have the mechanisms in place.
We've just got to push them forward.
Senator Udall. Dr. Zoback.
Mr. Zoback. Yes. Thank you, Senator.
One of our recommendations we entitled, ``Organizing for
Best Practice,'' and it was to enable just the kinds of
activities you were asking about and we--we feel there's a
real--a real need for that.
The public is not well-informed on these issues. Industry
and--and other stakeholders are not engaged with the public
sufficiently, and the Federal and State regulators seem to be
on their own--on own their own paths. So we felt that there was
a real opportunity for these--these various groups to come
together, and organize for best practice to share this
information, and to share the information with the public so
that they know what's doing--what--what's being done and--and
how their interests are being--being protected. So that was an
area where our--our committee made a number of specific
recommendations.
Ms. McGinty. Senator, yes, just to build on that and an
important part of that, I think, that's been kind of implicitly
referred to it, but the inclusiveness is important. There are
organizations like American Petroleum Institute that do have
very good standards that they have produced to advise on well
casing and cementing, and some of the other measures we're
talking about. But 2 things are different.
One is that we--we are looking for in order to enhance the
public's confidence in the industry that these efforts be open
to other stakeholders. Second, that they be measurable so that
if you take a certain precaution in terms of the cement that
you are using, what's the measurable outcome in terms of water
quality? Or if you use microseismicity to better understand and
target your frack job, what's the outcome in terms of the
efficiency of the production of that resource? The efforts to
date have not had that measurable component.
I think Dr. Holditch mentioned the environmentally friendly
drilling. That's a good example of the kind of thing we were
looking for. It's inclusive and it's looking at measurable
progress. Then it's making it easy for the public to understand
through a scorecard that it's working on that would rate the
environmental effectiveness of the operations at a given well-
site.
Senator Udall. Dr. Yergin, do you, as the as dean of this
group, do you have thoughts you might want to add?
Mr. Yergin. I think I just support what my colleagues have
said in--in this regard.
I mean, I think that the, you know, there's what happens in
production and drilling the wells and everything, and then
there's the perceptions that goes back to the gap question. It
goes back to the question of some really do think that--that
this development which has happened very rapidly is a kind of
Wild West, and then because it's in Pennsylvania, also Wild
East.
Senator Udall. Um-hmm.
Mr. Yergin. But, in fact, it's a--a highly, you know, it is
a highly regulated activity at the State level, and continuing
to push as--as it expands, to continue to push it and address
the kind of questions you're talking about.
Senator Udall. Mr. Chairman, I wonder if you'd indulge me
with one additional question?
The Chairman. Yes, go ahead.
Senator Udall. Your report emphasized that most of the
problems associated with fracking have been linked to leaked or
leaking well casings. If the well's not drilled right, then any
number of fluids can leak into groundwater.
How can we, at the Federal level, State level for that
matter, work with industry and scientists to improve research
and development for fracking technology? Could you give any
examples of the R and D that the Federal Government could
support to improve extraction of shale gas and address public
concerns about health and environment which is, after all, what
we're discussing?
Mr. Yergin. Yes, I think that's for Steve and Mark would be
the ones to actually have the--but one of the things we do want
to come back to in our work is the specific agenda. But as the
dean, I'll turn it over to the 2 of them.
Mr. Holditch. One of the things that--that the committee
needs to understand if you don't already is that these--these
shale gas developments in--in Oklahoma, Arkansas, Louisiana,
Texas, Colorado, Wyoming, Pennsylvania are all going on in--in
areas where we've been drilling wells for the last 50, 60, 70
years. There's tens of thousands of old wells in the same
places we're drilling these shale gas wells.
So the--the casing and the cementing issues may go back to
some wells that were drilled 20, 30, 40 years ago before they
were properly regulated or maybe just corrosion has set in. So
there could be, very well, issues in there and that's another
whole can of worms, another whole set of problems we're going
to have to deal with at some point in time, perhaps. But it
doesn't really tie to wells that are drilled correctly right
now.
I think the research we ought to be doing, to get back to
your question is--is trying to come up with green tech and
green fluids and--and ways to handle the produced water better.
Senator Udall. Um-hmm.
Mr. Holditch. Just take care of what we're doing and get--
get, you know, maybe we can come up with another bactericide
that--then we can get rid of the Clorox or something like that.
So there--there is some research to do but--but I'm not all
that concerned at all with the casing and the cementing of the
new wells that we're drilling. It's the old wells that, I
think, we need to be looking at.
Senator Udall. Thanks again to the panel and I think what I
hear all you saying was, ``Do this right.'' Thank you again for
the report. Look forward to working with you as we move forward
to produce this really important resource, but to do it right.
The Chairman. Let me just ask a question that Dr. Holditch,
in your testimony you say that, ``We need to develop more
affordable technology to monitor air quality and methane
emissions during the entire life of a shale gas well from
drilling to production.''
Could you elaborate on that a little bit?
Mr. Holditch. OK. I may have to punt on this one too over
to Kathleen, perhaps. But--but I was under the impression. It--
it's in our report and in our--in our comments that--that to
really go out and make accurate measurements in--in a wide area
of just what chemicals or what--what emissions might be
occurring, the sensors to do those measurements are quite
expensive, and it takes time to gather that data. I believe
we--what we heard in--in the public meetings that we held is
that--that--and--and some of our discussions is that we really
need to take a look at how we can make better air quality
measurements with lower cost sensors and still maintain the
sensitivity we need to understand the air quality. Is that--
does that?
Ms. McGinty. Hit it out of the park.
Mr. Holditch. OK.
Ms McGinty. I'd just add that in the various pieces of the
shale gas operations, some are--lend themselves more readily to
measurement than other aspects.
So the--at the time of well completion, that's the time
when you can really have your arms around: what is that pulse
of methane that is produced when the well is being completed?
It's a little tougher once that methane then travels into the
gathering equipment, and the midstream, and the down street
operations. Infrared technology is being used now to try to see
where there might be fugitive methane from that infrastructure.
As Dr. Holditch mentioned, there are sensors that are being
developed to assist in that effort. But it is an area of
improvement that's needed.
I'd also say just even at that green completion stage,
there is a need for care in approach there too because the
equipment needs to be styled such that you do not have any
safety issue when that methane is being captured.
The Chairman. Do we have--are the States requiring
monitoring of methane emissions in--in the drilling and--and
operation of wells? I'm surprised if they are. Is that going on
right now?
Ms. McGinty. No, I do not believe so. There are a couple of
efforts that are beginning to come together. Our colleague,
Fred Krup, who is part of our task force is working with a
variety of companies in the industry to put an initiative
together that would begin to gather that data. EPA has looked
at this and, I think, has some modeling that they have put
forward where you would impute what the methane emission might
be. But in terms of direct measurement, our report calls for an
effort that would get a better look at the lifecycle of methane
emissions from shale gas operations.
Mr. Yergin. In fact, I think we could just add that is, I
think you alluded to in your opening statement, there's quite
considerable debate as to the scale of the methane emissions.
