Enhancing Regulation of Hydraulic Fracturing in the Marcellus Shale Region

Enhancing Regulation of Hydraulic Fracturing in the Marcellus Shale Region

Drew Soda, Mandy Liao, Ryan Wilhelmi

University of Massachusetts Amherst

NAT-SCI 397A Professional Writing

Professor Evan Ross

April 29, 2014

The Marcellus Shale is a sedimentary rock formation of marine origin spanning much of the mid-Atlantic and northeastern United States from Tennessee in the South to New York in the North. Located anywhere from 5,000-9000 feet below the ground (Penn State Public Broadcasting, 2011), this rock could hold the key to eliminating our dependence on foreign petroleum based products. The natural gas found in shale is a clean burning fuel in which the United States and Canada hold the largest reserves of (Jacobs, 2014). Natural gas is an abundant fossil fuel that releases approximately half the carbon emissions of other fossil fuels such as coal and oil and is a fuel source that we can always count on, rain or shine (U.S. Environmental Protection Agency, 2013).

However, not all that glitters is gold. The extraction process employed to remove the gas from the shale is one of great controversy. Since the discovery of the vast gas resources in the Marcellus Shale, drilling companies have been flocking to rural towns throughout the Northeast. Struggling farmers stuck in economic struggles in which the world is becoming more and more dependant on factory farms, opened up their doors to strangers offering an undeniable deal. Sign on the dotted line, release the rights to a portion of land, and become a millionaire, seemingly overnight. Months later, strange phenomena start to occur. The water that has been flowing from the wells beneath these hundred year old farm homes began to change. Strange smells emanated from the sink and people began to feel adverse health effects. Upon further investigation, methane appeared to have contaminated the water to the point where some could hold a match to their running faucet water and ignite a small ball of fire. This once potable drinking water source is eventually deemed unsuitable for human consumption, and these people who banked their futures on that dotted line find themselves with no where to turn. These are the problems and the people associated with the new American gold rush.

Hydraulic fracturing, colloquially known as fracking, is the process by which vast quantities of natural gas are extracted from shale rock formations thousands of feet below the surface. It’s a very complex process, but simply put, a hole is drilled vertically several thousand feet into the shale formation, and then the drill bit is turned horizontally to extend further into the rock formation. From there, the well is sealed with concrete and capped. Thousands of gallons of fluids are injected into the shale  to create fissures, or small cracks, in the rock. These cracks are held open by millions of pounds of sand (Shale Reporter, 2014) which make it possible for the gas to escape and be collected. Throughout this paper we will use the term “fracking” to refer to the entire natural gas extraction process unless otherwise specified.

Television and radio commercials flood the mainstream media pushing the use of natural gas, claiming how it is “the fuel of our future”. Natural gas can be beneficial for the nation, after all, it is a cleaner burning alternative to current petroleum fuel sources and the most vast reserves in the world are right under our feet. Economically, it would be advantageous for the country to continue fracking, because it alleviates our dependence on foreign energy and profits would circulate back into the economy. Since the United States started hydraulic fracking, overall energy costs have gone down nationally (Mooney, 2012, p. 83). Lower energy expenses would also encourage other sectors to lower their costs for their goods and services when they are saving money from reduced energy bills. Cheaper prices would stimulate consumer activity in other parts of the economy.

The issue with hydraulic fracturing does not arise from the product, but from the process. Since the discovery of the vast Marcellus Shale formation underneath the Appalachian Mountain region of the United States and thanks to a previously pro-fracking federal administration, gas companies have flourished in a largely self-regulated realm that has led to immensely increased risks to public health and the environment. The Energy Policy Act of 2005, advocated for by pro-fracking lobbyists, made it possible for the members of the hydraulic fracturing industry to storm into portions of Pennsylvania and claim as much turf as they could in a virtually lawless situation. Self-regulation will not and has not worked because not all companies hold the same stature. While many of them are scrupulous and implement safe practices, others cut corners at the expense of the reputation of the entire industry. This means that one bad accident from one unscrupulous company could destroy the whole industry.

There are twenty separate companies with active wells in Pennsylvania alone. Figure 1 shows how companies within the industry have wide variances in compliance issues. Using the number of wells a company was actively working on, a comparison was made on the number of violations that were reported against them to demonstrate this.

Figure 1. Violations per well over a 6 month period in Pennsylvania (Copyright Wilhelmi 2014)

Natural gas can be the fuel of the future. However, updated comprehensive regulation is required to ensure the current negative environmental and public health impacts, as a result of current self-regulation, do not condemn the reputation of the industry in the future. The externalities associated with fracking have a negative impact for all, whether directly or indirectly associated with the process. Remove the majority of these externalities, and the question switches from how we can ban fracking to how soon we will no longer have to import foreign petroleum products.

