Revisiting This Week’s Natural Gas Hearings

This week, the U.S. Senate Committee on Energy and Natural Resources held a series of roundtables to discuss natural gas and its role in the American economy. From infrastructure and LNG exports to environmental protection and best practices, the committee gathered an array of stakeholders to discuss all facets of development. As to be expected, shale was a major focal point throughout the hearings.

Like any event on Capitol Hill, the discussions brought up perspectives from all sides. Experts from industry sat across from state and federal regulators, environmentalists, and lawmakers alike, debating and sharing their thoughts on the development, extent, and end use of our abundant natural gas supplies.

Here we take a quick look back on the week with some highlights, with some much-needed fact checks along the way.

May 21, 2013: Domestic Supply and Exports

Tuesday’s roundtable focused on America’s natural gas supply and liquefied natural gas (LNG) exports. Panelists included American Chemistry Council President Cal Dooley, Harry Vidas of ICF International, and Charles Ebinger of the Brookings Institution, among others. One outlier on the panel, however, was Deborah Rogers, Executive Director of Energy Policy Forum and a longtime critic of shale development and hydraulic fracturing.  Ms. Rogers, who landed a starring role in Gasland Part II and is affiliated with the aggressively anti-fracking group Earthworks, called into question the size of America’s natural gas resources, a claim for which she has become famous (or, perhaps, infamous).

From her testimony:

“Exportation of shale gas opens up many interesting, critically important questions. It is precisely for this reason that sensible and reasonable debate should occur before we commit billions of dollars and years of investment in an energy policy that will serve few of us. Unfortunately, debate has been subsumed by the cacophony of voices that would have us believe that shale gas is abundant, long lived and will defy pricing pressures for decades to come. This is simply not true.”

Ms. Rogers presumes that America’s natural gas supply is overstated, even grossly so. Her reasoning hinges upon an inherent distrust in shale development more generally, as Rogers believes that shale itself is actually unsustainable, and that rapid production declines from shale wells undercut the “abundance” argument.

It’s an interesting position to take, especially in the wake of the International Energy Agency’s (IEA) recent report, which found that North America’s shale supply is altering the entire global energy equation, and even – potentially – altering OPEC’s future activities. The findings reaffirm previous reports from IEA and the Energy Information Administration (EIA) touting our vast energy supply. In fact, IEA chief economist Fatih Birol recently referred to shale as the “the biggest change in the energy world since World War II.” If that’s not enough, another report from the Potential Gas Committee earlier this spring showed a massive increase in available natural gas – at least 110-years’ worth, to be more specific.

More from Ms. Rogers’ testimony:

“Shale wells deplete alarmingly. …Moreover, every shale gas play in the U.S., with the exception of the Marcellus, has already peaked and is in decline. Some have gone through almost a complete life cycle in a matter of a mere five years or so, negating entirely the notion of plentiful supply for 30, 40 or even 50 years.”

First of all, Ms. Rogers’ comments fail to acknowledge the expanse of America’s shale plays. As EIA’s Sam Gorgen told Business Insider, “The long-term outlook for shale/tight oil and gas production is supported by the large area extent of the plays and hence the number of wells that can be drilled.”

Yes, depletion does occur, but not quite as Ms. Rogers explains. Individual wells do have a well-understood depletion rate, with the largest amount of production occurring in the early stages of a well. But those same wells can still produce for decades – which is exactly why literally every credible voice on this subject is acknowledging America’s vast supply of natural gas. Moreover, the reason for “declines” in certain shale plays isn’t because of some sort of technological failing; it’s because America is so awash in natural gas that we’re trying to find new sources of demand, and thereby leverage this resource even further. As it stands right now, the federal government has constraints on the available markets for natural gas, one of which is the restriction on exports.

In essence, by opposing exports, Ms. Rogers is trying to create a self-fulfilling prophecy: limit markets for natural gas, and then blame the industry for not having enough available markets.

Unfortunately, Ms. Rogers continued:

The collateral damage in the form of air toxics, ground water depletion, encroachment, road damages and potential aquifer ruination in the United States could be immense and will only continue to rise as more and more wells need to be drilled. None of these externalities are at present fiscally covered. In other words, profits are to be privatized while costs and negative impacts will be socialized.”

Ah, here we get into the real source of Ms. Rogers’ beef: claims of upstream environmental impacts, the same ones that have been debunked time and again.

