[Senate Hearing 113-734]
[From the U.S. Government Publishing Office]
S. Hrg. 113-734
FUGITIVE METHANE EMISSIONS
FROM OIL AND GAS OPERATIONS
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON OVERSIGHT
of the
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
NOVEMBER 5, 2013
__________
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COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
BARBARA BOXER, California, Chairman
MAX BAUCUS, Montana DAVID VITTER, Louisiana
THOMAS R. CARPER, Delaware JAMES M. INHOFE, Oklahoma
BENJAMIN L. CARDIN, Maryland JOHN BARRASSO, Wyoming
BERNARD SANDERS, Vermont JEFF SESSIONS, Alabama
SHELDON WHITEHOUSE, Rhode Island MIKE CRAPO, Idaho
TOM UDALL, New Mexico ROGER WICKER, Mississippi
JEFF MERKLEY, Oregon JOHN BOOZMAN, Arkansas
KIRSTEN GILLIBRAND, New York DEB FISCHER, Nebraska
CORY A. BOOKER, New Jersey
Bettina Poirier, Majority Staff Director
Zak Baig, Republican Staff Director
----------
Subcommittee on Oversight
SHELDON WHITEHOUSE, Rhode Island, Chairman
MAX BAUCUS, Montana JAMES M. INHOFE, Oklahoma
CORY A. BOOKER, New Jersey JOHN BOOZMAN, Arkansas
BARBARA BOXER, California (ex DAVID VITTER, Louisiana (ex
officio) officio)
C O N T E N T S
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Page
NOVEMBER 5, 2013
OPENING STATEMENTS
Whitehouse, Hon. Sheldon, U.S. Senator from the State of Rhode
Island......................................................... 1
Inhofe, Hon. James M., U.S. Senator from the State of Oklahoma... 2
Vitter, Hon. David, U.S. Senator from the State of Louisiana..... 4
WITNESSES
Dunham, Sarah, Director of the Office of Atmospheric Programs,
Office of Air and Radiation, U.S. Environmental Protection
Agency......................................................... 5
Prepared statement........................................... 7
Responses to additional questions from Senator Vitter........ 10
Allen, David, Ph.D., Gertz Regents Professor in Chemical
Engineering and Director of the Center for Energy and
Environmental Resources, the University of Texas at Austin..... 21
Prepared statement........................................... 24
Responses to additional questions from:
Senator Boxer............................................ 26
Senator Vitter........................................... 30
Boling, Mark K., President, V+ Development Solutions, General
Counsel, Southwestern Energy Company........................... 31
Prepared statement........................................... 34
Responses to additional questions from:
Senator Boxer............................................ 37
Senator Vitter........................................... 38
Gowrishankar, Vignesh, Ph.D., Staff Scientist, Sustainable
Energy, Natural Resources Defense Council...................... 43
Prepared statement........................................... 45
Responses to additional questions from:
Senator Boxer............................................ 146
Senator Vitter........................................... 150
Smith, Darren, Environmental Manager, Devon Energy Corporation... 152
Prepared statement........................................... 155
Responses to additional questions from:
Senator Boxer............................................ 158
Senator Vitter........................................... 162
Senator Inhofe........................................... 164
Hill, A. Daniel, Ph.D., P.E., Department Head, Petroleum
Engineering, Texas A&M University.............................. 165
Prepared statement........................................... 168
Responses to additional questions from:
Senator Boxer............................................ 178
Senator Vitter........................................... 179
FUGITIVE METHANE EMISSIONS FROM OIL AND GAS OPERATIONS
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TUESDAY, NOVEMBER 5, 2013
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Oversight,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:29 p.m. in
room 406, Dirksen Senate Office Building, Hon. Sheldon
Whitehouse (chairman of the Subcommittee) presiding.
Present: Senators Whitehouse, Vitter, and Inhofe.
OPENING STATEMENT OF HON. SHELDON WHITEHOUSE,
U.S. SENATOR FROM THE STATE OF RHODE ISLAND
Senator Whitehouse. Good afternoon, everyone, and thank you
for being here. I am delighted to be hosting this hearing of
our Subcommittee, and I particularly want to welcome our
distinguished ranking member back. It is good to see him here
and in such good health.
Our topic today is fugitive methane. As we know, methane is
the most abundant component of natural gas, and burning natural
gas for energy produces the beneficial effect of less carbon
dioxide than burning either oil or coal. So that is a positive.
And both President Obama and the gas industry have both clearly
made the point that natural gas is a step toward a lower carbon
energy future.
The American Gas Association's Web site says in most
applications, using natural gas produces less carbon dioxide,
which is the primary greenhouse gas, and, it adds, using
natural gas to replace less environmentally benign fuels can
help address greenhouse gas emissions.
And, of course, all of that is true, but methane itself,
when left unburned, is a potent greenhouse gas. The IPCC
estimates methane is 28 times more potent than carbon dioxide
over 100 years and 84 times more potent over 20 years. It is
clear that methane causes much more warming than carbon
dioxide, particularly in the near term. The methane emissions
that are not burned can actually offset, and more, the carbon
benefits we get replacing oil and coal with natural gas.
According to EPA--and I want to welcome our EPA witness,
Sarah Dunham, here--methane is the second most abundant
greenhouse gas emitted by human activities after carbon
dioxide, and almost a third of methane emissions in the U.S.
come from petroleum and natural gas systems.
Methane, as a byproduct of oil drilling, is often vented
directly into the atmosphere, unburned. There is a lot of it
that goes out. Flaring of this unwanted natural gas in the bake
and shale formation in the Northern Great Plains has been
estimated to be costing landowners, who receive royalties based
on the value of the resources collected from their land, about
$100 million per month in lost royalties.
Even in the natural gas sector, where methane is the
product and not a byproduct, significant amounts are emitted
unintentionally through leaks or through inefficient drilling
practices. In fact, 3 years ago the Government Accountability
Office estimated that around 40 percent of the natural gas
vented and flared on offshore Federal leases could be
economically captured with currently available control
technologies.
Domestic natural gas production is expected to grow by
about 44 percent from 2011 through 2040, so fugitive methane
will pose an ever greater risk to the environment and to the
bottom line of natural gas companies and mineral rights owners.
But there are real opportunities here for producers and the
environment. Two of our witnesses, Dr. David Allen of the
University of Texas and Dr. A. Daniel Hill of Texas A&M, worked
with a team of other scientists on a study demonstrating the
promise of cost-effective technologies that significantly lower
fugitive methane.
Research also shows that broad application of more
efficient practices, such as those used by natural gas
companies like Southwestern, have immediate and significant
economic and environmental benefits. To be sure, implementing
fugitive methane capture technologies faces economic,
logistical, and legal obstacles. Nonetheless, there is evident
potential for economically attractive ways to reduce fugitive
methane within the oil and gas sector.
I want to thank all of our witnesses for their testimony,
and I want to particularly thank our ranking member, Senator
Inhofe, and also Senator Vitter of Louisiana for being here
today. Today's discussion, I hope, will help Congress and the
Administration better understand fugitive methane and develop
win-win policies that help industry and the environment.
Now I will turn for opening remarks to our ranking member,
Senator Inhofe.
OPENING STATEMENT OF HON. JAMES M. INHOFE,
U.S. SENATOR FROM THE STATE OF OKLAHOMA
Senator Inhofe. I appreciate it, Mr. Chairman. Thank you.
Thank you very much. This is one of the areas where we are
going to find a lot of agreement with each other. And when you
talk about a win-win situation, I think we are looking at one
that might be.
Again, I want to welcome Sarah Dunham. She and I got to
know each other in my office back during the confirmation time
of Gina.
This issue is something I have been involved with for quite
a number of years. Data started being collected about the time
around the Natural Gas STAR Program, when it started. At that
time, I chaired this Committee. The Natural Gas STAR is a
voluntary program designed to allow industry to collaborate and
share best practices to reduce emissions from production
activities. So you had a lot of cooperation there between
industry and the EPA.
We all know that oil and gas firms already have an
incentive to reduce methane emissions. Methane is natural gas.
If I were on the board of directors, as all other directors
would feel, they don't want to waste this stuff; it has a value
to it. So we are all together on that.
The Natural Gas STAR was all about EPA working
collaborative with industry to help them collect the data and
share best practices. It was a common goal, so everyone
cooperated. Unfortunately, the EPA used the category of data it
collected through the Natural Gas STAR program to justify some
of its new oil and gas regulations. To make matters worse, EPA
increased their emission estimate by assuming that methane is
vented during the hydraulic fracturing process whenever there
is not a State law mandated that it be flared, and that simply
is not true.
I wrote a letter pointing this out as a problem back in
April, about a year and a half ago. The Agency has gone ahead
and finalized that rule anyway. Since then, the EPA has started
to make some modifications to its inventory of methane
emissions from oil and gas operations, but it has come only as
a result of some of our personal attention to this matter.
I discussed this at great length with Gina McCarthy during
her confirmation process, and once at a time when Ms. Dunham
was there in her office, in present. I am very appreciative
that she made some adjustments, which she did. I remember we
had some stakeholders in the room at that time and she made
some adjustments, but even then we still have major questions
about the inventory data EPA had on emissions during the
hydraulic fracturing process.
