Features

May/June 2011 Clean, Cheap, and Out of Control

Why natural gas could be the fuel of the future, and how the industry could blow it all up.

By Jesse Zwick


Photo: Courtesy of Gasland

A few years ago, land agents representing natural gas companies began knocking on doors throughout Pennsylvania and upstate New York offering residents vast sums for the right to drill on their land. One such resident was filmmaker Josh Fox, who owns property close to the Delaware River in Milanville, Pennsylvania. Torn by the nearly hundred-thousand-dollar deal presented to him, he decided to learn all he could about the revolution going on within the natural gas industry and to make a documentary about what he learned.

Fox discovered first that his land was atop the Marcellus Shale reserve, a formation of shale rock larger than Greece and potentially containing more cubic feet of natural gas than any single site on earth except the South Pars field in Iran. New drilling technologies—commonly called hydraulic fracturing, or “fracking”—made it possible to exploit these vast reserves for the first time. As he soon discovered, however, the process was not without some grave environmental risks.

Fox traveled across the country talking to landowners who had signed away their mineral rights and allowed drilling for natural gas on their land. Many reported that their groundwater wells had been contaminated and their health compromised. In the film’s most memorable scene, a man from Colorado takes a match to his running kitchen tap and sparks a ball of flame. “I smell hair,” the man chuckles, before admitting, “that one was kind of spooky.”

Last year, Fox’s documentary, called Gasland, won a Special Jury Prize at the Sundance Film Festival. Aired repeatedly on HBO and public television, it soon elevated fracking to a major issue, especially in New York. There, the state legislature had recently passed a bill enlarging the maximum possible “spacing unit” for gas wells, effectively allowing the industry to implement its controversial new drilling techniques. In response, residents began raising questions about what the effects would be on upstate tourism and on New York City’s water supply, which comes from areas where gas drilling was expected to be intensive.

Facing an outpouring of concern from their constituents, state legislators scrambled in the waning days of 2010 to pass a moratorium on natural gas drilling in the Marcellus Shale. The state’s outgoing governor, David Patterson, refused to sign the legislation. But he issued an executive order that placed a moratorium on the most modern and productive practices now used to extract natural gas, including not just high-volume hydraulic fracturing, but horizontal drilling. The effect has been to block virtually all new gas drilling in New York’s sizable portion of the Marcellus until the state issues a revised environmental impact assessment sometime in mid-2011.

Beyond then, the fate of the industry remains unclear. In the early spring of 2011, the New York Times concluded a three-part investigative series that raised alarms about the discharge of wastewater used in the fracking process into rivers, including the Monongahela, which supplies Pittsburgh’s drinking water. Though the Pennsylvania Department of Environmental Protection has reported finding no threatening amounts of radioactivity in rivers downstream from gas drilling fields, it is also considering more stringent disclosure of the chemicals used in fracking. The U.S. Environmental Protection Agency, meanwhile, has documented the presence of potentially dangerous chemicals in thirty-nine wells in a Wyoming community surrounded by gas drilling and, over the strident objection of the industry, is currently engaged in a major new study that will look more comprehensively at the possible environmental threats posed by gas drilling.

So far, the drama over gas drilling might seem like a straightforward victory of the environmental movement over further exploitation of fossil fuels. But the view among national environmental organizations has been decidedly more nuanced. Groups like the Environmental Defense Fund and the Natural Resources Defense Council have increasingly come to embrace the potential role that natural gas can play as a “bridge fuel” to a low-carbon domestic energy economy—and for good reason. Newly abundant and potentially cheap, natural gas produces around half as much carbon pollution as coal when burned for electricity. It is also relatively easy to convert coalfired boilers to the use of natural gas.

Better yet, moving to greater use of natural gas in electrical generation can also solve one of the big obstacles facing wind and solar power, which is their need for a reliable backup system for calm or cloudy days. Unlike coal-fired generators, gas-fired plants are easy to turn on and off, and thus work better with intermittent wind and solar power than does coal.

Moreover, natural gas has many promising applications in transportation that could help reduce our dependency on gasoline and diesel fuel, both of which are dirtier and have extremely limited domestic supply. Natural gas doesn’t work very well as an energy source for automobiles, because it is far bulkier than gasoline and there are hardly any service stations currently set up to sell it. But as a way to power local truck, taxi, and bus fleets, as well as ships and locomotives, natural gas offers a fossil fuel alternative that is abundant, practical, and far greener than any alternative on the horizon. Natural gas is also a logical choice for generating much of the juice needed to power electric cars.

Both the promise and potential perils of natural gas make knee-jerk reactions to fracking hardly appropriate. This applies to people who instinctively reject any further use of fossil fuels without being able to point to any realistic, short-term alternatives. It also applies to many powerful figures in the gas industry itself, who reflexively and unrealistically reject any further regulatory oversight despite the very real dangers involved in natural gas production.