So, it cries out for proper measurement.
The Chairman. It does seem to me, I know we've had a lot of
questions from Senators and testimony also about how, you know,
this all ought to be done at the State level, all this
regulation and all. It does seem to me that the monitoring of
methane emissions, there might be some uniformity if--if, in
fact there's technology available or developed that can be used
to monitor methane emissions at a well-site. It seems like
there's some uniformity that could be appropriate there and you
wouldn't want a circumstance where one State says--
Ms. McGinty. Sure.
The Chairman.--``We could care less,'' about whether, what
the methane emissions are from--from wells drilled in our State
while someone else is trying to be more responsible and deal
with it.
Mr. Zoback. If----
The Chairman. Dr. Zoback.
Mr. Zoback. Just to elaborate. The--the issues of tracking
fugitive methane emissions is a--is a common issue to shale gas
development in all 23 States and a number of these other
environmental issues are--are common. Whether, you know, it's--
it's a--it's a different story about how we go about addressing
some of these outstanding problems, which is of national scale
and regulating local operations which, I think, all of us feel
is appropriately left with the States where the local expertise
lies.
So because we're recommending that the States have primary
jurisdiction over the regulation doesn't mean that there's not
a need for a national program of research on some of these
critical common issues that enable the lifecycle analysis to be
done correctly.
The Chairman. What if you did the research and the Federal
Government funded it, and it concluded that, yes, there was a
cost effective, reasonably inexpensive way to monitor methane
emissions at well-sites during the drilling process and
otherwise. Then some kind of requirement that could be
implemented would not seem, to me, inappropriate.
I mean, it wouldn't--it wouldn't make sense to say we're
just going to leave it up to the States whether they actually
do this monitoring. That--that's a difference of opinion, I'm
sure, I would have with some of my colleagues up here.
Let me defer to Senator Murkowski for any additional
questions she has.
Senator Murkowski. Thank you, Mr. Chairman.
Good conversation. I will say I have learned a great deal
just from the hour and half that we've had an opportunity to
talk with you.
You know, I started off my questioning about this gap
analysis, and I think it is clear that while it may not be
misinformation maybe it's just not complete information. But
there's so much discussion about, ``Oh, this toxic soup of
chemicals,'' that goes into the fracking and the need for full
disclosure there. I think, Dr. Zoback, the word that you used
was essentially these chemicals are somewhat benign. That it's
through the process where the fluids are pushed out that you
get the interaction that causes a different composition coming
out, and that's what we need to be focusing on. It is a lack of
understanding, I think, that causes concern.
Dr. Zoback, you mentioned that, ``Hydraulic fracturing then
becomes a bumper sticker for everything we need to watch out
for.'' I think we all, as policymakers, need to be careful
about not only the language that we use but how we describe
certain processes because I think it does cause unnecessary
alarm or concern.
It was interesting to hear from all of you a recognition
that with hydraulic fracturing and this process has been around
for, as you remind us Dr. Holditch, at least 40 years and then
some. This allows us access to a resource that is both valued
and needed and we need to do what we can to ensure greater
access, but in a way that's the environmentally responsible. We
can do that and there are clearly States that are working hard
to ensure a level of regulation that, I think, we all hope for
and want.
We just need to make sure that we don't try to apply a one-
size-fits-all application. Your own study notes that, ``The
geological diversity means that engineering practices and
regulatory oversight will differ widely among regions of the
country.'' I think we respect that and need to ensure that when
we're talking about the regulations we acknowledge just exactly
that.
I listened carefully to your response, Ms. McGinty, about
the best practices, and the reason why we need to have a new
standard setting body cause when I looked at that, I thought
immediately, ``Well, why wouldn't we stick with API or AGA?''
Both have demonstrated their abilities in setting existing
standards. Maybe for some reason the message is not being
understood clearly because of who's delivering it. I don't know
if that's the issue.
You mentioned it's got to be more inclusive and I can
understand that but I also note that you don't have involvement
from anyone in the Federal Government. I don't know whether
that was intentional or not, but I understand where you're
coming from. Still, I'm loathe to set up yet one more standards
setting body if it's just going to be kind of a duplication. If
we're having an issue making sure that what these standard
setting bodies are putting forward is not being understood,
let's deal with that. But that is something that initially
causes me a little bit of concern.
A question to each of you: You've got another report coming
up, a status on the 180-day report. I guess this is within 6
weeks from now. What should we anticipate from that? Have you
gathered anything from this discussion here this morning that
you can then incorporate into that report? If so, I've got a
lot of extra questions for you. But can you give me some kind
of a heads-up as to what we might anticipate? Dr. Yergin?
Mr. Yergin. I think this is----
Senator Murkowski. Since you're in the writing mode here.
Mr. Yergin. Yes, exactly. I--you know, we are about 6 weeks
out. I think what we--we're not--I--I don't think we're going
to try to have a--a full, comprehensive report because we--we
couldn't as we covered a lot of ground in this. But rather, to
look at these series of recommendations we made and have some
chart of what kind of progress has been made on them looking
across the range of issues. So that's certainly one of the
immediate things on the agenda.
I think there's a--a lot to carry away from this discussion
including it is so interesting that the theme that runs through
without is--is the Federal-State relationship and where does
responsibility lie and clarifying that because even as I've
been listening to the discussion, I was just thinking there's
such a discussion out here that is just, doesn't recognize how
this industry is regulated now or, indeed, that it is
regulated. I think further clarification of that would be
helpful.
Senator Murkowski. Will your report look to the various
States, the 23 States that currently have shale gas, how they
are regulating? Does it incorporate that?
Mr. Yergin. Kate--Kate--Katie, do you?
Ms. McGinty. Yes well, Senator, yes. So the best practices
that we point to are typically drawn from the experience of the
States.
So when we talk about, for example, how valuable it is to
have that baseline environmental data and have it publicly
disclosed that some States are already doing that; other States
are not. So we--the heart of the report is drawn from those
examples and those best practices.
One thing I certainly will take away is that we need to be
more precise in our discussion about the effort to identify
best practices and this inclusiveness that we call for. I
understand you're hearing it as standards, maybe regulations,
that kind of thing. What we're really doing is hearing the
industry and others who, I think, have learned a bit from the
public concern over fracking fluids. Industry now themselves
are saying, ''My goodness. Why--why did--why did we hold back
so long before we all just got behind the idea of disclosure?''
So what's at the heart of our recommendation here is to say
let's learn from that. Let's find places where people can
genuinely have the information to understand. If we do, if you
do that, then we think that there are plenty of ways people
agree and find the common ground to move forward.
Mr. Yergin. I think that that's an important clarification
because we're not recommending that the existing standard
setting groups be, you know, something new on top of that.
In best practices, what we're really trying to do is create
an ongoing process for discussion among the players and the
participants in this, so that that knowledge, whether they're
companies, regulators, communities that they're all aware of
it, and that best practices are evolving and that's the kind of
forums that we were talking about getting. So it wasn't to say
that there needs to be yet somebody setting standards.