Industry had regularly communicated to me that the
estimates from EPA were too high, which was contributing to the
alarm surrounding the hydraulic fracturing process. A few weeks
ago I think we were vindicated when we had the study the
chairman referred to. The University of Texas, in conjunction
with the Environmental Defense Fund, releasing a study that
showed methane emissions during the hydraulic fracturing
process had been overestimated by the EPA by 50 times. Not
double, not triple, not 10 times; 50 times.
This study relied on real measurements, as opposed to EPA's
general computer modeling estimates, so the new data we have
now is significantly more trustworthy than we had before. And
during the question and answer, of course, I am going to try to
see where we are right now in considering this new data as
opposed to some of the computer modeling that we had before.
Fortunately, industry has made significant headway toward
reducing even those emissions further. The industry is known
for its world class research and development practices and
partnerships with leading universities around the world and, as
a result, newer technology and process are constantly being
developed.
If a firm finds a better way to recover a resource, without
losing it to the atmosphere, they are going to do it. As I
said, it is to their benefit to do it. Still, some critics have
raised the concerns about the amount of flaring that is going
on in North Dakota and other regions that are being targeted
for their rich deposits of oil, but often yield natural gas
too. In many of these cases the companies simply cannot
immediately justify the gathering network of pipelines needed
to capture the gas and transport it to the market. Since gas
isn't liquid, it is a lot harder to move around, to transport.
One of the best ways that we could help the situation is to
allow a widespread LNG exports, which are currently restricted
by the Department of Energy, and if we were to do that, then
demand for natural gas, which is currently very low relative to
the supply that is out there today, would become more solid and
more of these gathering networks could be justified, which
would reduce flaring and increase domestic gas supply. So,
again, that would be a truly win-win situation.
So regardless, it is crucial that EPA have the most up to
date and accurate information in its methane emissions
inventory. It is my hope that they will be able to immediately
make some adjustments in light of the recent University of
Texas EDF study.
Thank you, Mr. Chairman.
Senator Whitehouse. Thank you, Chairman.
I invite Senator Vitter to make any opening remarks he may
care to make.
OPENING STATEMENT OF HON. DAVID VITTER,
U.S. SENATOR FROM THE STATE OF LOUISIANA
Senator Vitter. Thank you, Mr. Chairman. I would just like
unanimous consent to submit my opening statement for the
record.
Senator Whitehouse. Without objection.
Senator Vitter. And then I will summarize it very briefly.
I certainly want to associate myself with Senator Inhofe's
remarks. This is important because this activity, this oil and
gas activity, and particularly fracking, is at the center of
the biggest positive development in our economy in the last
decade, and it is creating good paying jobs, lower energy
prices, increased energy security, revitalized manufacturing.
So that is important for our economy and it is important,
therefore, to get this right based on the real science.
I also want to underscore how important it is that we talk
about the University of Texas Environmental Defense Fund
collaborative study, which is the first study, as Senator
Inhofe said, to base measurements on actual production sites,
actual measurements of 190 production sites, not hypothetical
extrapolations or computer models. Again, as Senator Inhofe
said, that study underscores how off the EPA has been on this
issue.
So I look forward to focusing on that so that we can get
this right based on the science, do the responsible thing, and
do it in a way that allows us to continue with this real
positive game changer, building American jobs.
Thank you.
[The prepared statement was not received at time of print.]
Senator Whitehouse. Thank you, Senator.
I am now pleased to introduce our first witness, Ms. Sarah
Dunham, who is EPA's Director of their Office of Atmospheric
Programs within the Office of Air and Radiation. She is here to
provide an overview of the Administration's work on fugitive
methane emissions. I am encouraged that the President's Climate
Action Plan includes the development of an interagency methane
strategy and that EPA will be leading that team, and I look
forward to learning more about the process and the other work
being done by EPA to address fugitive methane.
Ms. Dunham, welcome and please proceed.
STATEMENT OF SARAH DUNHAM, DIRECTOR OF THE OFFICE OF
ATMOSPHERIC PROGRAMS, OFFICE OF AIR AND RADIATION, U.S.
ENVIRONMENTAL PROTECTION AGENCY
Ms. Dunham. Thank you. Good afternoon, Chairman Whitehouse
and Ranking Members Vitter and Inhofe and members of the
Subcommittee. I appreciate the opportunity to testify today
regarding methane, a potent greenhouse gas.
My name is Sarah Dunham and I am the Director of the Office
of Atmospheric Programs in the Office of Air and Radiation at
the U.S. Environmental Protection Agency. The Office of
Atmospheric Programs works to protect the ozone layer, improve
regional air quality, and address climate change. My testimony
today will focus on the importance of continued methane
emission reductions to address climate change.
There is overwhelming scientific evidence that climate
change is happening, that human activity is largely
responsible, and that, if left unchecked, the impacts will be
severe. Efforts to reduce carbon pollution, including short-
lived gases such as methane, are critically important to public
health and the environment.
Although the majority of greenhouse gas emissions consist
of carbon dioxide, other powerful greenhouse gases
significantly contribute to climate change, including methane,
which is also an ozone precursor. The latest Intergovernmental
Panel on Climate Change assessment report estimates the 100-
year warming influence from one ton of methane is 28 times
greater than from one ton of carbon dioxide. In 2010, methane
emissions accounted for 14 percent of global greenhouse gas
emissions and approximately 9 percent of U.S. greenhouse gas
emissions. However, total U.S. anthropogenic methane emissions
are projected to increase by 3 to 9 percent by 2030, compared
to 2010 emissions levels.
Methane is primarily released from six sectors: natural gas
systems, petroleum systems, agriculture, landfills, coal
mining, and municipal wastewater. The EPA provides annual
national methane emissions estimates for each sector in the
Inventory of U.S. Greenhouse Gas Emissions and Sinks. Along
with a number of other organizations, we continue to work to
improve measurement methodologies and emissions estimates.
There have been several recent studies and analyses that help
to improve emissions estimates in the natural gas sector. The
EPA has reviewed and used these sources, along with data from
the Greenhouse Gas Reporting Program, to update the most recent
Inventory estimates for this sector. The EPA will continue to
review new data and analyses to ensure that the Inventory
reflects industry practices.
Since the 1990s, the EPA, in partnership with industry, has
been working with great success to reduce methane emissions
domestically through programs such as Natural Gas STAR, Ag
STAR, the Coalbed Methane Outreach Program, and the Landfill
Methane Outreach Program. These programs focus on removing
market barriers and increasing the use of cost-effective
emission reduction technologies.
We also expect significant domestic methane emissions
reductions as a co-benefit from Clean Air Act regulations,
including the Oil and Gas New Source Performance Standards for
Volatile Organic Compounds. The EPA estimates that the Oil and
Gas New Source Performance Standards, finalized in 2012, will
result in up to 1 million to 1.7 million tons of methane
reduced annually.
Additionally, the President's Climate Action Plan, issued
in June of this year, calls for broad Federal activities to
address climate change, including the development of a
comprehensive, interagency strategy to address methane
emissions. The EPA is currently working with other agencies to
assess emissions data, address data gaps, and identify
opportunities to further reduce methane emissions through
incentive-based programs and existing authorities.
To conclude, reducing methane emissions is critical to
mitigating the impacts of global climate change. We have made
progress, but there is more to be done and the interagency
strategy that the President's Plan calls for will put us on a
solid path forward to realize even further carbon pollution
reductions.
Thank you again for the opportunity to testify, and I look
forward to answering your questions.
[The prepared statement of Ms. Dunham follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Whitehouse. Thank you, Ms. Dunham. I appreciate
your testimony here. You concluded by saying that the EPA
estimates that the Oil and Gas New Source Performance Standards
finalized in 2012 will result in between 1 million and 1.7
million tons of methane reduced annually. What are the
technologies that are required to achieve that? Are we dealing
with very experimental or cutting-edge technologies or is this
pretty established stuff?
Ms. Dunham. Thank you for that question. The New Source
Performance Standard that I referred to really builds upon and
requires a set of technologies and best practices that have
been the industry has already proven are cost-effective and
very effective at reducing methane emissions. A number of
technologies that the industry leaders have been deploying for
a number of years and that we have been working with industry
through our Gas STAR program to show that they really do cost-
effectively reduce and capture emissions. It is those types of
technologies that form, really, the heart of the requirements
under the New Source Performance Standard.
Senator Whitehouse. So they are both established
technologies and cost-effective for the implementing companies,
not counting the social effects or the social benefits. From a
pure company point of view they are cost-effective?
Ms. Dunham. That is true. The cost-effectiveness largely
comes from capturing the natural gas emitted during the process
and using that, as you know, as a valuable energy resource.
Senator Whitehouse. Do you estimate how much these
reductions will save industry participants each year?
Ms. Dunham. Yes, sir. We have estimated for when the rules
have been fully implemented, in 2015 and beyond, that the rules
show a savings of between $11 million and $19 million a year,
again, to the previous point, largely from reducing the waste
of the valuable resource of natural gas.