Between the two, we are headed for the worst of all possible outcomes—one in which misguided environmentalism combines with industry intransigence to create a political climate that shuts off further natural gas production, thereby delaying the move toward cleaner, renewable sources of energy for perhaps another generation. If a few contaminated wells in rural towns were enough to put a hold on gas drilling in New York State, it’s easy to imagine how an incident that was far from catastrophic would still be enough to create an effective moratorium on new drilling, especially since most of the new gas happens to be in areas that are close to major population centers. Even the status quo, argues Scott Anderson at the Environmental Defense Fund, is a sort of “slow-moving Three Mile Island. It’s more the cumulative effect of a large number of smaller problems.”

Not all members of the natural gas industry are oblivious to this reality. “Scott Anderson likes to say industry is shooting itself in the foot, and quite frankly I agree with him,” says Mark Boling, executive vice president and general counsel of Southwestern Energy, a large independent natural gas producer. Far too many in the industry, however, have stood firm in their opposition to tighter regulations, even as some putative environmentalists continue to seek draconian regulation that would shut the industry down altogether. Thus it is important for all sides to get the facts about fracking straight and to put them in context, in order to establish the regulatory regime we need to avoid a far dirtier and more dangerous energy future.

Hydraulic fracturing first got under way in 1949, when engineers from the Halliburton Oil Well Cementing Co. experimented with a new drilling technique that involved pumping gasoline, napalm, crude oil, and sand into a deep oil well at high pressure in order to stimulate increased production. The experiment proved a big success and helped increase the amount of recoverable oil and gas reserves in North America by as much as a third. Natural gas, however, was still widely considered a declining fuel source and a bit player in the domestic energy game until the 1980s, when a Texas wildcatter named George Mitchell figured out how to extract it from shale rock formations previously considered impenetrable.

Mitchell began his experiments in the Barnett Shale formation near Fort Worth, Texas; after much trial and error, his engineers discovered that fracturing shale rock with a mixture of water, sand, and assorted chemicals allowed natural gas locked inside the rock formation to escape. Previously, it was thought that water would cause the clay in the shale to swell, locking in the gas for good, but instead it caused the shale to shatter like glass. His fracking technology was later combined with horizontal drilling techniques that radically altered the amount of gas that could be recovered from a single well. Suddenly, large shale formations in Texas, Louisiana, and Arkansas— previously untouchable—were up for grabs, as was the vast amount of gas trapped in the Marcellus Shale.

Spanning large swaths of New York, Pennsylvania, Ohio, and West Virginia, the Marcellus formation contains approximately 500 trillion cubic feet of natural gas, enough to supply all U.S. needs for nearly two decades. While it’s unlikely that the industry will be able to recover even half of the estimated supply, the newfound abundance is enough to lower natural gas prices dramatically and fundamentally change the economics of clean energy in the U.S. for the better, potentially displacing as much as a third of all coal-fired power generation.

Yet this abundance of gas in the Marcellus Shale also happens to be located where a lot of people live, and unlike in Oklahoma or Wyoming, few of them have any experience of living amid gas wells. “We’re in a part of the world where we’re trying to apply a process we’ve carried out with great success, but we’re trying to explain it to folks with no background and no cultural awareness of what we do or how we do it,” laments Chris Tucker, a spokesman for Energy In Depth, a natural gas and oil trade organization.

That’s true, but it still doesn’t contradict the very real need to close the myriad of regulatory loopholes the gas industry has managed to secure for itself over the years. For example, in 2005, thanks to heavy lobbying by Halliburton (one of the three largest providers of fracturing services), plus the help of a few well-placed friends of the industry, such as Dick Cheney, Sen. James Inhofe of Oklahoma, and Rep. Joe Barton of Texas (and BP apology fame), Congress passed a provision that effectively exempts fracking from any regulation by the Environmental Protection Agency (EPA) under the Safe Drinking Water Act.

With what came to be known as the “Halliburton loophole” in place, natural gas production took off, including in places where it had never been seen before. The backlash among environmentalists was fierce, however, and all the more since the players involved in creating the loophole had already been widely demonized by progressives on other grounds. In 2009, that distrust found expression in congressional legislation that sought to re-empower the EPA and force the natural gas industry to provide detailed disclosure of the chemicals used in the fracturing process. Predictably, the bill, introduced by Rep. Diana DeGette of Colorado and Sen. Bob Casey of Pennsylvania, immediately faced heavy opposition from the industry, which argued that the current state-level regulations for natural gas drilling were sufficient. What really killed the bill, however, was an ironic twist in the politics of global warming. In order to coax the oil and gas industry along on an overarching climate bill, the Democratic leadership agreed to put off its push to regulate fracking. After the climate bill stalled in the Senate, the natural gas industry was left retaining its loophole.