Senator Murkowski. Dr. Zoback.
Mr. Zoback. If I may. For--it's fairly obvious by this
point that our committee was--was--was not charged with the
question of who should be regulating what and we--we certainly
stayed away from that issue. But--but the thing we are
concerned about is implementation of our recommendations.
Senator Murkowski. Um-hmm.
Mr. Zoback. So with--without then getting into who and how
our recommendations should be implemented we--we came upon this
idea of organizing for best practice as a way of bringing the
stakeholders, you know, in--into the process to look at our
recommendations and see how they could implemented. We, you
know, we simply didn't have the charge, the expertise or--or it
was not our role to--to say how they should be implemented, but
we very much want to see them implemented.
So this idea of organizing for best practice was--was a
step we could take without sort of exceeding the--the bounds of
our--of our charge.
Senator Murkowski. Thank you all. Thank you, Mr. Chairman.
The Chairman. Senator Shaheen, you--you're sort of the
clean up batter here. You go--go ahead and ask what questions
you have. Thank you.
Senator Shaheen. Thank you very much, Mr. Chairman.
I--I apologize to the panel for being late. I had to
preside over the Senate and unfortunately, I don't get a pass
for that to come to the hearing. With the help of my staff,
hopefully, I will not duplicate too many of the questions that
have already been asked.
Do want to point out that I--I chair subcommittee on water
and power, and we're hoping to do a follow up hearing to the
hearing this morning to look at the impact of fracking on
production of shale gas in the Eastern United States where, I
think, some of the issues may be a little different than in
other parts of the country. So hopefully, we can get in even in
greater detail into some of the issues that you all are
exploring this morning.
Ms. McGinty, given the impact that a fracking job gone bad
can have on families, should we consider requiring the industry
to go beyond today's best practices? You were talking about the
importance of getting everybody together and actually being
transparent about those best practices.
But how do we ensure that that actually happens, that
complacency doesn't set in? That we don't have those examples
where some corporate citizens or for whatever reason, may not
be following best practices?
Ms. McGinty. Senator, I think it's essential that--that
continuous improvement not just be a buzzword. I would say that
in our meetings with industry, I think they feel the importance
of this too, that with the concern over fracking fluids, for
example, they learned a lesson that a bunker mentality does not
work in furthering the industry. But--but we need to be
genuinely be serious about continuing to advance the ball. So,
what are some of the things that are very important?
You're looking at water--the water energy nexus. It's
important to say that shale operations are a tiny fraction,
generally, of the water consumed in a given location. However,
the water needed to produce a shale well is still an order of
magnitude greater than the water needed to produce a
conventional well. So that says whether someone's requiring it
or not, the community will expect a level of responsibility in
the use of a water resource. It's in everyone's interest that
we move to more efficient ways of handling and using water.
That community has concerns not only about what is being
put down in the well, but they'd like to know what's coming
out. Can we understand the full lifecycle of that water? I'll
say, one of the recommendations we make in our report, that
some in industry have said, ``Well, that might be too expensive
and there might be a better way of doing it,'' is we--we've
talked about tracking and manifesting the water from the time
it's withdrawn to the time it's used to produce the well. From
the time it comes out, et cetera, to its final disposition;
tracking and manifesting. We talk about, maybe there's a better
approach.
But it gets to your question, it's about demonstrating to
the public every day that there's nothing to hide. We're not
going to hide it. We're going to continuously improve our
performance.
Senator Shaheen. One of the things that I have certainly
noticed in talking to business folks about water use is that
whenever they have to pay for water use that that significantly
changes the way they actually use the water. People try to be
much more efficient about water usage when there's some cost
involved.
Can you talk about whether--whether you found that to be
true as you've looked at companies and they're using fracking
to produce shale gas?
Any of you? Dr. Zoback, do you want to respond to that?
Mr. Zoback. I think that statement is--is generally true
and--and, you know, economics is often a good driver.
The expense of hauling flow back water from Pennsylvania to
Ohio because of the lack of--of permitted injection wells
perhaps was one of the motivations for the reuse of water and
recycling frack fluids. It was the driver, but ultimately it
produced something that was not only good for the, you know,
the economics of the development but it was also good for the
environment. So often, you know, multiple goods can come from--
from, you know, opportunities like--like the one you're
mentioning.
Other opportunities are the one I cited where when you're
drilling many wells and doing many fracks at a single site, it
might even be efficient to drill a well into a saline aquifer
and use a local supply of water that's unfit for any other
purpose to do the fracking. So all sorts of things, all sorts
of possibilities arise.
Senator Shaheen. Given that there are reports of wastewater
that's being disposed of in inappropriate ways, sent to
treatment facilities not equipped to handle the type of waste,
whatever. Is--do we have enough information about how the
wastewater is being handled to be able to reassure the public
that they are not in any, or not being exposed to any harm as
the result of how the wastewater's being handled?
Ms. McGinty. Senator, I do think that there is need for
more transparency there. Referencing before whether it's
tracking or manifesting or some other way to give the public
confidence that the water is properly being handled. If I could
jump in on what Dr. Zoback said 'cause I think he touched an
important point in terms of the economics of water and how it
impacts whether or not we might have innovation and better
environment performance.
I do think it's tough for companies out there right now who
are building on the success that Dr. Zoback talked about where
we are recycling and concentrating the brines of the flow back
water. Will we go the next step and then actually fully remove
the brine so you have discharge quality water and can put it
back into the water table or into surface water?
There's lots of companies out there, Dr. Holditch was
saying the other day, how impressed he is. He has somebody
knock on his door every day. They've got--they've got the
answer. Many of them do, technically. The economics are really
tough. They're tough when there is an abundant water resource.
They're tough when there's the ability just underground inject
the--the produced fluids. They're tough when there isn't some
other driver that says, ``Let's put a premium on conservative
management of water.''
So I do think that there's going to be need for some kind
of new factor involved here, whether it's economic or policy or
what have that enables some of these newer technologies to
bring us to the next level--level of water treatment and
conservation.
Senator Shaheen. Yes.
Mr. Holditch. Can I make a statement?
Senator Shaheen. Dr. Holditch.
Mr. Holditch. --I'm in the petroleum engineering department
and I have a lot of people come talk to me about their
technologies, and I've visited with 2 companies just last week.
One has already built a plant north of Denver the--and they're
about to build a plant in South Texas, and they're going to
take not only flow back water from frack fluids, but they're
going to take produced water. The industry produces about 3
times more water than it does hydrocarbon. They're building a
plant with a new technology to take the produced water, clean
it up so it can be fresh, good enough to be fresh water, and
then they're going to take--take out the impurities and the
salt, and sell the salt.
So there's a lot of entrepreneurs out there right now
trying to take this problem we have and turn it into
businesses. So I think the American entrepreneurship is going
to help solve a lot of these issues in the first short term.