“Collateral damage” may be exciting rhetoric, but it isn’t reality. Recent reports from the Pennsylvania Department of Environmental Protection (DEP) have found that natural gas development is actually reducing air pollution. As the Breakthrough Institute describes, increased hydraulic fracturing and deployment of natural gas-fired power plants

“…have dramatically reduced emissions across the State, emissions of every sort – deadly particulates, heavy metals, and the NOx and SOx which are those nasty components of smog that also cause acid rain and a lot of health problems.”

As far as “groundwater depletion” goes – yes, hydraulic fracturing requires water, but so does almost everything else. The real question is, does shale development use too much water, and how does it compare to other industries? The reality is that water required for hydraulic fracturing is typically a fraction of a percent of any particular state’s total water demand. As such, claims of hydraulic fracturing “depleting water resources” are not supported by the facts.

Like any industry, there are environmental risks associated with development. But Ms. Rogers’ assertion that these risks cannot be mitigated and that they exceed any or all benefits is demonstrably false. As a report from Yale Graduate Energy Study Group found, when comparing benefits and costs, the former exceeds the latter by a factor of 400 to 1.

May 23rd, 2013: Shale Development: Best Practices and Environmental Concerns

Thursday’s hearing focused on the technology and best practices surrounding the development of America’s shale supply, with experts such as XTO Energy president Jack Williams, Anadarko’s Clay Bretches, Chairman of the Texas Railroad Commission (TRC) Barry Smitherman,  Environmental Defense Fund’s (EDF) Mark Brownstein, and many others adding to the discussion. A dynamic and well-rounded conversation, panelists and U.S. Senators alike shared their opinions on how our nation can best develop its extensive natural gas supply.

But perhaps the most notable moment in the series of forums was an exchange between Senator Mary Landrieu (D-La.) and two environmental groups who are critical of hydraulic fracturing.

Following a comment from Halliburton’s Marc Edwards on the proven safety record of hydraulic fracturing, Senator Landrieu asked the panel (1:25:26) if anyone disagreed with Mr. Edwards and knew of any documented cases of hydraulic fracturing contaminating groundwater supplies.

Upon Senator Landrieu’s question, the Sierra Club’s Deb Nardone, Director of the Beyond Natural Gas Campaign, quickly responded with a “yes.”  The Senator asked Ms. Nardone to follow up with a specific example, to which Nardone launched into a series of talking points about “public trust” and other things that did not answer the Senator’s question. Landrieu pressed her, again, for something specific, to which Nardone blurted out “methane contamination in Dimock, Pennsylvania.”

Edwards responded by saying that the issue was the “chemistry pumped into [shale] formations,” which are typically a mile below where groundwater aquifers are. “Under scientific rigor, it’s hard to understand how the chemistry can migrate through a significant volume of rock to contaminate groundwater aquifers,” Edwards added.

Landrieu’s response: “I keep hearing from environmental groups that there are many examples of contamination of groundwater.” She added that industry consistently says the opposite (as do state regulators and other experts, by the way), and then reiterated her request for the environmental groups to name a specific example – and avoid generalities. “Please do not give me theories,” Landrieu added.

Amy Mall from NRDC responded with a non sequitur. She cited a Scranton Times-Tribune story that alleged 161 cases of water impacts due to oil and gas development – a large majority of which were determined to be unfounded. Yes, that’s right: Asked for a specific case of hydraulic fracturing contaminating water, and the NRDC points to a list of impacts, most of which had sources not attributable to oil and gas, and many of which don’t even refer to shale wells.

It’s telling that, when pressed for actual evidence of hydraulic fracturing contaminating drinking water, neither the NRDC nor the Sierra Club could do it. All they could do was speak in talking points and generalities.

Earlier in the hearing, the Sierra Club’s Deb Nardone suggested “there are no ‘best practices’ that can fully address” the impacts of shale development (clearly ignoring the actual safety record of the industry), and that continued development would ultimately lead to environmental “disaster.” She raised the issue of methane leaks, even though EPA data contradict the claim that leaks are massive, and spoke of how we need to reduce carbon dioxide emissions in the United States by transitioning to “zero-carbon energy.” Ms. Nardone must have missed the fact that, according to pretty much anyone who is paying attention, carbon dioxide emissions are at a twenty-year low, thanks in large part to the increased use of natural gas.