Senator Whitehouse. And do you think that the New Source
Performance Standards have driven down actual fugitive methane
emissions from oil and natural gas systems at this point?
Ms. Dunham. We are certainly working with industry
collaboratively as industry is working to implement these
regulations. A number of the dates haven't yet been fully
realized in terms of when the compliance requirements are, so
we don't have in our data collection, for example, our
greenhouse gas reporting program, where some of the data would
show up, we don't have that yet to show it, but we certainly
are hopeful and we expect that the benefits that we projected
under the rule will be achieved.
Senator Whitehouse. You all at EPA are the lead on the
President's Climate Action Plan. What can you tell us about
what you expect EPA's role to be in terms of how you expect the
process to work and any timeline or deliverables that you have
in mind at this point?
Ms. Dunham. One point to point out is we do, through our
partnership programs, largely, have a long history of working
with industry, again, on a very collaborative and partnership
basis across a number of different sectors to help reduce
methane emissions, so we are bringing that into the interagency
discussions. But the development of the methane strategy called
for in the President's Climate Action Plan is being led through
the White House through the collaboration of multiple Federal
agencies, because I think, as you pointed out, there are
multiple agencies who have a role here in looking at reducing
methane emissions from multiple sectors.
Senator Whitehouse. And what do you think your timeline is
likely to be?
Ms. Dunham. I don't have a timeline right now, but I think
what I can do is take back that question and that interest
back, particularly to the interagency group and the White
House, and we can follow up.
Senator Whitehouse. Good. Anything on like timeline,
process, and deliverable points where it will help us kind of
mark your progress as you go forward I think would be very
helpful.
Ms. Dunham. OK.
Senator Whitehouse. Senator Inhofe.
Senator Inhofe. Thank you, Mr. Chairman. Again, I welcome
our witness here. You have been career and you have been
through this. You were in the new STAR program and were very
familiar with the benefits, and with the cooperation that we
have historically had, at least I believe at that time, we
don't have quite that same cooperation now, from my estimation.
Now, on this program that was put together by the
University of Texas and the EDF, have you looked at this? Have
you formed any personal evaluations as to the accuracy of the
results that they came up with? Have you looked at this? I
guess I will rephrase it a different way. Do you object to
their results in any way?
Ms. Dunham. Well, sir, I think one of the things I noted in
my testimony is that there have been, and continue to be, a
number of studies in this area of measuring the emissions from
the natural gas sector, and I think we see the study that you
will hear about from the next panel as one of the very
significant ones that is producing a lot more data in this
area, so we hope to evaluate it and draw from that moving
forward.
Senator Inhofe. But don't you think, though--you are
talking about the University of Texas here, you are talking
about the EDF. These are groups that normally would not be
entrenched in one side or the other, and here they are together
in agreement with each other. And the reason I bring this up,
if this were like a two to one variance from what our data that
was used for models, then I would feel a little bit differently
about it, but right now are you currently making changes as a
result of this in terms of what you are expecting from
industry, in terms of your relationship with other entities and
also international groups such as the United Nations? Are you
sending out anything saying we are correcting errors that we
made in the past, which is understandable, because this is the
first time there has really been a study like this that has
taken place?
Ms. Dunham. I think the subject of the study that was done
by the University of Texas and this group is definitely an area
that we have already very publicly called attention to as an
area where we are seeking additional data and it would be very
helpful to have additional data. So it is very timely and
relevant to those sorts of efforts that we have been saying
over the last year or so and particularly called out in our
most recent greenhouse gas emissions inventory as an area where
we were seeking additional data and looking for enough data to
possibly look at different methodologies for estimating
emissions from this sector. So some of the specific things that
we asked for in that inventory this study is very relevant to.
Senator Inhofe. I know you know this because I have said it
so many times and one time or another you have heard it. The
first hydraulic fracturing that took place was in my State of
Oklahoma in 1948, and I can remember the predecessor, back when
Lisa Jackson was the director of the EPA, in response to the
question has there ever been a documented case of contamination
as a result of hydraulic fracturing, and she said no. So I am
very interested in this because, as you look around, you see
this huge boon that is taking place right now. It is horizontal
drilling and hydraulic fracturing. Without that we probably
wouldn't be having this meeting today.
So my concern is, and I was very pleased to see the results
of this study that took place, that we immediately adopt this
and discard anything that is in conflict with this and not
continue with any kind of regulations that are underway right
now until that is fully considered. Are there regulations right
now that are underway or being studied by the EPA?
Ms. Dunham. We have a number of petitions for
reconsideration and judicial review on the New Source
Performance Standard that we finalized last year that I
referred to, and we are continuing to evaluate those petitions
and the issues that were raised in them.
Senator Inhofe. With any regulations that are currently in
the planning stage, would you do an advanced notice of proposed
rulemaking and allow comment to be taken on the notice to see
if the regulations are even necessary or should be changed?
Ms. Dunham. Again, I think to the extent that we are
considering additional issues, it is largely under the umbrella
of the evaluation of the ongoing petitions with respect to the
process with which we would move forward with. I should note
that it is not my office that owns the regulatory framework;
what we do, largely, is support some of the analysis and the
data on those.
Senator Inhofe. Yes, but you are representing the EPA at
this time.
Ms. Dunham. That is true.
Senator Inhofe. The last thing I wanted to mention, and
maybe this would be something you might want to take for the
record, because one of the things that could improve the demand
certainty of natural gas is to justify more gathering lines.
This gets into the somewhat controversial area of exporting
LNG. Of course, there are a lot of people who are opposed to
it, saying that is going to cause the price to increase here in
the United States, when in fact something is going to have to
be done because right now the supply and demand situation is
such that we have something we could really offer in terms of
the balance of trade and other things that we could be great
beneficiaries of that. So do you have any comments right now in
expanding the LNG exports?
Ms. Dunham. I do not have any comments on that.
Senator Inhofe. OK. Well, something to think about it.
Thank you, Mr. Chairman.
Senator Whitehouse. You are very welcome, Senator.
I will turn to Senator Vitter.
Senator Vitter. Thank you, Mr. Chairman.
And thanks, Ms. Dunham, for your work, for being here.
The regulatory impact analysis for the final NSPS rule
discusses the 2010 social cost of carbon estimates developed by
the Administration's interagency working group, and this year
that working group released revised social cost of carbon
estimates and those are being used in a lot of EPA proposals,
so they are very significant. During all your work at EPA, have
you participated, or do you now, in that interagency working
group work on the social cost of carbon?
Ms. Dunham. We have folks in my office who are part of the
technical group that goes into the modeling context.
Senator Vitter. So your office certainly participates in
that.
Ms. Dunham. It participates in the development of the
analysis and the modeling.
Senator Vitter. OK. And personally have you attended
meetings, provided materials, analysis during the development
of those social costs of carbon estimates?
Ms. Dunham. I have certainly attended some meetings. There
are a lot of different meetings on these, but I certainly
attended some meetings that have discussed the updated social
cost of carbon estimates, and particularly with respect to the
technical work and the modeling and some of the differences.
Senator Vitter. Where I am going is to anyone outside the
Administration, including me, this is like a black box, and we
have been asking a number of legitimate questions through at
least two letters about that process and about the
participants, and I have just gotten no information yet. So are
you aware of others who have been involved in that process?
Ms. Dunham. I am certainly aware of your interest in the
subject and knowing more about it, so what I can do is make
sure that I take that interest back in learning more about what
the process was.
Senator Vitter. OK. Specifically, can you ensure that our
inquiries are substantively addressed, including with a list of
agency officials who have participated in that social cost of
carbon process?
Ms. Dunham. I can certainly take your interest in getting
that back to the agency.
Senator Vitter. OK. I am not so much concerned about that;
I am concerned about the other direction.
Ms. Dunham. I understand.
Senator Vitter. Will we get anything back from EPA or the
Administration?
Ms. Dunham. Yes. It is not my role at the Agency to speak
for that, but I can take it back, your interest in it.
Senator Vitter. Well, I would specifically ask you to get
those legitimate questions answered, including a list of Agency
officials who have participated.
Ms. Dunham. Yes, sir.
Senator Vitter. Since you have been somewhat involved in
the process, what officials do you know of who have
participated directly?
Ms. Dunham. Well, I will tell you the discussions that I
have been mostly involved with were really the technical and
the modelers, and things like that. I know you are asking for a
broader set of questions and frankly would like to defer to the
Agency officials.
Senator Vitter. OK. Well, since you are the witness, I
would just like to ask for you to supplement this record with a
list of all officials that you know of who have participated in
that.
Ms. Dunham. OK.
Senator Vitter. Great. Ms. Dunham, a number of us are a
little concerned about the very sort of backdoor way EPA has
gone at regulating methane through these lawsuits that were
filed, including basically regulating it as a co-benefit. But
the methane reductions, at the end of the day, are on the order
of 90 times greater than the reductions of hazardous air
pollutants that the rule directly seeks to regulate. Do you
have any concern about that, sort of the tail wagging the dog?