Mr. Yergin. Just to add that the, you know, the whole shale
gas development was about 20, over 2 decades to actually go
from, you know, trying to make it work to work, and then it's
only been 2008 when we've had this incredible growth in it. So,
I think this process of--and a lot of--so we're talking about
best practices, we're also talking about technological
innovation and the 2 being linked. This is about the advance of
technology and these issues have been identified. As Professor
Holditch says, people are now focused on finding the
technologies to address these issues. You know, that will--
that's where the real solutions will come.
Senator Shaheen. Sure. One of--and again, I apologize if
this has already been raised but one of the--when I was
Governor in New Hampshire, we had an issue around a water
bottling plant that was going to take significant amounts of
groundwater, and there were no regulations or policy had not
really looked at that issue because the technology had gotten
ahead of where the policies in the State were.
Is that where we are with this technology? Do States need
to reexamine their policies around how we regulate or
incentivize shale gas production in a way that addresses some
of these concerns?
Mr. Yergin. I think one of the conclusions we came to, and
while you were presiding there this morning, we were talking
about it is that, in fact, there is a very well-developed State
regulation of oil and gas. There's a kind of perception,
though, that it doesn't exist, and that that is the foundation
for it.
Obviously, there are 2 best practices we talk about, this
group called STRONGER helping the States that are newer to the
field gain expertise and knowledge about how to--to do it. But
that seems to be the foundations on--on which--which we're
working, but it is to enhance the capabilities of, call it, the
new entrants.
Mr. Zoback. One--one area in which progress could be made
is in lessening cumulative impacts of shale gas development and
that's something we address in the report and water is central
to that. That water resources be--be managed more on a regional
than on a well specific scale.
Senator Shaheen. Right.
Mr. Zoback. That's something we emphasize and--and a place
where organizing for best practice could have a big payoff.
Ms. McGinty. I--I do think this is an area where there is
an opportunity for growth and improvement in terms of approach;
some basics things.
State of Texas, for example, has most or all of the water
resources in the State mapped; some other States do not. Now in
Texas when you get your permit to drill that well, the State
knows exactly what the depth of that water resource is and
therefore says on the cementing and casing issue, they know
exactly where you need the most protection. In other States,
that information is not available and industry has to figure it
out as they go, things like that just very important.
I know also that in some States there are tools that can
look at the quantity of water withdrawn, but in other States,
there may be authority over quality, protecting the quality of
water but the situation in terms of quantity is whoever has the
biggest straw wins. So, I know in Pennsylvania that we just had
to figure it out in the western part of the State because we
did not have a tool going into the development of the resource
and--and needed to invent one.
So I think it's an area where the sharing of experience
among States and a real and sincere focus on best practice and
continuous improvement is important.
Senator Shaheen. Thank you. Mr. Chairman, you've been very
tolerant, but can I ask one final question?
The Chairman. You--you can. Go--go right ahead.
Senator Shaheen. I've gone significantly over my time but
this is just kind of a throw it out. I don't know if you,
anybody has a view on this but as, I'm sure you're aware, in
recent months there has been some media attention to whether or
not the amount of shale gas reserves in the country are really
as high as some of the initial industry estimates have been.
Concern that they may not provide the production levels
anticipated because of the inability to access them.
Does any--do any of you on the panel have a viewpoint about
that issue? Something totally outside your report.
Mr. Holditch. Shale gas is--is for real. I mean, I've--I've
looked at a lot of wells in--in production, and done
engineering, and computed reserves and there it's--it's a game
changer for this nation. If you take the--the shale gas that
we're going to produce and use it for electricity and natural
gas vehicles, you take the same technology on horizontal
drilling and fracturing and--and you look at South Texas, West
Texas, even Ohio now in the Utica Shale and Bakken, the oil
production is going up in the United States for the first time
in--in 20 or 30 years. Dr. Yergin can tell you a whole lot more
about it than I do.
We--we're going to lessen our--our reliance on imported oil
in the next 5 years. It's--it's just going to knock your socks
off. It's going to be a game changer. It's really going to help
our economy. Dr. Yergin and his company is probably the best in
the world at evaluating this, so I'll let--let him kind of
close it out.
Mr. Yergin. Yes, I think the--the discussion about this has
been pretty confusing. I mean, even some of the reports that
one has seen that if you, is it apples and oranges that are
being compared? It's very hard to tell. But the U.S.
Geological, the one that was cited was actually the one that
was supposedly the lower estimate was 40 times larger than
their estimate of 10 years ago.
So I think the general view among professional geologists,
the people who do this is that this is a very large resource.
As Professor Holditch has--will--has instructed, not all wells
are economic, not all of them, the shales are not evenly
distributed in terms of the amount of gas. But every day, it
seems, is the sense of the resource grows and we're seeing
other regions of the world, of the United States and certainly
other regions of the world.
So I think what President Obama said in his remarks that
100 years of supply is a--is a--is a pretty good guide. I know
companies are finding when they acquire resources that, in
fact, is they learn how to produce it. You know, reserves are
not a finite concept. They're dependent upon economics and
technology. They found that actually the resource is even
larger.
So the numbers that are there are just, when we thought
just 5 years ago, we're going to be importing all this LNG
'cause we didn't have any natural gas. It turns out to be a
very different picture.
Senator Shaheen. Thank you all. Thank you, Mr. Chairman.
The Chairman. Thank you very much. Thank you all. I think
it's been a very useful hearing. We appreciate.
That will conclude our hearing.
[Whereupon, at 12:02 p.m., the hearing was adjourned.]
APPENDIX
Responses to Additional Questions
----------
Responses of the Secretary of Energy's Subcommittee on Shale Gas
Production to Questions From Senator Bingaman
Question 1. Based on the 90-day summary that you are here
testifying about--I have a good idea of what efforts can be undertaken
to ensure safe, sustainable domestic shale gas production. What's next
for you all and this subcommittee? You've indicated that there is a
second part you are working on--more like a 180-day report. Can you
elaborate a little bit more about what we can expect in the second half
of this report? What resources, if any, do you need to complete the
report?
Answer. The Subcommittee submitted its final report on November 18,
2011, and disbanded. The final report focused on implementation of the
recommendations presented in its first report. The final report is
available at www.shalegas.eneray.gov.
Stakeholder Feedback
Question 2. Have you received much of a reaction to your study from
public stakeholders? Other stakeholders? Can you elaborate on what the
public's reaction has been?
Answer. Public comment was solicited at every stage of the
Subcommittee's work. DOE maintained a website (www.shalegas.energy.gov)
and received over 39,000 public comments throughout the process. Those
comments may be viewed via the website and summaries of the comments
are also provided. The Subcommittee is gratified by the generally
favorable reception its reports have had from state and federal
agencies, industry, and public interest groups. The composition of the
Subcommittee has been criticized by some as including too many
individuals with ties to industry and by other as not including enough
individuals who have experience in industry.