When the horizontal drilling process went from a thought of the future to a practice of the present, there was a huge push to exempt the industry of many important regulatory policies – some that have been in place since the mid-1900’s (Hatzenbuhler and Centner 2012 p.985).  After extensive lobbying efforts paid for in large part by what some call the new gold rush — and the opportunity to make the United States energy independent — policy was pushed through Congress to ensure the fracking industry was not hindered by the strict enforcement of regulation (Hatzenbuhler and Centner 2012 p.985). Through their research, Hatzenbuhler and Centner (2012) found that current exemptions allocated to drilling and exploration companies have made it so the actors in the industry cannot be held responsible for their lackadaisical actions. Some of which may prove catastrophic to potable drinking water sources and public health. The year 2005 saw the passing of the Energy Policy Act, which, strongly advocated for by pro-fracking lobbyists and high-ranking federal officials, eliminated the fracking process from two key pieces of legislation. Hatzenbuhler and Centner (2012) initially cite The Safe Drinking Water Act, an act of Congress passed to protect potable water sources by “implementation of an Underground Injection Control program regulating subsurface injection and storage of fluids” (p.985).  Hatzenbuhler and Centner (2012) examine The Energy Policy Act which deliberately excludes the fracking process from The Safe Drinking Water Act, stating:

The term ‘underground injection’—(A) means the subsurface emplacement of fluids by well injection; and (B) excludes—(i) the underground injection of natural gas for purposes of storage; and (ii) the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities. (p. 985)

“While the Safe Drinking Water Act specifically excludes hydraulic fracturing from regulation, the use of diesel fuel in fracturing is regulated since it is defined as a hazardous contaminant” (Hatzenbuhler and Centner, 2012, p. 985). This lack of comprehensive regulation could lead to a potential catastrophe, not only rendering potable groundwater resources tapped for both personal and commercial uses unsuitable for consumption, but also decimating the sensitive and vital freshwater ecosystems within the vicinity of a well.  Insuring safe drilling practices would result in a more sustainable industry that would persist long into the future. Safer fracking can be achieved if industry and government work together.  If the potential risks to the environment and public health were decreased, fracking could benefit the entire country.

The Energy Policy Act also exempts drilling companies from another key piece of legal legislation, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). Congress enacted this policy in 1980 to “provide for the cleanup of abandoned hazardous waste and established liability to those who released the waste to pay for clean up” (Hatzenbuhler and Centner 2012 p. 985). The Energy Policy Act, however, ensures that gas exploration and drilling companies cannot be held responsible for accidental spills and leaks resulting from the fracking process.  Hatzenbuhler and Centner (2012) state:

Exploration and production companies cannot be held liable for damages under CERCLA, nor may they be sued by any entity for replacement of drinking water supplies or any health problems created as a result of their operations. (p. 985)

These companies are not required to comply with regulation that affect nearly every other extraction industry. They are also not held responsible for the repercussions of their actions, allowing the current health hazards associated with fracking to continue without any resolution.

Safe drilling practices are currently looked down upon by the fracking industry because it would include added expenditures to a situation in which they are currently reaping maximum profit margins. Increased regulation in this field would require them to invest more in tracers and innovation in technology. Thus, they will oppose any new regulation that eliminates their current exemptions. However, these practices are not sustainable and will inevitably lead to the demise of the industry. Forcing exploration and drilling companies to comply with stricter regulations will ensure the legitimacy of the industry for the future. Instead of viewing this proposal as a hinderance on profits, the money invested in safe practices has the potential to reduce costs in the long-run with the prevention of blow-outs and other costly accidents.

The externalities associated with faulty fracturing forces the costs onto everyone, whether directly or indirectly, causing the negative impacts to exponentiate. By avoiding additional costs through unsafe drilling procedures, the industry is putting the burden on others to pay for. Many in the industry are competing with one another in a race to claim the natural gas resources first, so safety is not their priority. Though regulation may increase the cost of energy, it is needed to ensure that the externalities that come from this process are internalized. This in turn will pay for the costs that are not accounted for, but may be taken up by third parties. For example, if regulation prevents possible chemical contaminants from entering drinking water sources, this could save people from expenses from getting treatment for illnesses contracted from consuming pollutants.