Ms. Dunham. Well, I think for a number of sectors methane
is co-emitted with volatile organic compounds and, frankly, I
think we--and a number of the technologies that have been used
and are used in this regulation that capture both volatile
organic compounds also capture methane. So I think using this
sort of model of capturing the methane as a co-benefit is a
helpful one in terms of using this very valuable natural
resource that is being vented to the atmosphere without these
technologies.
Senator Vitter. OK.
If I can have an additional 30 seconds.
It appears EPA is also on the verge of getting sued again,
probably in an attempt to force the Agency into additional
regulations that more directly regulate methane. As we speak,
what are EPA's plans in regard to additional rulemakings on
methane?
Ms. Dunham. Again, particularly with respect to the oil and
gas sector, that is one of the issues that we have been
petitioned on for reconsideration, so we are continuing to
evaluate all those issues.
Senator Vitter. Final question.
Senator Whitehouse. For the record, could I just ask the
witness to define the word petitioned, what she means by that
so that it is clear to people following this?
Ms. Dunham. Yes. And maybe we can get back to you with a
more formal legal definition of it, but we have petitions for
reconsideration of issues under the rule, as well as petitions
for judicial review of the rule. But if you want a more sort of
fuller explanation of both the petitions, as well as the use of
that word, we would be happy to----
Senator Whitehouse. No, that is close enough.
Ms. Dunham. OK.
Senator Vitter. Final question. In any of that future work,
will the EPA commit to using actual measurement data from
actual sites like the University of Texas study--I am not
suggesting that should be the entire universe--would seem to be
qualitatively different and better, if it is done right, than
modeling, et cetera?
Ms. Dunham. We absolutely agree that the more actual
measurement data there is that is available, we want to use
that to improve our estimates. And I would just point out that
there are a number of studies, in addition to the University of
Texas one, including the now 2 years' worth of greenhouse gas
reporting program data that actually requires all facilities to
report emissions to the Agency. That is another extremely
valuable source of data for use in updating our estimates and
making sure that they are based on the best available science.
Senator Vitter. OK, thank you.
Senator Whitehouse. Thank you very much, Ms. Dunham. We
appreciate you being here and we appreciate very much your
work.
Ms. Dunham. Thank you.
Senator Whitehouse. Enjoy the rest of the afternoon.
Ms. Dunham. Thank you.
Senator Whitehouse. If I may take just a moment's recess
while we call up the next panel of witnesses and ask the
witnesses to come forward.
[Recess.]
Senator Whitehouse. Good afternoon, gentlemen. Thank you
all for being here. I appreciate it very much. I think what I
will just do is go right across the table, starting with Dr.
Allen. Dr. Allen is the Gertz Regents Professor in Chemical
Engineering and the Director of the Center for Energy and
Environmental Research at the University of Texas at Austin. He
has authored six books and over 200 papers in areas ranging
from coal liquefaction and heavy oil chemistry to the chemistry
of urban atmospheres. Dr. Allen's work has focused primarily on
urban air quality and the development of materials for
environmental education in the past decade.
He has also developed environmental educational materials
for engineering curricula and for the University's core
curriculum. He was the lead investigator for the first and
second Texas Air Quality Studies, which involved hundreds of
researchers drawn from around the world and which have had a
substantial effect on the direction of air quality policies in
Texas.
He received his bachelor of science degree in chemical
engineering with distinction from Cornell University. His
master and Ph.D. degrees in chemical engineering were awarded
by Cal-Tech in 1981 and 1983. He has held visiting faculty
appointments at Cal-Tech, the University of California Santa
Barbara, and at the Department of Energy, and we are pleased to
welcome him here.
Dr. Allen.
STATEMENT OF DAVID ALLEN, Ph.D., GERTZ REGENTS PROFESSOR IN
CHEMICAL ENGINEERING AND DIRECTOR OF THE CENTER FOR ENERGY AND
ENVIRONMENTAL RESOURCES, THE UNIVERSITY OF TEXAS AT AUSTIN
Mr. Allen. Thank you very much for inviting me to appear in
this hearing of the Environmental and Public Works Oversight
Committee on methane leakage. My name is David Allen and I am a
professor in the Cockrell School of Engineering and the
Director of the Center for Energy and Environmental Resources
at the University of Texas at Austin.
Since January 2012, I have been leading a research team
funded by Environmental Defense Fund and nine natural gas
producers. The nine large and mid-sized companies that have
participated in this study account for 16 percent of natural
gas production and roughly half of new gas well completions in
the United States. The research team making the measurements
consisted of personnel from UT-Austin's Cockrell School of
Engineering and environmental testing firms URS and Aerodyne
Research.
The team has been making measurements of methane emissions
from natural gas production sites throughout the United States,
in locations ranging from Pennsylvania to the Gulf Coast and
Rocky Mountains. In September this year, our first results were
published by the Proceedings of the National Academy of
Sciences. In these brief prepared remarks I will summarize the
main findings of our work to date.
The overall goal of the study was to measure methane
emissions during natural gas production at a large number of
recently developed sites and to assess the national
implications for methane emissions of these measurements. The
team performed the first-ever direct measurements of methane
emissions from some of these sources.
Briefly, our study is based on measurements made at 190
production sites throughout the United States, with access
provided by the nine participating energy companies.
The collaboration of the energy companies and unprecedented
access to their natural gas production facilities and equipment
allowed our research team to acquire direct measurements of
methane emissions from natural gas production operations where
hydraulic fracturing is used.
During the year-long study, the UT-led team selected times
and general locations for sampling activities, and companies
provided us with access to their sites. The sampling was
designed to be representative of company operations in the Gulf
Coast, Mid-Continent, Rocky Mountain, and Appalachian regions.
We measured methane emissions from hydraulically fractured
well completions, a process that clears sand and liquids from a
fractured well. For two-thirds of the completions sampled
during the study, reduced emission completion equipment was
used to reduce methane emissions. This equipment reduced
emissions by 99 percent.
For these wells, only 1 percent of the methane leaving the
well during the completion flowback was emitted to the
atmosphere. Because of this equipment, our estimates of
national methane emissions from well completions are
significantly lower than the calendar year 2011 national
emission estimates that were released by the EPA in April 2013.
We also found that emissions from certain types of
pneumatic devices, which control devices such as valves on well
sites, are 30 percent to several times higher than calendar
year 2011 EPA estimates for this equipment. We estimate the
combined emissions from pneumatics and equipment leaks account
for about 40 percent of national emissions of methane from
natural gas production.
We found that the total methane emissions from natural gas
production from all sources measured in the study were
comparable to the most recent calendar year 2011 EPA estimates.
Having summarized the findings, I will briefly comment on
the manner in which the work was reviewed. The nine natural gas
producers and Environmental Defense Fund provided technical
reviews throughout the study. In addition, a scientific
advisory panel made up of independent academic experts reviewed
the study. The panel reviewed project plans before data
collection, preliminary findings, and the final manuscript that
was published. Prior to publication, the study also went
through the peer review process of the Proceedings of the
National Academy of Sciences, which involved responding to the
comments of anonymous reviewers selected by the editors.
In addition, I note that our study, which focused on
natural gas production, is part of a larger effort spearheaded
by the Environmental Defense Fund to measure methane emissions
throughout the natural gas supply chain. Results for the
studies addressing other parts of the supply chain, which are
being done by other investigators, will be reported during the
next 12 to 18 months.
Finally, I note that the University of Texas at Austin is
committed to transparency and disclosure of all potential
conflicts of interest of its researchers, and for details on
our disclosures I call your attention to those disclosures that
appear with our published manuscript.
Thank you for the opportunity to describe our work.
[The prepared statement of Mr. Allen follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Whitehouse. Thank you very much, Dr. Allen. I
appreciate it.
I am very pleased to welcome Mark Boling here. He has
served as president of V+ Development Solutions, which is a
division of Southwestern Energy Company since that division's
creation in April 2012. Previously, he has been senior vice
president, general counsel, and secretary of the board of
directors to Southwestern and an executive vice president of
Southwestern.
The mission of V+ Development is to identify and develop
solutions for achieving balance among the economic,
environmental, and social effects of Southwestern's activities,
focusing in particular on the role of advancing the development
of domestic natural gas supplies in achieving a low carbon
energy future. He initiated and continues to lead
Southwestern's efforts to collaborate with the Environmental
Defense Fund and other environmental NGOs to develop a model
regulatory framework for hydraulic fracturing operations.
Thank you, Mr. Boling, for being here. Please proceed.
STATEMENT OF MARK K. BOLING, PRESIDENT, V+ DEVELOPMENT
SOLUTIONS, AND GENERAL COUNSEL, SOUTHWESTERN ENERGY COMPANY
Mr. Boling. Good afternoon, Chairman Whitehouse, Ranking
Member Inhofe, and Senator Vitter. My name is Mark Boling and I
am General Counsel and President of V+ Development Solutions, a
division of Southwestern Energy Company. Southwestern Energy
Company is an independent exploration and production company
and is the fifth largest producer of natural gas in the United
States. I appreciate the opportunity to appear before you today
and provide testimony regarding methane emissions from the
Production Sector of Natural Gas Systems.
