PA Marcellus News Digest March 9, 2012
SRBC girds for direct action, odd alliance opposes gas exports, what's that shaking?, DEP conceals Greene County spill, kinder and gentler drillers? Right!
Articles
The Susquehanna River Basin Commission’s New Rules for Radicals
NPR State Impact
Susan Phillips
March 9
The Susquehanna River Basin Commission wants to make sure their public comment sessions don’t turn into public protest. The Marcellus Shale boom has thrown the previously obscure agency into the public spotlight.
Link: http://stateimpact.npr.org/pennsylvania/2012/03/09/the-susquehanna-river-basin-commissions-new-rules-for-radicals/
Ohio: Gas-drilling injection well led to earthquakes
Carlisle Sentinel
AP
March 9
COLUMBUS, Ohio (AP) — A dozen earthquakes in northeastern Ohio were almost certainly induced by injection of gas-drilling wastewater into the earth, Ohio oil and gas regulators said Friday as they announced a series of tough new regulations for drillers.
Link: http://cumberlink.com/news/state-and-regional/ohio-gas-drilling-injection-well-led-to-earthquakes/article_f92e4f94-6a06-11e1-b8bc-0019bb2963f4.html
Odd Alliance Says No to Gas Exports
Wall Street Journal
Russell Gold and Keith Johnson
March 9
Energy companies have found so much natural gas in U.S. shale rocks they want to begin exporting it. But the push is creating a political clash with an unusual set of opponents who think American gas should stay in America.
Link: http://online.wsj.com/article/SB10001424052970203961204577269672522415982.html
How about impact fees for Marcellus shale pipelines?
York Daily Record
Editorial
March 8
Gov. Tom Corbett says impact fees (taxes, really) for Marcellus shale natural gas production should go to the communities that are actually impacted.
Great!
Link: http://www.ydr.com/opinion/ci_20127291/our-take-how-about-impact-fees-marcellus-shale
Diesel spill polluted Greene Co. waterway
Observer-Reporter
Tara Kinsell
March 8
Officials in Greene County were unaware a 480-gallon diesel spill had leaked into a high-quality waterway in Center Township in December until they were contacted by news media this week.
Link: http://www.observer-reporter.com/or/story11/03-08-2012-Diesel-spill
Del. River Basin panel still reviewing proposed rules for natural gas drilling
Inquirer
Sandy Bauers
March 8
What is going on at the Delaware River Basin Commission?
The agency that controls natural gas drilling in the Delaware River basin hasn't revealed much since a vote on proposed regulations was canceled in November.
On Wednesday, the DRBC door cracked open a little.
Link: http://articles.philly.com/2012-03-08/news/31136117_1_natural-gas-marcellus-shale-coalition-kathryn-klaber
U.S. has more to gain by keeping gas here, Dow CEO says
E&E News
Nathanial Gronewold
March 9
(full text below)
HOUSTON -- One of the world's largest chemical manufacturers has a warning for the United States: Do not export shale gas.
It is a veiled threat, and the company accepts that some liquefied natural gas (LNG) exports will likely leave U.S. shores at some point in the near future. But hopefully not too much, otherwise it and other firms will invest elsewhere, its top CEO warned an audience.
Speaking yesterday at a conference here, Andrew Liveris, chairman and CEO of Dow Chemical Co., said his firm believes exports of no more than 5 percent of domestic gas supplies could be sold in the form of LNG abroad without affecting domestic prices too much. But Liveris could barely contain his disdain for even more ambitious LNG export plans during his speech at the annual IHS CERA Week energy industry gathering.
Ultra-low natural gas prices, the feedstock material for a host of his company's products, has Dow considering long-term plans to move manufacturing back to the United States and expand investments here. If the natural gas industry succeeds in tying rising domestic gas prices to higher international rates, through an LNG market, then Liveris said his company will look to develop those plants elsewhere.
"We're all for exporting natural gas," he said. "We just want to see it exported in solid form instead of liquid form."
Liveris argues that companies like Dow can bring more value to the United States by repatriating lost chemical and plastic manufacturing capacity and exporting products with a higher value-added benefit than LNG. He said the country needs to develop a comprehensive, longer-term energy policy that includes manufacturing in the equation. Government needs to play a role in this process, he said, even if the decisions by regulators go against trends that the marketplace would have otherwise favored.
The free market is not always fair, "nor does it bow to competitive advantage," Liveris said. "Public policy plays a role."
He called for a "framework of action" that would seek to maximize domestic energy production while keeping prices competitive over a long period of time, producing a balance that favors industry, government and energy producers equally. Such a "genuine, lasting partnership" could be spearheaded by a government agency or brought about through private-sector cooperation.
But his repeated calls for a major government role in determining how far shale gas developments go, including the LNG market, suggests Dow is prepared to lobby hard for controls. Responsible countries maximize competitive advantage by looking at the bigger picture, he said.