Since then, the political battles over natural gas have fanned out, flaring up as skirmishes in state legislatures and local permitting fights across the Marcellus, with both sides claiming bad faith. “I think right from the playbook, page one [of environmentalists] is to find any areas where the perception might be played up that big companies might be hiding something, then go to the communities and scare the hell out of them,” says industry spokesman Tucker. “Then you’ve got a good bumper sticker.… And if they can weave a narrative that hydraulic fracturing is new, that it was invented by Dick Cheney, that Halliburton is involved—the ‘H word’—all the better.”

But the current approach taken by the natural gas industry—that drilling is sufficiently regulated and its detractors deluded—is also wrongheaded. It not only ignores the real threats to groundwater and other environmental risks of gas production, it also fuels the very perception that the natural gas industry claims to seek to avoid: that it is hiding something.

Industry executives are fond of declaring that there have been no confirmed incidents of groundwater contamination from hydraulic fracturing. Yet their argument is largely a matter of semantics. It’s true that fracking—understood as the moment at which a water-sand-chemical mixture is pumped into a shale formation at high pressure—occurs deep underground. Often as much as 8,000 feet of sediment separates the fractures created in the shale and the freshwater aquifers above, and there is not much chance of the water flowing upward. Yet there are other ways that the process of fracking and other aspects of gas drilling can lead to water contamination.

One example is a blowout, like the one that occurred at BP’s Deepwater Horizon well in the Gulf of Mexico. As we learned from that catastrophe, you can’t just take well integrity for granted in the absence of effective regulation. Moreover, the process of fracking can itself contribute to the likelihood of blowouts in poorly constructed wells. “What do these [well integrity] issues have to do with fracking?” asks Amy Mall, a senior policy analyst at the NRDC. “The process of fracking creates a lot of high pressure in the well. A well that fails—whether it’s the casing, cementing, or what have you—did it fail during fracking or would it have failed anyway? Sometimes it fails and fracking is not a contributing factor, and sometimes it happens during fracking. Industry will always say that it doesn’t have to do with fracking, just well construction.” But that is not necessarily true.

What to do with all the wastewater produced by fracking—which contains all sorts of chemicals the industry refuses to disclose, as well as carcinogens like benzene and radioactive elements like radium, both of which also exist naturally underground—is also a big problem. In some states companies send their drilling waste to injection wells for storage deep underground, while others are learning to recycle it for use in future operations, but in states like Pennsylvania the majority of wastewater is dropped off at water treatment plants illequipped to handle such contaminants. While we do not yet have the science to be sure how the discharge of such wastewater into rivers may affect downstream drinking supplies, many people are understandably concerned. Industry resistance to further monitoring and regulation is a surefire way to stir up hysterical opposition to more drilling.

In addition, fractures induced in the shale rock, while rarely extending beyond several hundred feet, have the potential to interact with nearby abandoned gas wells or naturally occurring fractures in the deposit. This could lead to gas and fracturing fluids rising up and finding their way into the water table. A three-year study completed in 2008 by Garfield County, Colorado, one of the most intensely drilled areas in the United States, indicated in new detail how a system of interconnected natural fractures and faults could extend from gas layers deep underground up to the earth’s surface. “It challenges the view that natural gas, and the suite of hydrocarbons that exist around it, is isolated from water supplies by its extreme depth,” Judith Jordan, the oil and gas liaison for Garfield County and former hydrogeologist with DuPont, told the nonprofit news organization ProPublica at the time of the study’s release.

The natural gas industry has also long resisted disclosing exactly what chemicals it is inserting into the ground when it engages in fracking, arguing that disclosure could expose trade secrets; there is no public need to know. Lee Fuller, vice president of government relations at the Independent Petroleum Association of America, states that the less specific data already provided on worker-safety documents are sufficient. Any more detailed disclosure, he told a panel at the Heritage Foundation, would “put at risk the ability to then convince the public that fracturing is safe.”

But Fuller’s line of reasoning—that disclosure will jeopardize public confidence in fracking—misjudges the level of distrust generated by the industry’s efforts to keep its chemical formulas secret. Without detailed disclosure, argues Anderson at EDF, government agencies and third-party scientific studies have been unable to properly carry out investigations of complaints of water contamination near well sites, leaving the door open for continued speculation about the role of toxic chemicals employed by the industry. Moreover, “nothing good will happen for the natural gas industry in terms of public acceptance until the gas industry puts behind it the issue of disclosure,” adds Anderson. “It’s not as if it looks like the industry is hiding something. They are hiding something,” he told Reuters.