At Southwestern, we believe the development of America's
natural gas resources is an important part of achieving a
secure, low-carbon energy future for our country, but only if
it is done right. The good news is that the solutions to doing
it right are out there and if industry, environmental groups
and regulators work together in a collaborative way, these
solutions can be found and implemented.
One of the primary roles of our Development Solutions
division is to engage the communities impacted by our
operations, as well as other stakeholders, to assist us in
maximizing the benefits while minimizing the negative impacts
of our activities. We believe that by engaging in these
problem-solving dialogs, it is possible to develop ``smart
regulations'' for our industry. When I refer to ``smart
regulations,'' I am talking about rules that level the playing
field for all companies and effectively manage risk by
achieving the proper balance among the economic, environmental
and social impacts of the regulated activities.
Southwestern believes that a good example of how
collaboration between industry and regulators can lead to smart
regulations is EPA's Natural Gas STAR Program. The Natural Gas
STAR Program is a voluntary partnership that encourages oil and
natural gas companies to adopt cost-effective technologies and
practices that improve operational efficiency and reduce
methane emissions.
Southwestern joined the Natural Gas STAR Program in 2005.
Since our initial report in 2006, Southwestern has reported
cumulative methane reductions of over 37 billion cubic feet of
gas, primarily due to our use of Reduced Emission Completions,
also known as Green Completions. Additionally, due to the hard
work and innovation of our employees, Southwestern was able to
drive down the incremental cost of conducting Reduced Emission
Completions in our Fayetteville Shale project from
approximately $20,000 per well to $0 per well, while at the
same time capturing a significant amount of natural gas that
would have otherwise been vented or flared.
The years of collaboration and innovation supported by the
Natural Gas STAR Program provided key technological and
operational practice information to support the recently
enacted New Source Performance Standards, Quad O regulations.
Southwestern believes the Quad O regulations are smart
regulations as they effectively manage volatile organic
compound, VOC, emissions from the production sector, and
indirectly methane emissions, by requiring proven, cost-
effective emission reduction technologies and practices. In
fact, much of the equipment, controls and practices required by
Quad O have already been implemented by Southwestern and many
other companies that participate in the Natural Gas STAR
Program.
Finally, I would like to say a few words about another
important collaborative effort, the recently released upstream
methane emissions study conducted by a team of researchers from
the University of Texas and testing firms URS and Aerodyne
Research. Since Dr. Allen has already provided details of the
measurement data gathered from the study, I will limit my
comments to the following key findings:
First, total estimated methane emissions from natural gas
production were found to be comparable to the most recent EPA
estimates.
Second, measured methane emissions from hydraulically
fractured well completions were found to be significantly lower
than the estimates used by EPA in the national emissions
inventory.
And third, measured methane emissions from equipment leaks
and certain types of pneumatic controllers were found to be
higher than current EPA estimates.
This study shows that methane emissions from the natural
gas production sector can be effectively minimized by applying
reasonable emission capture and control practices. It also
shows, however, that additional opportunities exist to reduce
methane emissions from this sector.
Southwestern intends to actively pursue these opportunities
by taking the following steps: implement an internal initiative
to reduce methane emissions associated with our operations,
including a leak detection and repair program; participate in
additional studies to gather data on pneumatic controllers and
liquids unloading events to increase the data set and improve
knowledge; participate in a research and development project to
identify or develop cost-effective methane emission monitoring
devices; and work with other energy industry partners to
develop a methane leadership initiative, with a primary goal of
reducing methane emissions from the entire natural gas value
chain.
Mr. Chairman, this concludes my testimony. I would be happy
to answer any questions you may have.
[The prepared statement of Mr. Boling follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Whitehouse. Thank you, Mr. Boling, I appreciate it.
Our next witness is Dr. Vignesh Gowrishankar, who is a
staff scientist in sustainable energy at the Natural Resources
Defense Council. His work focuses on Federal and State
policies, programs, and mechanisms to clean up natural gas
production, help deploy cleaner resources across the electric
grid, and promote greater industrial energy efficiency.
Prior to joining NRDC, Dr. Gowrishankar served as a senior
policy advisor on climate change adaptation and mitigation
issues to the premier of the Australian state of Victoria and
served as a management consultant with McKinsey & Company in a
variety of industries. He earned his Ph.D. from Stanford
University and his undergraduate degree at the Indian Institute
of Technology Madras in Tamil Nadu, India. We are delighted to
have him here.
Please proceed, Dr. Gowrishankar.
STATEMENT OF VIGNESH GOWRISHANKAR, Ph.D., STAFF SCIENTIST,
SUSTAINABLE ENERGY, NATURAL RESOURCES DEFENSE COUNCIL
Mr. Gowrishankar. Thank you, Chairman Whitehouse, Ranking
Member Inhofe, and Senator Vitter. Thank you for the
opportunity to testify here today. My message today is simple:
The Federal Government needs to do more to limit the release of
methane and other pollutants from the production and
distribution of natural gas. Absent such steps, the increased
use of natural gas will aggravate smog, expose the public to
more carcinogenic chemicals, and worsen climate change.
The good news is that the technologies to reduce the
release of these pollutants exist today and the oil and gas
industry can actually make more money using them. Failure to
employ these health and environment protecting technologies is
a classic market failure.
The leakage and sometimes intentional venting of gas occurs
across the supply chain, from the production to transport. This
releases harmful and toxic pollutants and methane, a highly
potent greenhouse gas that accelerates and magnifies climate
change. This is the right time to be discussing the topic of
methane leakage, 1 year after Hurricane Sandy and close on the
heels of the President's Climate Action Plan.
According to the latest EPA data, methane leakage equals
about 1.5 percent of all natural gas produced each year, and
recent peer review literature has reported leakage as high as 7
percent, or even more, in certain locations. To put that in
perspective, at just 3 percent leakage, natural gas is no
better than coal in terms of its contribution to near-term
climate change. Continuing research on the precise level of
leakage should not obscure the fundamental and incontrovertible
point that natural gas is leaking into the atmosphere, wasting
fuel, polluting the air, and damaging our climate; when,
instead, that fuel could economically be put to use.
The technologies to control emissions are not hard to
understand at a basic level. They include such common sense
steps as capturing the big release of gas that occurs when a
well is fracked, using better seals for compressors and making
sure they are properly maintained and functioning, ensuring
that wells that control gas don't actually leak the gas,
putting a sealed lid on storage tanks so that gas does not
escape, and using detectors to identify when and where
equipment is leaking. And there are many others. This equipment
has been tried and tested, and is being manufactured and sold.
A number of leading companies are using them in some of their
operations and Dr. Allen's study further proves that they can
be very effective.
These technologies enable industry to capture and therefore
sell the gas that is now leaking into the atmosphere. As a
result, these technologies pay for themselves in short time,
typically in just a few months to about 2 to 3 years. NRDC has
identified 10 such technologies that are especially cost-
effective. Employing these 10 technologies could potentially
reduce 60 to 80 percent of methane leakage, and possibly even
more. Yet, using these proven, cost-effective technologies is
not yet industry standard practice. This is a classic market
failure. Industry is leaving money on the table and the public
is paying the price for suffering the health and environmental
harms of leakage.
The EPA recently established standards that begin to cut
this wasteful leakage, but these standards are too weak and
will cut less than one-sixth of total emissions in the near
term. EPA has the authority and obligation under current law to
do more. EPA should be setting stronger standards that target
methane directly and require emission controls for new and
existing equipment already in the field; all types of wells,
including oil wells that co-produce gas, such as those in North
Dakota; all significant emission sources across the entire oil
and gas supply chain. Such additional standards could actually
benefit the entire economy and help royalty owners, U.S.
equipment manufacturers and service providers, and well trained
technicians, operators, and pipe fitters.
Ultimately, the solution to climate change is moving away
from fossil fuels entirely and relying on energy efficiency,
renewables, and zero emission energy sources. Deploying these
should be the primary goal of U.S. energy policy. But until
then we need to ensure that the fossil fuels we do use have the
lowest environmental footprint possible, and reducing leakage
and venting of methane is one of the easiest things we can take
in this regard. There is absolutely no excuse to delay action.
Thank you again. I would be happy to take any questions.
[The prepared statement of Mr. Gowrishankar follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Whitehouse. Thank you very much, Dr. Gowrishankar.
Our next witness is Mr. Darren Smith, who is the
Environmental Manager for Devon Energy Corporation, a Fortune
500 company headquartered in Senator Inhofe's home State in
Oklahoma City. He served there since January 2009. Devon's oil
and natural gas exploration production operations are focused
onshore in the United States and Canada, and the company owns
natural gas pipelines and treatment facilities in many of its
producing areas, making it one of North America's largest
processors of natural gas liquids.
Mr. Smith earned his undergraduate degree in biology from
the University of Western Ontario and he earned a Master of
Science in environmental toxicology from the University of
Wyoming-Laramie. We welcome him here today.
Mr. Smith.
STATEMENT OF DARREN SMITH, ENVIRONMENTAL MANAGER, DEVON ENERGY
CORPORATION
Mr. Smith. Thank you, Chairman, for that introduction.
Ranking Member Vitter and Ranking Member Inhofe, thank you for
the opportunity to testify here today about this very important
issue. My name is Darren Smith. I am Devon Energy's
environmental policy manager.