It’s also odd that Ms. Nardone would try to pit natural gas against renewables, when in reality renewables need natural gas to grow. Even Sen. Wyden said in his opening remarks that natural gas is the “first stage of a lower carbon future.”

Amy Mall with NRDC also provided some whoppers in her testimony:

“…natural gas development is a major industrial activity that uses toxic chemicals, produces massive amounts of hazardous waste, releases heat-trapping methane and other dangerous air pollutants, and has contaminated water and air in communities across the country.”

This is classic rhetoric from critics of shale development: squeeze in as many scary terms as possible into each statement, thereby magnifying risk and ignoring context.

Yes, shale development does involve risk, but it simply does not have the impact that Ms. Mall is suggesting. As we stated earlier, reports have found that clean-burning natural gas development is actually reducing toxic air pollution. As for “toxic chemicals,” they make up only 0.5 percent of the fluid used, and many of them include every day materials you would find in ice cream or dish detergent. Oilfield service companies that actually perform hydraulic fracturing are also investing increasing amounts of R&D dollars into other types of additives, including food-based products.

Finally, as this hearing once again confirmed, there has never been a documented instance of groundwater contamination as a result of the hydraulic fracturing process, and neither the Sierra Club nor the NRDC could list any specific examples to prove otherwise.

Ms. Mall also suggested that oil and gas development is essentially an unregulated free for all (a claim the NRDC takes great pleasure in promoting):

“…what is the rationale for leaving natural gas production exempt from critical provisions of federal laws that have applied for decades to virtually every other industrial activity – laws that have proven to be effective, affordable and workable? …And where is the evidence that states have proven equal to the task?”

First of all, natural gas production is heavily regulated at both the federal and state level. An operator can’t even begin thinking about drilling a well without filing a stack of paperwork and completing numerous environmental tests, all in accordance with dozens of laws. Suggesting that oil and gas development is somehow “exempt” from regulations that keep the public safe is a deliberate attempt to misinform.

As for the evidence of states being up to the task, how about we ask the U.S. EPA – the agency that the NRDC wants to put in charge of regulating hydraulic fracturing?

Former EPA administrator (and President Obama appointee) Lisa Jackson has strongly defended, on numerous occasions, state regulation of oil and gas development. “We have no data right now,” Jackson said in 2011, “that lead us to believe one way or the other that there needs to be specific federal regulation of the fracking process.” She added: “States are stepping up and doing a good job. It doesn’t have to be EPA that regulates the 10,000 wells that might go in.”

The director of EPA’s Drinking Water Division also says states are doing a “good job” regulating hydraulic fracturing.

So, if Ms. Mall is truly interested in evidence – and not just making sure a favorite talking point is entered into the public record – hopefully repeated assurances from the EPA will suffice.

A few of the other highlights of the hearing (which you can also see on EID’s Twitter page):

  • FracFocus: Anadarko, XTO, Noble and other operators at the hearing said they report all wells to FracFocus in every state where they are operating, even if the particular state doesn’t mandate it.  Senator Wyden noted that FracFocus is a “constructive effort,” and EDF’s Brownstein also shared his support for the program.
  • Flaring: Panelists noted how industry is investing “over $4 billion” in new infrastructure to reduce the need for flaring. EDF’s Brownstein noted that flaring is better than venting, but would like to see green completions applied to associated gas to insure that achieve a combustion efficiency of 98 percent or greater. (For more information on flaring, check out our previous post on the subject.)
  • Manufacturing: Sen. Joe Manchin (D-W.Va.) observed the benefits natural gas from shale in both his state and the rest of the nation’s chemical industry, a fact also highlighted in a recent study by the American Chemistry Council (ACC). Earlier in the week, ACC’s Cal Dooley explained to the Committee that affordable and domestic natural gas supplies have “transformed the U.S. chemical industry from the world’s high-cost producer five years ago, to among the world’s lowest-cost producers today.”

All in all, this week’s roundtable discussions provided valuable insight on natural gas issues, especially the safety and promise of future shale development. Though there were some notable deviations, the Committee hearings were largely an adult conversation about best practices, improving performance, and recognizing the importance of future shale development – a welcome respite from the all-too-typical public onslaught of fear mongering and inflammatory headlines.

In other words, it was nice to see conversations occurring within the confines of reality. For once.


Post A Comment