Beyond those posed by fracking itself, there are other environmental threats caused by gas drilling. These, too, must be addressed if America is going to succeed in moving to cleaner energy sources, including wind and solar power, whose full development depends, as explained above, on the greater use of gas in electricity generation.

Certainly local communities deserve some compensation and/or protection from the disruption gas exploration can cause. Says Eileen Millett, a lecturer in environmental law at Syracuse University, “You have the number of rigs coming into communities, the miles of pipelines that will be required, the hundreds of heavy trucks, the pumping of thousands of gallons of fresh water. All of those are issues that as a small municipality you’d want to be concerned about.”

In addition, natural gas production can release substantial amounts of methane into the atmosphere unless properly regulated. This can occur either through intentional venting or from leaks throughout the system. At present, oil and gas systems are the second largest source of methane emissions in the United States, accounting for approximately 23 percent of methane and 2 percent of total greenhouse gas pollution. There are proven ways for industry to capture and harvest these fugitive methane emissions, but until it is required to do so, it’s harder to make the case that natural gas production represents a huge improvement over burning coal.

Given the current composition of Congress, much of the push for greater regulation of gas production is now being directed at the state level. In 2009, Colorado became one of the first states to update its regulations for gas drilling and hydraulic fracturing, and Pennsylvania, too, overhauled some of its antiquated regulations. Last year also marked the passage of the first mandatory chemical disclosure laws in two states— Wyoming and Arkansas.

At least some large independent producers are pleased with these developments and see the need for still more regulation. Southwestern Energy has agreed to collaborate with the Environmental Defense Fund, for instance, on devising stricter guidelines for the integrity of gas wells that undergo hydraulic fracturing. The goal, says Mark Boling of Southwestern, is to create a guide for states in setting higher standards. “The problem with having voluntary standards is first, it makes people say, ‘Oh, yeah right,’ and second, our industry is only as good as its lowest common denominator,” Boling adds.

But a patchwork of state laws is a poor substitute for a strong federal law that would set a uniform minimum safety standard for industry. Moreover, state laws, no matter how tough, mean little if state governments are too cash-strapped to enforce them. A study by ProPublica of twenty-two gas drilling states found that between 2004 and 2008 the number of new wells drilled increased 42 percent, while enforcement staff grew by only 9 percent. New York State reduced field inspector staffing in its oil and gas division by 20 percent during the same period, while its Department of Environmental Conservation allowed a 676 percent increase in new wells drilled each year. Since the recession, most states have been forced to make cuts to their regulatory budgets, further ensuring that they have inadequate staff to investigate, inspect, or monitor gas wells.

Ultimately, this weak regulatory structure could be the Achilles’ heel of the whole effort to expand domestic natural gas exploration. To see how, consider what happened last year to offshore oil drilling in America. For years, the petroleum industry had been lobbying Washington to open up more of the U.S. coastline for oil drilling, even as it successfully fought stricter federal oversight of existing wells. Finally, last March, the industry seemed to win big when the Obama administration— eager to court GOP support for climate change legislation— announced that it would end a long-held moratorium on oil exploration along the Eastern Seaboard from Delaware to central Florida and in the eastern Gulf of Mexico. Three weeks later, the Deepwater Horizon rig exploded, spilling several million barrels of oil into the Gulf. Eight months after that, the administration rescinded its lifting of the moratorium; now, new drilling will have to wait until at least 2017, and possibly longer. It is not hard to imagine a similarly traumatic accident involving natural gas—say, dangerous chemicals from fracking showing up in Pittsburgh’s drinking water—leading to a wholesale, years-long ban on gas drilling in any number of states.

Yet instead of welcoming increased regulation as a hedge against such a public backlash, many in the industry, including major oil companies like BP and ExxonMobil, maintain a deeply engrained antiregulatory zeal and put out all manner of contradictory arguments for why they should be trusted to drill without more government oversight. “They say they’re not the problem and all the accidents are caused by all the small companies,” says Mall at the NRDC, “but then they turn around and say they can’t have new rules because of the cost concerns for their smaller brothers and sisters.” In fact, large oil and gas companies have been quite up front about their opposition to enhanced regulations. When ExxonMobil acquired XTO Energy and its large natural gas holdings last year, the company wrote into its merger deal that if Congress makes the practice of hydraulic fracturing “illegal or commercially impracticable,” it reserves the right to back out.

Clearly, making fracking “illegal or commercially impracticable” would be a grievous and irresponsible blow to the natural gas industry and the fate of the climate alike, and environmentalists who have that as their real goal are doing the country and the planet no favors. But when industry stands in the way of the commonsense increases in regulation that will be necessary to develop our gas reserves safely, it too is being irresponsible— and incredibly shortsighted.

Jesse Zwick is a writer living in Washington, DC.

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