Devon Energy Corporation is a leading independent oil and
natural gas exploration and production company with operations
focused onshore in the U.S. and Canada. We operate in several
of the major shale basins in the United States.
Devon has been actively engaged in the last several years
in efforts to demonstrate to EPA that its method of estimating
methane emissions from oil and gas operations is fundamentally
flawed and is resulting in gross overestimates. I testified to
that effect last June and extensively described how this faulty
data had been contaminating critical public policy research and
considerations.
Since that time, Devon has continued to engage EPA in
constructive dialog, providing method suggestions and data,
some of its from EPA's own greenhouse gas reporting program, to
encourage EPA to revise the factor that it uses to estimate
methane emissions from hydraulically fractured natural gas
wells.
This work is ongoing and Devon remains encouraged that EPA
will act swiftly to revise its data. The UT-EDF Fugitive
Methane Study that we are discussing today, one that EPA,
environmental groups, and industry hold in high regard,
confirms what Devon has been telling EPA for the last 2 years,
that its estimate for representing methane emissions from
hydraulically fractured natural gas wells is an order of
magnitude too high. The study confirms that this EPA estimate
is in fact 50 times too high.
The time for EPA to finally revise this erroneous emission
data is now. There is both consensus and confidence in the data
that industry has provided, in the data that has been provided
to EPA under its greenhouse gas reporting program, and now in
this peer-reviewed scientific study.
Immediate action is vital because EPA estimates have been
relied upon by researchers, financial analysts, and various
policymakers as a basis for critical public policy
considerations. In fact, a recently finalized EPA regulation on
the oil and gas industry was justified using this inaccurate
data. Equally troubling is a group of Northeastern States that
is threatening to sue EPA if it doesn't propose additional
emission requirements on the oil and gas sector. All this is
driven by the Agency's use of this flawed data. EPA must
immediately revise its data to more accurately reflect
emissions associated with the source category before further
harm is done.
Devon applauds the researchers and the companies that
participated in the UT-EDF study for their efforts to shed a
necessary scientific light on the topic of fugitive methane
emissions from oil and gas operations. It is unfortunate that
some of the headlines and discussions surrounding the release
of the study suggest that the low emission performance by the
oil and gas industry is due solely to recent EPA regulation
that forces industry to use emission control equipment. The
study fails to recognize that, in fact, the industry had been
already voluntarily using many of these controls prior to the
EPA mandate, and I should add that the mandate that we are
describing had been justified in part using the flawed emission
estimate that we are talking about today.
Despite the study's findings that emissions from
hydraulically fractured wells are 50 times lower than what EPA
previously estimated, the study concludes that, overall, when
other methane emission sources are added, methane emissions
from gas operations are about the same as EPA previously
reported in their inventory.
One source, pneumatic controllers, devices that use gas
pressure from the well to maintain fluid levels at a well site
when no electricity is available, were found by the study to
emit more than EPA's prior estimate, thus offsetting the
significant decline in emissions from completions with
hydraulic fracturing. The end result is that the overall
estimate of methane emissions from the entire system are about
10 percent lower than EPA's.
Many in the industry question whether conclusions about
methane emissions from these pneumatic devices are premature
since it is known that they will be studied further in phase
two of the study, and the researchers have admitted ``There was
significant geographic variability in the emissions rate from
pneumatic controllers between production regions'' and,
further, that ``emissions per controller from the Gulf Coast
are highest and are statistically different than emissions from
controllers in the Rocky Mountain and Appalachian regions''
and, further, ``the difference in average values is more than a
factor of 10 between Rocky Mountain and Gulf Coast regions.''
The bottom line here is that the researchers admittedly
cannot explain this variability and have therefore correctly
concluded that more study is needed in order to correctly
establish what representative emissions are from these devices.
We are confident that phase two of the study will ultimately
show that a few high emission measurements in one part of the
country are not indicative of the nationwide average. In fact,
it is likely that phase two will lead to a downward revision of
the emission estimates for these devices, from what was found
in phase one, as we understand that three out of the four
regions already studied have demonstrated low emissions from
these devices.
This would mean that the overall methane emissions from gas
production would fall even further below the study's current
estimate of .42 percent of gross production and remain less
than one-third to one-sixth of what critics believe is
necessary for natural gas to benefit the climate.
One cannot lose sight of the fact that gas producers are in
the business of selling methane and industry will continue to
make important innovations to improve efficiency and further
reduce emissions. Not only is this a reflection of a strong
commitment to environmental stewardship, but it is in the
companies' best interest to do so because methane leaks
represent lost revenue. I am confident that future studies like
the one we are discussing today will continue to reinforce this
business fundamental.
With that, this concludes my testimony. Thank you.
[The prepared statement of Mr. Smith follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Whitehouse. Thank you, Mr. Smith. I appreciate it.
Our final witness is A. Daniel Hill, who is the department
head and holder of the Noble Chair in petroleum engineering at
Texas A&M University. Professor Hill also holds the Robert
Whiting Endowed Chair. Prior to joining the faculty of Texas
A&M, Dr. Hill taught for 22 years at the University of Texas at
Austin, and before that, before entering academia, he spent 5
years as an advanced research engineer with Marathon Oil
Company. He serves on the Society of Petroleum Engineers
Editorial Review Committee and chairs the Society of Petroleum
Engineers Hydraulic Fracturing Technology Conference.
He holds three degrees in chemical engineering, a bachelor
of science from Texas A&M, a masters and doctorate from the
University of Texas at Austin, and we are delighted to have him
here today.
Professor Hill.
STATEMENT OF A. DANIEL HILL, Ph.D., P.E., DEPARTMENT HEAD,
PETROLEUM ENGINEERING, TEXAS A&M UNIVERSITY
Mr. Hill. Thank you, Chairman Whitehouse and Ranking Member
Inhofe and Senator Vitter. Good afternoon. I am Dan Hill. I am
the head of the Harold Vance Petroleum Engineering Department
at Texas A&M University. I have been a faculty member for over
30 years, after working in industry for about 5 years.
In recent years, one focus of my research has been various
aspects of hydraulic fracturing of shale gas and oil
reservoirs. Hydraulic fracturing, of course, is the key well
completion technique that has enabled the production of huge
quantities of natural gas and oil from shale reservoirs to the
enormous benefit to the U.S. economy and to U.S. consumers.
In February 2012, I was invited by Professor David Allen of
the University of Texas to serve on the scientific advisory
panel for the planned comprehensive study of methane emissions
at natural gas production sites in the United States. As a
member of the advisory panel for this methane emission study, I
reviewed the planned measurement program, reviewed results
partway through the study, reviewed the final results, and
reviewed the publications describing the outcomes. Throughout
the study, I was impressed with the careful and thorough
approach of the study team. I would say that this was the
unanimous opinion of the scientific advisory panel.
Unconventional oil and gas production has changed the U.S.
energy game. Production of natural gas and oil from
unconventional reservoirs, primarily shale formations, is
soaring, daily lessening this country's dependence on imported
oil and natural gas. A slide that you Senators have is a
history and forecast of U.S. natural gas supply. In less than
10 years gas production from shale formations has grown to over
30 percent of the U.S. supply and continues to grow. In fact,
in a recent update to this 2011 forecast, the EIA is now
predicting that the United States will be a net gas exporter
before the year 2020. This is great news in every possible way:
natural gas is the cleanest burning fossil fuel, it yields the
least CO2, and it is low cost thanks to its newfound
abundance in unconventional reservoirs.
Thus, it is critical that development of natural gas
production from shales continues in an environmentally
responsible fashion. In my opinion, this study has alleviated
the fear that large volumes of natural gas are emitted during
the flowback period following hydraulic fracturing. However,
the study did reveal significant sources of natural gas
emissions occurring during other shale gas well operations.
The measurement protocols used were sound and were properly
applied. The validity of this study is founded on the
measurement methods used and their correct application. The
methods chosen were all proven from years of prior practice and
were properly calibrated and applied in this study.
The study is comprehensive. In this study, methane
emissions were measured at 190 well sites, with 489
hydraulically fractured gas wells at these sites. The well
sites were located in the Gulf Coast, the Mid-Continent, Rocky
Mountain, and the Appalachian regions of the U.S. Slide 4 shows
the regions studied. The measures were made on sufficient
numbers of well sites to make the results statistically valid
and extrapolatable.
Methane emissions during hydraulic fracturing flowback
operations are 36 times less than that estimated in the EPA's
2011 greenhouse gas inventory. The most important finding of
this study is that methane emissions during the flowback period
immediately following hydraulic fracturing are dramatically
less than that estimated by the EPA in its 2011 greenhouse gas
inventory, more than 36 times less. The EPA estimate was not
based on actual measured methane emissions, as this study is,
but simply assumed a certain percentage of all methane produced
during flowback was emitted. Obviously, the assumed percentage
emitted was too high, 36 times too high.
Significant volumes of methane are being emitted from
pneumatic controllers, from pumps, and from leaks. The study
found that emissions from these devices exceed the 2011 EPA
estimates and are by far the largest sources of methane
emissions at shale gas well sites. Many of these emission
sources are easily reducible.