"Saudi Arabia understands that. China understands that. Germany understands that. Singapore understands that," Liveris said. "Should I keep going?"
###
A kinder, gentler industry? Leaders aim to soften image
E&E News
Nathanial Gronewold
March 9
(full text below)
HOUSTON -- Oil and gas companies would like a do-over.
Worn down by four years of an exhausting public fight over the application of hydraulic fracturing for shale gas and shale oil extraction, industry executives are hoping to turn a new leaf. The same holds true for deepwater offshore drillers who continue to feel a backlash from the 2010 Gulf of Mexico spill.
As the industry moves to employ these technologies in new parts of the country, and internationally, many firms say they plan to go forward much more gingerly and humbly than before, promising maximum transparency and attention to the environment. They're asking the others to follow.
Meanwhile, states that want their business -- especially Colorado and Ohio -- say they'll be at the industry's side every step of the way as they develop their own sets of regulations and monitoring. Companies and state governments both want to hold the public's hand throughout this entire process, hoping to alleviate fears while working to drive home their mantra that the benefits of increased domestic oil and gas production far outweigh the risks.
"We need access, but we also need acceptance, from policymakers, from regulators and also from the general public," Helge Lund, CEO of Statoil, told a gathering of energy insiders earlier this week. "We have all experienced how our own poor performance from time to time can affect business, and sometimes even beyond our own company."
The first step is to clean up oil field practices, something that companies and observers say is starting to happen.
For both economic and environmental reasons, some firms are approaching near full recycling of the fracturing fluids they employ. And companies insist that sloppy well cementing jobs have become much rarer as they pressure their industry peers to avoid corner cutting, knowing full well that one incident could screw it up for everyone.
"The industry is on a learning curve, and several bad practices ... seem to be on the decline," Robert Kleinberg, an unconventional resources technology leader at Schlumberger, said to a panel on shale gas science. "If not, the industry will pay the price sooner or later."
Five days of assessments and debates about energy end today as Houston's 30th IHS CERA Week energy conference comes to a close. Discussions ranged from updates on the international spread of shale extraction technologies to skepticism over the impact of liquefied natural gas exports from the United States among major international LNG players.
Underlying everything were calls by executives of some of the world's largest energy players to continue championing newer offshore technologies and the spreading use of hydraulic fracturing, but to do so differently than how it was handled in the past.
"Let's be honest: As an industry, we have not always done our best to engage in the public debates about these issues," said Peter Voser, CEO of Royal Dutch Shell PLC.
The new approach called for by Voser, Lund and others sees industry being more honest about the environmental risks their operations pose, and admitting that oil and gas operations have caused large- and small-scale pollution events that could have been easily prevented. Rather than being dismissive of criticism, oil and gas firms are more likely to win the public's trust by being upfront about risks and problems that have occurred in the past, they argue.
"Yes, not all of the concern and criticism is based on facts or rational argument, but it is our reality, and these concerns need to be addressed," Voser said.
Geologists, state regulators, and oil and gas experts continue to insist that the actual practice of hydraulic fracturing holds little to no risk to groundwater supplies. The production zones and water reservoirs are separated by thousands of feet of hard rock layers and do not intermingle. And the pumps used to break up deep underground rock formation can't muster enough force to create vertical cracks of 4,000 feet in length or longer to connect the two zones.
Still, Kleinberg at Schlumberger lambasted some in his field who repeatedly "deny that there are any problems at all." He pointed out seven that his firm is fully aware of, challenging others to accept them and pay attention to the list.
Hydraulic fracturing operations use, per square mile, roughly 20 percent of the water used to irrigate a single acre of corn, Kleinberg estimates. But that's still a lot of consumption that can have an impact on local water stores where supplies are already stressed, like in south Texas, he and others contended.
Spills of concentrated fracturing fluids can happen -- in at least one case, a spill has killed livestock. Bad cement jobs have leaked natural gas into water supplies close to the wellhead, in both conventional and unconventional gas wells. Wastewater has been mishandled, the wastewater injection wells companies use have likely triggered earthquakes, air pollution remains a problem, and some rural areas do not react well to the explosion of truck traffic that shale oil and gas operations lead to.
As a result, there's been backlash. New York state has a firm moratorium in place, and some cities there have banned hydraulic fracturing. French lawmakers have implemented a national ban on the practice in their country, despite holding some promising shale gas reserves of their own that could free them from some import dependence.
Expanding shale exploration and hydrocarbon production requires a more preventive and resource-light approach, and "hopefully one that is more accepted by the public," said Baker Hughes executive Andy O'Donnell.
State perception
State responses to shale gas extraction have been mixed.