Regulatory Revision
Question 3. Your report calls for public disclosure and open access
to information critical to shale gas extraction--like the composition
hydraulic fracturing fluids. You go further to mention the need for
perhaps more standard regulations related to protecting water resources
and air quality. Are you suggesting any new regulations in particular?
Are these at the state or federal level (or both)?
Answer. Since DOE is not a regulatory agency, the Subcommittee
avoided consideration of regulatory design. The Subcommittee made
recommendations to strengthen regulatory controls and to improve public
access to information, but it is up to the relevant regulatory agencies
and other policy makers to decide how to implement those
recommendations.
Question 4. You mentioned the need to collect baseline date prior
to the onset of shale gas development activities. Should the collection
of baseline data be made mandatory by the states as early as the
permitting process, like under the Safe Drinking Water Act, Underground
Injection Control Program? In areas where shale gas development is
underway, how should operators and regulators address the need for
baseline data . . . is it too late to get this information?
Answer. The Subcommittee strongly believes that having baseline
information is important to accountability, but also recognizes that
there are practical obstacles to its collection. In many cases such as
background water quality measurements, it is not collected in a timely
way. The Subcommittee recommends background data collection should be
adopted as a best practice.
Question 5. I see that the Subcommittee made recommendations
regarding the adoption of best practices. What steps should be taken to
ensure that these best practices are adopted and utilized? Should there
be any enforcement mechanism put in place to ensure the use of these
best practices?
Answer. These are excellent questions, for which the Subcommittee
did not prescribe definitive answers. For improvements in best
practices to occur, the Subcommittee recommended that industry lead a
multi-stakeholder process to answer these questions and develop a
rigorous and credible system of continuous improvement. The
Subcommittee favored a national approach to an industry best-practice
organization but recognized that differences in state regulation and
regional shale plays argued for a more decentralized approach. Industry
is proceeding on a regional approach around centers of excellence.
Water Quality
Question 6. There has been considerable media attention to the
issue of shale gas production, especially since the documentaries
''Gasland'' and ''Haynesville'' came out about shale gas development
and its impacts on the communities and the environment around the shale
gas production sites. Can one of you elaborate as to what is happening
when I see videos of citizens who can light their tap water on fire? Is
that gas related to shale gas production? Can you elaborate on this a
bit? How might that gas have reached the fresh water aquifer?
Answer. The Subcommittee did not investigate specific incidents but
received considerable public comment about them. EPA's water study may
provide more definitive information and it is investigating several
incidents under CERCLA, such as the recently released report on
Pavillion, Wyoming.
Question 7. What are the barriers to implementing saline water
usage for fracturing rather than simply using freshwater resources?
What are the benefits and are there any potential negative impacts?
Answer. The Subcommittee did not address this question. Generally
speaking, companies work within the applicable regulations in deciding
on water usage.
Question 8. Why is recycling flowback water for reuse more common
in the northeast part of the US, versus other geographic regions in the
US where oil and gas operations are taking place?
Answer. The allocation of flow-back and produced water for reuse
depends on local circumstances that vary widely in different shale
plays across the country in terms of amount of water produced,
availability of new water, alternatives for treatment and disposal.
It seems that a central message of the Subcommittee's report is
that we need to look at the use of water in shale gas production
operations from ''cradle to grave'' to make sure that both water
quantity and quality are taken into account.
Question 9a. Do you care to comment on this observation?
Question 9b. Do other members of the panel have a view on this?
Answer. The Subcommittee believed that cradle to grave (system)
management is an essential feature to effectively managing the
environmental impact of water usage. All members of the Subcommittee
agreed to the two reports and all of the recommendations.
Air Quality
Question 10. Your 90-day report recommends reducing air emissions
from shale gas production. The EPA recently issued draft rules to
control air emissions from oil and gas production, transmission and
storage. Do you think these rules go far enough to address the concerns
you outlined in your report? If not, what additional controls might you
recommend?
Answer. The Subcommittee is pleased to see regulatory agencies
addressing these issues, but it was not our task to evaluate specific
regulations or regulatory policy questions. The Subcommittee made
certain recommendations, for example a comprehensive study of the
greenhouse gas footprint of natural gas production, which go beyond
EPA's present plans.
Abandoned Wells & Safety
Question 11. An area of some concern when gas developers are going
into an area, such as the Marcellus shale, is the occurrence of
abandoned wells from oil and gas production that happened earlier in
the 20th century. Do you think abandoned wells pose a problem for
environmental and human health and safety? How would you recommend we
address locating and properly plugging these wells?
Answer. Abandoned wells are a general problem for the oil and gas
industry that will require attention by regulators and industry.
Abandoned wells are a specific problem for new hydraulic fracturing
operations in all areas. Plugging new shale gas wells is a matter for
state and federal regulation.
Question 12. There have been quite a few onshore well blowouts (at
least three notable cases) in the past year, in areas where shale gas
production is occurring. Did you look into the cause of these blowouts?
Did you consider whether these were the result of operator error,
shortcomings in the regulations themselves, failure by the state
regulator to adequately enforce regulations, or perhaps a combination
of many of these issues?
Answer. The Subcommittee did not investigate specific blowout
incidents.
EPA Study on Hydraulic Fracturing
Question 13. The EPA is on track to have the results of their
hydraulic fracturing study/research out by spring or summer of 2014.
How does your report fit into that study? Did you work with the EPA
when you were conducting the 90-day study? Do you think your
recommendations will change at all based on the type of study they are
undertaking? Do you think that the study they are undertaking is robust
enough to adequately address many (or most) of the issues you raise in
your report?
Answer. The Subcommittee consulted frequently with EPA officials
throughout the process and was thoroughly briefed about the EPA study.
Our study was produced on a much shorter time frame and addressed a
broader range of issues, not just water quality, and so is
complementary to EPA's work in many ways. In its second ninety day
report the Subcommittee urged EPA to release information and regulatory
guidance in the course of its water quality study.
Methane Leakage
Question 14. There have been several papers out in the past year
that have highlighted the problem of natural gas leakage during the
extraction process. The authors of these studies point out that if
there is a large amount of methane leakage during the extraction of the
resource, the overall carbon footprint of using natural gas could be
much higher than we would expect if you consider just the point of
combustion. Could one of you comment on how good our data is on methane
leakage? Also, could you provide an assessment on whether or not there
are ways that we could improve data collection about leakage and work
to curtail methane leakage during natural gas extraction?
Answer. The Subcommittee believes this is an area where there are
significant data gaps and much more research needs to be done to
assemble reliable data and explore best practices for dealing with
leakage issues. In our first 90 day report, we made three
recommendations that bear on this question:
(1) Enlisting a subset of producers in different basins to
design and rapidly implement measurement systems to collect
comprehensive methane and other air emissions data from shale
gas operations and make these data publically available;
(2) Immediately launching a federal interagency planning
effort to acquire data and analyze the overall greenhouse gas
footprint of shale gas operations throughout the lifecycle of
natural gas use in comparison to other fuels; and
(3) Encouraging shale-gas production companies and regulators
to expand immediately efforts to reduce air emissions using
proven technologies and practices.''