More study of methane emissions during gas well unloading
is needed. In this study, only nine gas well unloading events
were monitored for methane emission, and in only three of
these, all located in the Gulf Coast region, significant
methane emissions occurred. The range of emissions measured
during these few tests were extremely variable and not easily
generalizable. I recommend that a comprehensive study of
methane emissions during unloading be conducted, following
protocols like those used in this study, and apparently some
are already underway.
Fugitive methane emissions are only .42 percent of the
produced gas from shale wells. This study has shown that amount
is produced from shale well sites and emitted to the
atmosphere. It also showed that the large majority of emissions
occurred during normal production and is not related to
flowback after hydraulic fracturing. It is instructive to
realize that .42 percent of current U.S. shale gas production
is about 42 billion cubic feet per year, which even at current
low prices has a value of about $150 million. This is a
significant economic target for the industry to capture by
applying improved practices and developing new technologies.
Thank you.
[The prepared statement of Mr. Hill follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Senator Whitehouse. Thank you very much, Professor Hill.
Just to put this into perspective, why is it that we are
concerned about fugitive methane?
Mr. Hill. Why is it? I think the primary concern is its
role as a greenhouse gas.
Senator Whitehouse. And its role as a greenhouse gas is
what?
Mr. Hill. I am sorry, sir?
Senator Whitehouse. Its role as a greenhouse gas is what?
Mr. Hill. Well, it has a greater effect on a per mass
basis, much greater effect, apparently, than CO2 as
a greenhouse gas.
Senator Whitehouse. Unless it is burned.
Mr. Hill. Yes.
Senator Whitehouse. Than it is CO2.
Mr. Hill. Yes.
Senator Whitehouse. OK.
Mr. Boling, we have heard considerable testimony today
about the value of the fugitive methane and there is a lawsuit
in, I think, South or North Dakota over the loss to the mineral
owners, alleging, again, very significant value. Given that the
value is there and given that these companies tend to be in
that business, why is it that the market itself hasn't solved
this problem?
Mr. Boling. I think that really depends on the situation.
With respect to the Bakken, a lot of that gas is flared simply
because there is not sufficient infrastructure in place to
allow the gas to be economically gathered and sold. Obviously,
at some point in time the volumes that get flared become very,
very significant and something needs to be done, but I think
that is really the answer to that question, is that the
infrastructure is not there to support it.
Senator Whitehouse. And how about the losses during normal
production, the ones that were underestimated by EPA and shown
to have been larger by the UT study that are further along in
the process? That wasn't all lack of infrastructure, correct?
Mr. Boling. That is correct.
Senator Whitehouse. And why do you suspect it is happening
in those cases, where the lack of infrastructure isn't the
explanation?
Mr. Boling. Well, I think that one of the issues, really,
is I know that it does sound like a no-brainer, so to speak,
that if it is going to make everyone money, why wouldn't you do
it, but that presupposes you are not in a capital-constrained
environment in terms of the investments being made by industry.
And, in certain cases, if they feel like those dollars can go
into things that can probably make them more money, they may
not necessarily do it.
Senator Whitehouse. Got it.
Dr. Allen, on balance, I gather, your study has come
moderately close to supporting the EPA's overall numbers, but
it shows dramatic differences in the place within the
production sector where the leaks are taking place. Can you
comment on the difference between potential and actual methane
emissions from hydraulically fractured wells?
I ask unanimous consent to have, for the record, an exhibit
that has gone up to your right side that you can see that shows
the EPA 2011 numbers and the numbers from your report, and
obviously it is a dramatic reduction in the top line,
completion flowbacks from hydraulic fracturing.
Mr. Allen. Thank you for that question, Chairman
Whitehouse. In our work, and also in the EPA national
inventory, potential emissions are defined as methane that
might get into the atmosphere. So in the context, for example,
of completion flowbacks, it would be the methane that leaves
the wellhead. If all of that is released to the atmosphere,
then those potential emissions become the actual emissions. For
completion flowbacks, what we found was that our measurements
of what was leaving the wellhead were actually quite similar to
EPA's estimates of potential emissions.
What we found was that when reduced emission completion
equipment was in place, it was very effective in reducing those
actual emissions to the atmosphere, hence, leading to this
large reduction. So the potential emissions are mitigated by
control technologies, and the difference between what gets into
the atmosphere and the potential emissions depends on how
widely those control practices are applied and how effective
they are.
Senator Whitehouse. We have heard testimony that these
control technologies are both fairly common, not complicated,
not complex, and also highly effective. Can you confirm that
testimony from the point of view of your study?
Mr. Allen. Our study definitely confirms that reduced
emission completions are highly effective. We can comment on
the data that we measured. We went to 27 completion flowbacks.
For two-thirds of those we found this type of equipment in
place. This was for the nine companies that agreed to
participate in our study. So, in this case, what we observed
was that two-thirds of the flowbacks had this reduced emission
completion equipment in place.
Senator Whitehouse. Thank you.
We can do a second round, but I will abide by the timing
and yield to our ranking member.
[The referenced information was not received at time of
print.]
Senator Inhofe. Thank you, Mr. Chairman.
One of the issues that you reveal is that the emissions
from pneumatic pumps were higher than previously thought. Is
this something the industry recognized?
Mr. Smith. No, I am not precisely sure that industry
anticipated these results, Senator.
Senator Inhofe. All right. How much do you think is a
maintenance issue versus an equipment issue?
Mr. Smith. Well, I think, not being a participant in the
study, I am not certain whether or not maintenance practices
were evaluated by the team as a cause for the difference
between kind of published emission rates and what was measured
in the field, but I do know that this equipment, when it is
installed in the field, it is subjected to pretty harsh
conditions and maintenance needs to be an element to keep the
equipment working as it is designed.
Senator Inhofe. And I would assume, then, Devon and you
might also, Mr. Boling, agree with this and the rest of
industry. Do you really think you need regulations to motivate
these changes that are being talked about today?
Mr. Smith. Is that a question to me?
Senator Inhofe. It is a question, yes, to you, Mr. Smith.
In other words, doesn't it inure to your benefit to do this
without regulations?
Mr. Smith. As I mentioned in my testimony, a lot of the
control technologies that have been discussed today are already
being conducted by industry, and we have data from industry
that suggests that, for instance, green completion equipment is
being deployed very consistently across the industry. So the
incentive, I think, to employ these control technologies is
already there. I think an important thing to recognize is that,
and I think this is maybe a little counterintuitive to some,
but I think there is some belief that in this condition of low
gas prices, that because gas is maybe not worth so much, that
companies aren't paying as much attention to leaks of it.
But in reality, the inverse is really true, because if you
consider a company needing to make profits from these wells,
the only way that a company can offset our operating costs of
these wells is to really, if you will, scrape the bottom of the
barrel to really capture and sell every cubic foot of gas that
we can. Otherwise, if we can't offset the operations costs of
these wells, because, of course, operations costs are
independent of what gas prices are, to a large part. If we
can't offset our operations costs, then these wells are
operating at a loss.
So even in conditions of low gas prices there is a strong
incentive for energy companies to capture every cubic foot of
gas that they can.
Senator Inhofe. Yes, that is right. Of course, you heard my
comments in opening statement. I talked about the benefits of
increasing our exports that would put us in a position. Right
now you have huge supply, but the demand is down. This could
change that around so that you would be in a position, and Mr.
Boling, you would be in a position to have the benefits of the
profits to make these changes that might not be economically
feasible at today's market. Is that inaccurate? I have been
trying to make the case and I have made some talks on the floor
about exporting LNG.
Mr. Smith. And this kind of demand certainty that would
surround LNG export. Again, I think the incentive for operators
to reduce leaks is maybe not so much driven by our forecast for
demand certainty as much as it is about really trying to
maximize profits and really, again, in these low conditions of
gas prices, to certainly generate enough revenue to offset our
operating costs in many areas.
Senator Inhofe. I got the impression, Dr. Gowrishankar,
that you had said there is technology out there that some of
these companies are not using, and the question I am asking
them is it because the volume they are dealing with doesn't
justify the cost of making these changes.
Mr. Gowrishankar. Our analysis suggests that potentially
the primary reason for them not being used more widely goes
back to the question of capital constraints and other strategic
initiatives that may potentially make more sense for the
companies.
But in our view, these standards that require the control
of these emissions make sense; they are profitable and that, I
think, is pretty much undeniable. They are profitable and cost-
effective and they, therefore, must be used to control these
emissions. And there is no evidence to suggest that it is being
used widely. There are some companies that are doing it, but
voluntary action has not been sufficient.
Senator Inhofe. So you are contending that we need
regulations to force that?
Mr. Gowrishankar. Yes. We think regulations must be in
place to level the playing field, fix the market failure, and
ensure that these standards are adopted across the country by
all producers; not just the leading ones, but everybody.
Senator Inhofe. If you don't mind my going a little bit
longer, because I won't be able to stay for a second round.
Just one other question.