Colorado and Ohio are seen as the next two states most likely to see a major new influx of activity targeting natural gas liquids and oil. The governors of both say they are carefully studying the slip-ups made with the introduction of hydraulic fracturing in other states as they prepare their own regulatory regimes.
Colorado's share of the Niobrara Shale formation "does look like it could be a colossal field over time," Colorado Gov. John Hickenlooper (D) told EnergyWire at a news conference.
But he argues that the companies his regulators have been working with have been operating with a different attitude than may have existed in the past. He insists that concerns over water, a touchy subject in arid Colorado, are overblown, but nevertheless companies are showing sensitivity to the issue.
Hickenlooper says a bigger worry of his is air pollution. Eastern Colorado's higher altitude and geography make it susceptible to low-level air pollution, so he's pressing companies to avoid escapes of methane that can occur with "fracking" fluid flowback. "Obviously, there is a great effort around using green completion techniques," he said.
Ohio Gov. John Kasich (R) says his office will put forward "comprehensive legislation" within a week that will outline how that state plans to regulate the practice. Although Ohio already hosts a number of wastewater injection wells, many taking waste fluids from Pennsylvania's shale boom, recent seismic events are pushing his state to possibly mandate alternatives.
"We're looking at new technology that can help to clean this fracking water," Kasich told reporters.
"We're looking at all kinds of approaches," he added. "Within the bill, we're going to require that fracking fluid be described, exactly what's in there. The wellhead is very important. The gathering lines need to be secure."
A member of the Natural Resources Defense Council is working with Kasich's office to help design draft regulations, he said. And Kasich plans to sell the idea further by putting in provisions aimed at benefiting all residents of Ohio. Namely, the governor wants to fund an income tax cut in his state through levies raised on oil and gas operations. The details of that tax plan will be made clear in the draft bill coming out, he said.
Kasich insists a New York-style moratorium is out of the question. Though he promises to be tough on the industry and make sure it adheres to strict environmental standards, the need for jobs comes first, he said.
The shale zones that companies are looking at in Ohio are "located in areas where we've had multigenerational depression, or recessions bordering on depression," Kasich said. "We need to have this industry, because it's going to allow people to climb out of poverty."
Hickenlooper says Colorado is also walking that thin line between the need for jobs and economic growth and environmental concerns. Public opinion of hydraulic fracturing in his state is "bifurcated," he said, and as a professional geologist, Hickenlooper says he is convinced the technology can be safe. But he also says he is sensitive to public fears, as is industry in Colorado.
"I think the oil and gas industry recognizes this and is actively working to try and say: 'OK, how can we have a smaller footprint? How can we use less space? How can we make sure we have, if not zero emissions, close to zero emissions? And how can we build the infrastructure to make the disruption to people's lives as minimal as possible?" the governor said.
Scott Angelle, secretary of Louisiana's Department of Natural Resources, said in an interview that a larger concern of his state is enticing the drillers to come back.
Drilling activity and natural gas production had been robust in Louisiana's share of the Haynesville Shale for years, but the collapse in natural gas prices has seen the number of rigs operating in the state drop by half. QEP Resources Inc., one of the active producers in that state, estimates that it will be down to zero rigs in the Haynesville Shale in the next few months.
But Louisiana is drawing new interest in its Tuscaloosa Marine Shale, which is believed to hold more oil and natural gas liquids. Activity in the Tuscaloosa is so small that the state isn't spending any money on setting up regulations yet, but even in industry-friendly Louisiana, Angelle says his agency is reaching out to local governments and communities to help them get prepared.
"We learned a lot of lessons because of the Haynesville Shale," Angelle said. "We're putting together, and will probably have posted up on the website in a couple weeks, frequently asked questions about the Tuscaloosa to start providing some leadership for landowners and for governments and interested stakeholders."
Companies are reaching out to these governments and the general public in other ways. One emerging conduit is through public university systems.
Yesterday, Exxon Mobil Corp. and GE Energy announced contributions of $1 million each to support shale oil and natural gas research and training initiatives. The grants are aimed at programs in established and emerging shale development zones, with Penn State University, the Colorado School of Mines and the University of Texas at Austin slated to receive funding. Organizers of the initiative say the programs will "provide access to the latest shale resource technology and best practices to better educate regional developers, policymakers and regulators."
Jim Suciu, president of global sales and marketing at GE Energy, tells EnergyWire that it will be up to the universities to design and run the programs.
"Communities and regulators are looking for access to the latest information and latest technologies," Suciu said. "Obviously, the universities will stoke them as they move forward, but we believe these programs will provide that."
Oil and gas companies would be well advised to go along with a more sensitive approach in the coming second round of the hydraulic fracturing story, executives and industry experts argue. Doing so could help turn public perception around in their favor.
"Fracking has become synonymous with oil and gas extraction in some places, and that's unfortunate," said Michael Paque, executive director of the Groundwater Protection Council.
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