Question 15. You mention in your testimony that the most important
thing to ensure water-safe operations is to have sound well casing and
cementing. How can we ensure that this takes place? Is this currently
being regulated adequately by the states?
Question 15a. Do other members of the panel have an opinion on
this?
Answer. Both regulators and industry play important roles in
ensuring that well casing and cementing operations are done safely and
soundly. All members of the Subcommittee agree with this point.
Responses of the Secretary of Energy's Subcommittee on Shale Gas
Production to Questions From Senator Murkowski
Question 1. There has been significant controversy over
expenditures on programs for the promotion of ``green jobs.'' Given the
transformative effect that expanded natural gas production is already
having on our economy, in addition to the environmental benefits
derived from using natural gas for power generation and eventually
transportation, isn't the U.S. essentially a green jobs world
powerhouse already?
Answer. The Subcommittee agrees that natural gas production has had
enormous benefits for the nation, including very significant
contributions to employment, and, if environmental concerns can be
managed responsibly, that its potential will continue to grow.
Question 2. Here on Capitol Hill, China has become something of a
fascination. We regularly hear that the federal government has to spend
what China spends, on the technologies China spends on, in order to
keep up in the so-called clean energy race. What do you think about
that approach? Is it a wise decision--or a smart strategy--for the U.S.
to view our energy supply as a race, let alone a government spending-
based race that's driven by decisions made in China?
Answer. These are important questions, but are beyond the scope of
the Subcommittee's work.
Question 3. In your new book you have a couple of very interesting
chapters on China. In America, China is often cited as the leader in
green energy with whom we have to keep up. Also here in the U.S., many
oppose domestic production of oil and gas as a tactic to promote
alternatives. In China's push for alternative energy, are they
restricting the development of fossil fuels to promote the green energy
or are they proceeding to develop all energy fronts?
Answer. The Subcommittee's work focused on methods of making shale
gas production safer and more environmentally sound in the U.S. and did
not investigate practices in China.
Question 4. In the New York Times editorial about the SEAB report,
second-to-last paragraph states, ``The panel was largely silent on the
question of who should regulate the industry. But it made clear that
while the industry can do much to improve itself, the EPA, other
federal authorities and state regulators must step forward.'' That's
the New York Times' analysis--that the EPA should take a lead role in
regulation. Do you agree? If we want to ensure our shale gas resources
are produced at a rate which keeps pace with cleaner energy demand,
which agency or combination of agencies would be best?
Answer. The Subcommittee did not address the balance of
responsibility between state and federal regulation. The states have
historically been the principal regulator of oil and gas development on
nonfederal lands. Numerous other regulatory functions are managed
through a complex system of shared and delegated federal/state
programs. The Subcommittee's second ninety day report did note that it
has ``unease that the present arrangement of shared federal and state
responsibility for cradle-to-grave water quality is not working
smoothly or as well as it should.''
Question 5. I am interested to learn more about the Subcommittee
recommendation to create a shale gas industry production organization,
dedicated to continuous improvement of best practice through the
development of standards. I agree that it makes sense to encourage best
practices in the industry and that this gives the regulators and the
public the confidence that the industry is self-policing and operating
in the safest and most responsible manner. I am curious as to why the
report does not acknowledge the already existing standards setting
bodies, such as API and AGA. These organizations have already developed
many standards related to hydraulic fracturing and are in the process
of developing many more. It seems totally inefficient to require that
an entirely new standard setting body be created. Is the lack of
acknowledgement of these standards setting bodies an indication that
you do not believe that they are sufficient?
Question 5a. The Subcommittee envisions that this new industry
organization would be made up of member companies, NGOs and academic
institutions, but does not mention any form of federal involvement. I
wonder if the Subcommittee deliberately did not include the federal
government in its list of prospective participants and for what reason
it was excluded?
Answer. The Subcommittee did not exclude involvement of federal
agencies in its consideration of its best practice organization models.
There certainly should be a role for DOE, D0I, EPA, and USGS in the
activities of such industry organizations.
The Subcommittee heard from the API in its public meeting and
several members are familiar with the very valuable API and AGA
standard setting activities. The Subcommittee stressed the importance
of measurement and disclosure as central to monitoring improvement in
practice and reduction in environmental impact. The Subcommittee has
the impression that measurement and disclosure is not a central aspect
of the current API and AGA standard setting activities.
You talk at length about the need for best practices in casing and
cementing. You mention the fact that the API has a casing and cementing
standard (API Standard 65-2), but then fail to comment on whether the
API standard is sufficient, and if not, why not. The API casing and
cementing standard covers both onshore and offshore operations and has
been adopted into the federal regulations by the Bureau of Ocean Energy
Management, Regulation and Enforcement.
Question 6a. Have you looked at this document?
Answer. Several members of the Subcommittee have reviewed this API
standard.
Question 6b. My understanding is that this is a robust, technically
sound standard that is designed to help ensure that methane migration
does not occur before, during, and after drilling operations. Do you
believe that this standard is insufficient?
As mentioned above this standard does not have measurement and
disclosure as a part of the standard.
Question 6c. If so, do you think that the federal government made a
mistake in adopting it into regulation?
Answer. The Subcommittee's task was to offer recommendations for
ways to improve the safety and environmental performance of shale gas
production and we believe that measurement and disclosure standards, if
implemented, will have a beneficial effect.
Given that the Subcommittee membership includes the President of
the Environmental Defense Fund, the head of the Pennsylvania EPA, and a
well known environmental consultant, yet no active industry
representative, there have been questions as to whether there exists
any inherent bias amongst the Subcommittee members towards or against
expanded natural gas development. Please explain how each member of the
Subcommittee came to be a part of this Subcommittee.
Question 7a. Please explain how the panel is structured, what, if
any, was the procedure for vetting the candidates, and whether adequate
safeguards against bias or conflict of interests in the membership were
taken?
Question 7b. If the members of the Subcommittee are not members of
the SEAB, please describe who they are and whether they are deemed
Special Government Employees, or Representatives.
Question 7c. Are the members on the Natural Gas Subcommittee
identified anywhere within the FACA Database? If not, please explain
why? If they are included, does the database identify their start and
end date, their appointment type and term, as well as their pay plan
(if any)?
Question 7d. Was the industry feedback solicited throughout the
investigative process, and was industry input researched and
considered, when not solicited?
Answer. The Subcommittee was selected by the Department of Energy
and included members with experience in industry, the environmental
community and states. Members were evaluated for conflicts of interest
and agreed to recuse themselves if any such issues arose. As is typical
with Secretary of Energy Advisory Board subcommittees, some members
were not SEAB members but were drawn from the outside; they are not
special government employees. The members of the Subcommittee are
publicly listed on the SEAB website, including their biographical
information (http://www.shalegas.energy.gov/aboutus/members.html). The
selection of the Subcommittee members was also publicly announced by
the Departmental on May 5, 2011. Members of the Subcommittee who are
also members of the Secretary of Energy Advisory Board are listed in
the FACA database with all of the required information. However,
members of subcommittees that are not members of the full committee are
not required to be in the FACA database and are not listed there.