Dr. Hill, from what I understand, a portion of the Federal
royalties from the oil and gas operations goes toward ongoing
research on oil and gas resources. We have talked about this
for a long period of time. Because of this, the Federal
Government has actually played a big role in collaborating with
industry to unlock the shale revolution. But the program that
manages the selection of the projects to fund expires next
year. Can you tell us how extending the program will help
foster voluntary collaboration and innovation, the benefits
that would come with that?
Mr. Hill. Yes, Senator. I would be happy to. The program
you are mentioning is called the Research Partnership to Secure
Energy for America. It has been underway, it is in its seventh
year now and this program has funded $50 million a year of
research from royalty funds, Federal royalty money to support
research on unconventional resource development, shale
primarily, and the second major area is deepwater oil and gas
development. This has been a very successful program; it
supports research at many universities across the country,
educated a lot of engineers for this burgeoning industry and
helped a great deal in developing the technology that has led
to these efficiencies.
There is a lot more to be done. A lot of the work that the
RPSEA, as it is referred to, program is conducting right now is
aimed more to the environmental side, a lot of studies on water
usage, for example, minimizing fresh water usage and fracturing
operations. So it is a program that has done a lot for this
country, a lot for this development of shale gas and oil in
particular.
Senator Inhofe. Do you think this should be reauthorized?
We have a lot of good programs, Mr. Chairman, of cooperation.
Partnership and Wildlife is one that has been very, very
successful. This is another example.
Mr. Hill. Yes. I think it would be wonderful if this could
be reauthorized.
Senator Whitehouse. Senator Vitter.
Senator Vitter. Thank you.
Thank you all very much. Very impressive panel,
particularly given that a UT and an A&M presence sat at the
same table, albeit separated.
[Laughter.]
Senator Vitter. I want to go back to the sort of summary of
the study. I know none of you have said this, but make sure
there is no misconception of it. In a sense, the overall
summary could be EPA was way off in terms of estimates about
the fracking process. They underestimated leakage from
pneumatic devices, et cetera, and overall they were in the
ballpark, maybe 10 percent off. But I want to make sure
everybody agrees. The subcategories do matter in terms of
policy and responsible policy and moving forward. It is
certainly important that we understand where the problem is or
the opportunity for improvement is and where it doesn't. Does
everybody agree with that?
Dr. Allen. Everybody can respond.
Mr. Allen. Thank you, Senator Vitter. We feel the major
contribution of our study is identifying where the major
emissions are so whatever action is appropriate can be taken
based on measurements of where the emissions are, and what we
found was emissions from hydraulic fracturing completion
flowbacks are very low when reduced emission completion
equipment is in place and pneumatics were higher than we
expected.
Senator Vitter. So does everybody agree that those
subcategories absolutely matter and we have a lot to learn from
those specific subcategory conclusions, even if it is some sort
of general wash within 10 percent overall?
Mr. Boling. I agree that the subcategories are very
important. I would caution, however, that when we are talking
about the emissions and conclusions to be drawn from the study,
while it is clear that EPA's estimates of the actual, net
emissions were much higher than the study, when you talk about
potential emissions, as was mentioned previously, the potential
emissions are pretty comparable. So it really is a question of
production characteristics of the well and the period of time
that the well is allowed to flowback. And if you get into a
situation where the well either is not flowed back for a long
period of time or you have REC completions, then you will have
much less net emissions, even though the potential emissions
could still very well be the same.
Senator Vitter. Right.
Mr. Smith, I think as early as 2010 Devon had initiated a
project aimed at reducing emissions from pneumatic controllers,
one of those specific areas we have been talking about. Can you
go into a little detail about what you and other industry
leaders have been doing there voluntarily?
Mr. Smith. Yes. At Devon, we are proud to have written, as
far as I know, the only carbon methodology for creating
fungible emission credits from emission reductions in the oil
and gas sector, and we did that with a methodology for the
retrofit of pneumatic controllers. So it is taking high-bleed
pneumatic controllers out of service and replacing them with
low-bleed pneumatic controllers. And that methodology is
available to the public, so any industry could use that and
establish carbon credits for it.
The topic about what else we are doing to reduce methane
emissions, unfortunately, we don't have near enough time to
take you through that, but I will say that in addition to
focusing on reducing emissions from pneumatic controllers,
Devon was one of the pioneers in green completion reductions,
one of the earliest companies that were doing green
completions, so we are very familiar with that; we do it
everywhere in our operation.
The other thing we do is that we have surveyed our
operation. We don't have a wet seal on any one of our
compressors. And without going into a bunch of technical detail
about what a wet seal is, it is a much higher emitting device
than a dry seal. So we don't have any wet seals in our
operation.
Also we are really centralizing a lot of our production
equipment so that some of the control equipment that is outside
of its operating range at individual well sites is now feasible
when you kind of aggregate more equipment together. So we are
doing a lot of things, and not just us, but industry is doing a
lot of things to be proactive in reducing methane emissions
voluntarily.
Senator Vitter. Great. Thank you all very much.
Senator Whitehouse. Thank you, Senator.
I would like to call up a chart that a smaller version I
will make a part of the record, without objection. This is
based on EDF information. I think Dr. Allen is familiar with
it; perhaps Dr. Gowrishankar is as well. And what it shows is
the ratio between the amount of fugitive methane that is
released and how natural gas competes with other fuels in terms
of being a better or worse carbon alternative, environmental
alternative.
And you will see that although we are talking about very,
very low numbers, 0.42 percent, we are dealing with very low
numbers here. If you have 1 percent emitted of natural gas, not
burned, but just emitted, then you don't break even with heavy
duty diesel, I can't even read it, the lines are so close, it
looks like for about 40 years. And if you are emitting 2
percent, you don't break even with gasoline for 40 years. And
if you go to 4 percent, then you don't break even even with
coal for 40 years.
So the question of how much methane gets away is vital to
protecting, frankly, the marketing position of natural as
against competing fuels in the minds of a public that is
increasingly sensitive to these concerns. So I hope that this
helps explain why we are so concerned about this and why I
think this is a great opportunity for the industry and for the
environmental community and Congress to all work together to
solve this problem, because if worse gets out that if it is
leaking in substantial amounts and that is causing natural gas
to have to reverse a lot of the things that folks like the ANJ
are saying all the time about the environmental value of
natural gas compared to other fuels, then that is going to
have, I think, an unfortunate effect on the market and on the
credibility of the gas industry and so forth.
So I think it is really important that we get this right. I
think the fact that the technology is as well established as it
is, particularly through the leading companies, and I want to
particularly recognize Devon and Southwestern for being here,
is a very good sign. And the fact that even though it might not
be the highest return in use of capital, the fact that it is a
net positive use of capital for companies shows that this is
the type of regulation that really, in fact, can be a win-win.
So I thank everybody for being here.
Just to make sure that the record is completely clear, I
have asked Professor Hill this question, but, Mr. Smith, on
behalf of Devon Energy, why is it that we want to limit the
fugitive emission of methane?
Mr. Smith. Well, from a company standpoint, and, of course,
I recognize the global warming potential of methane and all
that, but from a business perspective it is a responsibility to
our shareholders to produce as much from our wells as they are
funding us to do that.
Senator Whitehouse. And describe the other reason that
doesn't affect your shareholders so directly, but affects the
rest of all of us.
Mr. Smith. It is recognized as a greenhouse gas, that is
absolutely right. We certainly would not deny that.
Senator Whitehouse. And it, if released, will do what?
Mr. Smith. Well, maybe you are pushing me into an area
that, first of all, I am not an expert.
Senator Whitehouse. Generally. You are the environmental
manager for a very big energy corporation.
Mr. Smith. Right.
Senator Whitehouse. I am not asking you complicated
questions.
Mr. Smith. It is not a complicated question.
Senator Whitehouse. Methane in the atmosphere does what?
Mr. Smith. It is believed to cause global warming.
Senator Whitehouse. Because it traps solar heat.
Mr. Smith. Traps heat.
Senator Whitehouse. All right.
One last question. When Senator Inhofe was asking, I guess,
Mr. Smith about the maintenance versus equipment question, Dr.
Allen, you were making notes as if you wanted to add something.
I am not sure if you were just making notes. Did you have
anything to add to that discussion or are we all set here?
Mr. Allen. No, I just make notes.
Senator Whitehouse. OK, terrific. Then I won't press
anything further.
Let me just thank all of you very much. This has been a
very helpful panel and, Dr. Allen, the work that you have done
obviously has made a very significant impact and I hope will
help inform this policy debate. A lot of hard work went into
it. I appreciate it very much.
Mr. Boling, thank you for the forward stance that
Southwestern has shown and the very powerful way that you have
brought industry and environmental leadership together in a way
that I think does have this win-win potential. I am grateful to
both of you.
Dr. Gowrishankar, thank you for your research with NRDC.
To our witnesses from Devon and from Texas A&M, again,
thank you both for the expertise you brought to this hearing.
The hearing record will remain open for Senators to submit
any written questions for 2 weeks. You think you are free of
us, but you are not quite free; we might come after you with
written questions for another 2 weeks. If you would be kind
enough to reply to those questions, we obviously would be very
grateful.
With that, the hearing is adjourned. Thank you all so much.
[Whereupon, at 4 p.m. the Subcommittee was adjourned.]