All members began Subcommittee work on May 18, 2011, and ended work
on November 18, 2011, and all were unpaid but per diem expenses were
reimbursed.
As mentioned above, the balance of the membership of the
Subcommittee was much criticized and thousands of the public comments
received focused on the membership. The vast majority of those comments
criticized the panel as too closely tied to industry.
Question 8. In the report, the subcommittee states that it will not
weigh in on whether the States or the federal government should have
the lead in regulating natural gas development. Yet, from a practical
standpoint, shouldn't we first know whether the States are effectively
regulating natural gas development, or whether the State/federal mix is
appropriately balanced?
Question 8a. Should we not first complete a gap analysis of the
regulations to determine whether the regulations are effective before
making recommendations to change those regulations?
Question 8b. Isn't this the primary issue in front of us--whether
the States are effectively regulating natural gas development?
Question 8c. If so, then how could the subcommittee not answer this
question?
Answer. These are important questions that must be addressed by a
group that has broader sponsorship than the DOE, which does not have
regulatory responsibility. The Subcommittee did confer with the EPA,
BLM and USGS and with a number of state regulatory authorities to learn
how the regulatory process for shale gas production was evolving in the
field.
Question 9. You provide many recommendations in your report, but
for each recommendation you have not consistently described what is
currently being done in the particular area. For example, you recommend
that air regulation should be improved to minimize pollution of methane
and other air pollutants. Yet EPA currently regulates air pollution and
methane emissions though New Source Performance Standards, National
Emissions Standards for Hazardous Air Pollutants, and National Ambient
Air Quality Standards. In fact, EPA recently proposed a rule that is
designed to significantly decrease methane emissions. Your report
inaccurately stated that the new EPA rule is not designed to address
methane emissions, yet the rule is designed to do exactly that. In
fact, the rule is designed to decrease methane emissions related to the
hydraulic fracturing process. Will the 180 day report reflect this
point and correct the mischaracterization of the rule?
Answer. There are no National Ambient Air Quality Standards for
methane. EPA's proposed New Source Performance Standards and National
Emissions Standards for Hazardous Air Pollutants for the oil and
natural gas sector do not establish emission limits or standards for
methane. The proposed rule contains emission limits for VOCs and EPA
has recognized ``many of the proposed requirements for control of VOC
emissions also control methane emissions as a co-benefit.'' 76 Fed.
Reg. at 52,756. We agree that these are interesting and important
questions. The Subcommittee did not attempt in the short time given to
it to conduct a survey of the history or content of every aspect of
shale gas production and regulation.
Question 10. I agree with the finding of the report that resources
dedicated to the oversight of the industry must be sufficient to do the
job. But the report goes on to suggest that ``fees, royalty payments
and severance taxes are appropriate sources of funds to finance these
needed regulatory activities,'' and I wonder if you could please
clarify what you mean by this. Do you mean that the current level of
fees, royalty payments and severance taxes are sufficient or are you
saying that new fees, royalty payments and severance taxes are
necessary?
Answer. The Subcommittee's recommendations are intended to
underscore the principle that direct costs of the regulatory process
should be part of permitting charges granted to licenses. There is a
broader question about the general level of taxation of resource
extraction that the Subcommittee did not address.
The Subcommittee recommends that states and localities adopt
systems for measurement and reporting of background water quality in
advance of shale gas production activities, but I wonder if the
Subcommittee has evaluated how much this would cost and if it would
even be feasible, given the various constraints that states and
localities face. The report finding is that baseline measurements
should be publicly disclosed while protecting landowner's privacy, yet
there is no recommendation or discussion as to how this might be
practicably accomplished. How can a policy protect landowner's privacy,
and the value of that land, in the event that the baseline data would
show very low quality water? One central theme of our recommendations
is that development and disclosure of information is useful and
necessary. Shale gas production has significant and undeniable benefits
for the country, but controversy arises in part because of lack of
information and attendant suspicions. We believe that information can
improve public perceptions and improve both the production and
regulatory processes. We firmly believe that if you measure something,
you can improve it. In particular, gathering baseline information about
water quality before production activity begins would resolve the
frequent conflict between landowners alleging that their water has been
contaminated and companies claiming the contamination was preexisting.
We also recognize that there are difficulties in obtaining this
information.
Question 11. I am concerned that there may be a lack of
coordination between the SEAB review effort and the ongoing studies
undertaken by EPA and by the BLM. Can you please explain what you know
about the EPA National Fracking Study and about BLM's preparation of
fracking ``regulations''?
Question 11a. Has there been any formal or informal coordinating
between EPA, BLM and your Board regarding fracking analysis?
Question 11b. What information, if any, related to the EPA fracking
Study or the BLM effort has been provided to the SEAB?
Question 11c. Has EPA or BLM solicited any information or requested
any consultation from the SEAB?
Question 11d. Given the budgetary constraints faced by these
agencies, do you believe it would be beneficial for federal agencies to
work together in addressing these issues?
Question 11e. Do you know if there was data from the EPA or BLM
that shows that the concerns SEAB raised in their 90-day report have
been resolved?
Question 11f. Could such data impact your 180-day report?
Answer. The Subcommittee consulted with EPA and the Department of
the Interior (both BLM and the U.S. Geological Survey) and was briefed
by senior officials at each agency. Agency officials appeared at public
Subcommittee meetings and provided valuable information (all of 14
which is posted on the website). The Subcommittee understands that DOE,
EPA, and Interior are working together on research issues and
coordinate on other natural gas issues as they arise. DOE is providing
technical assistance to EPA regarding its water study. We understand
that all three agencies are actively reviewing our recommendations and
taking steps to implement them as appropriate.
Question 12. The oil and gas producing states, the Interstate Oil
and Gas Compact Commission, which represents those states, and the
Groundwater Protection Council, among others, have shown persuasive
evidence and record that the states are in the best position to
regulate both oil and natural gas development. You even heard from a
panel of state regulators who testified directly before the
subcommittee that they have the expertise and resources to serve as
effective regulators and that regulation should remain their
responsibility. Do you disagree? Why does the report omit comment on
this issue?
Answer. The Subcommittee met with each of these entities and
benefitted greatly from information provided by them. We agree that a
great deal of good work is being done by them. We also understood that
states have historically been the principal regulator of oil and gas
operations on non-federal lands. The Subcommittee was not tasked with
making regulatory policy decisions so our reports refrained from doing
so.
Question 13. Please describe the current safeguards in place to
ensure that groundwater is protected in areas where fracking is used.
Answer. The Subcommittee did not in the short time available to it
undertake a comprehensive survey of such practices, which we understand
vary.
Question 14. Please describe the role of state regulatory bodies in
overseeing and safeguarding water resources.
Answer. State regulatory bodies share oversight and enforcement
responsibilities with the EPA on private land. The DOl's BLM shares
oversight and enforcement responsibility with EPA on federal lands.
Question 15. Please describe the processes generally undertaken
once water is recovered through the fracking process.
Answer. In general terms, flow back and produced water is stored
temporarily in holding ponds and can potentially follow four different
disposal pathways: (1) runoff to streams and waterways (almost
everywhere prohibited), (2) reused as fracturing fluid for new wells,
(3) injected in underground disposal wells, and (4) sent to treatment
facilities. Each pathway is subject to different regulatory oversight.
Question 16. Please describe the depths where the shale is
generally found, and the natural geologic barriers between the areas of
exploration and production, and the freshwater aquifers supplying
drinking water. Do these barriers provide additional protection, to the
current safeguards in place, for our water resources?
Answer. Shale gas formations vary across the country as to depth.
The risks to drinking water depend upon local circumstances, including
surface activity. The great majority of shale gas formations being
developed are thousands of feet below the depth of the water wells.
Question 17. There does not appear to be any direct recognition in
the report of states' ability to quickly adapt to new levels of
development and create an effective regulatory regime. Having worked
for the Pennsylvania Department of Environmental Protection, were you
able to share with the Subcommittee the strong steps taken by the State
of Pennsylvania in just the past three years? (For instance,
Pennsylvania has strengthened its water withdrawal regulations, has
strengthened its drilling standards, now requires a buffer between
operations and streams, has increased the fee required for an
application for a drilling permit, and has increased its staffing from
88 to more than 200.) With Pennsylvania being so close to the center of
this public debate, why is there not more discussion in the report of
the steps taken by Pennsylvania to address many of the concerns raised
in your report? Will the final report, as an example of how a state is
proactively addressing and mitigating the impacts surrounding increased
natural gas development, include more discussion of Pennsylvania's
approach and experience?
Answer. The Subcommittee met with the head of Pennsylvania DEP, and
with regulators from several other states, and has followed the state's
activities regarding this issue. Ms. McGinty spoke specifically at the
hearing to new measures the commonwealth had announced just the 16 day
before the hearing that represent another important contribution to
ensuring environmentally sound gas production.
Question 18. From an emissions standpoint, especially as regards
power generation but also as regards fleet vehicles, is it preferable
for natural gas supplies, to remain accessible and, thereby, abundant?
Answer. Yes, the Subcommittee agrees that natural gas is a very
valuable source of energy for the nation for many purposes.
Question 19. From an emissions standpoint, especially as regards
power generation but also as regards fleet vehicles, is it preferable
for natural gas prices to remain at or near their current levels of
affordability?
Answer. Lower energy prices benefit the consumer. The Subcommittee
did not speculate on the likely future trajectory of natural gas
prices.
Response of the Secretary of Energy's Subcommittee on Shale Gas
Production to Questions From Senator Stabenow
Question 1. In your 90 day report you briefly mention green
drilling and fracturing fluids as an area that deserves more R and D.
(p.32). What kind of alternative fracturing techniques are available
today and how often are they used?
Answer. The Subcommittee is convinced that industry has the
incentive to develop and adopt more efficient technical advances that
will reduce the actual or potential environmental impact of shale gas
production--several examples were mentioned in the first ninety day
report such as real time monitoring of fracturing fluid placement,
development of alternative fracturing fluids to water, induced
seismicity, and so-called ``green'' fracturing fluids. The Subcommittee
believes that the environmental aspects of shale gas development are
appropriate subjects for federal research and development work.
Responses of the Secretary of Energy's Subcommittee on Shale Gas
Production to Questions From Senator Manchin
Question 1. The Secretary of Energy Advisory Board Shale Gas
Production Subcommittee (``Subcommittee'') recommends improving public
information about shale gas operations through the creation of a new
access portal while also recognizing the value of expanding and using
existing tools such as the Risk Based Data Management System. Has the
Subcommittee fully researched whether a mechanism or portal currently
exists through organizations such as the Interstate Oil and Gas Compact
Commission that can serve as a central repository of information?
Answer. The Subcommittee understands that the Ground Water
Protection Council, in cooperation with the IOGCC, operates an
excellent and continually improving database for disclosure of
fracturing fluids. We met with both entities and benefitted from the
information they provided. The Subcommittee called for more expansive
disclosure of additional types of information from a wide variety of
state and federal agencies that already collect this information,
beyond that which GWPC currently contemplates. We believe any other
efforts in this area certainly should take into account and coordinate
with the GWPC website and be complementary to it.
Question 2. The Subcommittee believes the creation of a new shale
gas industry production organization dedicated to continuous
improvement of best practice is necessary. Did the Subcommittee fully
consider what organizations currently exist that could perform the
function?
Answer. Yes, the Subcommittee considered a wide variety of possible
organizational arrangements. For example, the Subcommittee had the
benefit of information and briefings from API, which has managed a
valuable standardization effort for many years. On balance, the
Subcommittee believes a new industry led initiative is justified,
emphasizing measurement, disclosure and use of these measurements to
document a progress improvement in practice and environmental action.
Question 3. The Subcommittee is charged with identifying measures
to improve the safety of shale gas production. Has the Subcommittee
considered the operational onsite safety procedures and specifically,
identification of a framework within which safety standards and
procedures for each phase of the activity can best be established and
impleriiented across the industry? Will the best practice
recommendations address training aspects for workers and emergency
response teams when accidents occur?
Answer. The Subcommittee did not attempt to provide detailed
guidance on the specific content of operational safety or training
procedures.
Question 4. Has the Subcommittee fully considered the application
of existing laws and regulations for protecting air quality and water
quality?
Answer. In the short time available to us, we did not conduct a
detailed survey of applicable law and regulations that apply in this
field.
Question 5. The National Energy Technology Laboratory (``NEIL'') in
Morgantown has supported shale gas related research for quite a number
of years. Arguably, that research has provided some of the
underpinnings to the extensive development of shale gas resources that
is underway today. In fact, the Subcommittee makes note of a NETL
analysis related to the greenhouse gas footprint for cradle-to-grave
use of natural gas in its 90 day report. The Subcommittee recommends
that additional assessment of the greenhouse gas footprint [related to
shale gas development] be undertaken and that ``a project of this scale
will be expensive.''
Answer. The Subcommittee is aware of the depth and variety of
expertise at DOE and its laboratories, including NETL, as well as
expertise in other agencies and research organizations.
Question 6. Does the Subcommittee recognize that NETL with its
university, industry, and national laboratory partners is well
positioned to lead such an effort? What order of magnitude in terms of
funding would the Subcommittee deem appropriate to complete this
``expensive'' project?
Answer. The Subcommittee defers to the Administration and Congress
on appropriate funding levels, but agrees that the project is a worthy
one and that NETL is one of several qualified candidates to perform the
work.