Without proper regulation, extraction of natural gas will continue to be regulated on a first-come, first-served basis. Because of the need to claim possession, companies will try to maximize drilling sites. In Ecological Economics, Holahan and Gwen (2013) state that this causes a “common-pool economic waste problem” (p.128) that decreases overall net profit for drilling companies over time. They cite the “tragedy of the commons” phenomena, where too many wells are drilled for extraction of limited resources, decreasing the natural pressurization and making it more difficult and costly to extract the remaining gas and oil each additional time. In addition, there are many other economic wastes that come with this problem. Since natural gas and oil are fluid and can move about within the shale layer, most of these economic wastes “stem not directly from basin-wide inefficient pressurization, but instead from the uncertainty [of the exact location of where these pockets are] under which fracking takes place and the consequent over-capitalization of drilling operations” (Holahan and Gwen, 2013, p. 129). Without knowing the depth and thickness of shale layers it is impossible to know what drilling sites are viable, which leads to many unnecessarily drilled wells wasting money and resources and increasing the risk of contamination. The support for stricter regulation would help control this free-for-all and prevent excess drilling by requiring pre-site evaluations that will pinpoint the reserves. Updated regulation could also entail limiting the number of wells a company can make per site. Less drilling, in turn, would also decrease the likelihood of chemical contaminations caused by cracks in casings and outflow that will be more costly to clean-up than to prevent.

Industry should get ahead of public sentiment and work with regulators. Adapting some practical approaches that will dramatically increase the safety of the fracking process will allow industry to turn the public focus to the benefits of fracking, such as lowered carbon emissions and energy independence that come from using natural gas instead of the petroleum based sources. States like Wyoming have shown that they can be industry friendly while still providing tough regulation (Galbraith, 2013). Genesis Oil worked with the cities of Grand Junction and Palisades Colorado developing a watershed plan and promising to use only “green” fracking fluids after vehement opposition in those cities (Luftgarten, 2009). These companies could be used as models for the proposed updated regulation to be applied in the Marcellus Shale.

A revision to eliminate current exemptions under CERCLA and the Clean Water Act, along with new regulations providing guidelines for drilling and fracking techniques should be proposed to legislators. These guidelines will be based on the industry’s best practices and successful regulation at the state level. Clear regulatory guidance is necessary to prevent fracking related accidents and contamination. Removal of exemptions provides the necessary legal consequences to encourage companies to act prudently and within regulation.

Proper practices and techniques during fracking, incorporated into legislation can help dramatically reduce the risk to groundwater associated with fracking. Removing the exemptions from CERCLA and the Clean Water Act is important but it is not enough. Guidance is also needed to ensure that industry does not create the kind of incidents that would make them liable under those acts. There are four specific practices that have shown to have a positive effect on environmental outcomes in areas where fracking occurs:

  • pre and post site evaluation of drilling area

  • use of chemical tracers in fracking fluid

  • disclosure of chemicals used in fracking fluid

  • inspection of cement casings

Site evaluation

Often there is debate between industry and landowners over the source of contamination of groundwater near fracking sites. Drilling companies deny culpability when confronted with angry landowners claiming fracking polluted their drinking water, while landowners assume the pollution must be caused by fracking. However, drillers have plausible deniability in most of these cases because pre and post evaluation of drilling sites is not required in most states (Scientific American, 2011).

Pre-site evaluations are necessary because they give a baseline of the conditions before drilling begins. By requiring a geological survey of the site unnecessary drilling can be prevented at sites that will not be productive, therefore preventing the types of common-pool economic waste issues discussed earlier. The geological survey would be paid for by the company doing the drilling and would identify the depth, thickness, and nature of the shale at a proposed drilling site. This survey would then be evaluated by a neutral geologist chosen by state and local officials, who would decide if a site is viable (from a production standpoint) and in an area safe to drill. There would also be an environmental evaluation, also paid for by the drilling company, but again chosen by state and local officials. Pre and post site environmental evaluations already take place in states such as Wyoming. In Wyoming, these evaluations test the drilling site within a ½ mile radius for characteristics like temperature, methane, and benzene.  Pre-site evaluations will also help protect drilling companies because they would allow for the identification of pre-existing pollution so the industry will not be blamed for it at a later date.

Post-site evaluations will let officials and residents know if there is cause for concern after drilling has ceased. Contamination findings in the post-site evaluation that were not found in the pre-site evaluation do not necessarily mean industry culpability, and they should not be interpreted that way. Findings of contamination would however show that an investigation is necessary, and the following recommendation will aid in that investigation to determine the source of contamination (King, 2012, pp. 27-34). Post site geological evaluations will help both industry and academia learn more about how hydraulic fracturing affects the bedrock of an area.

Chemical Tracers

Chemical tracers are uniquely identifiable particles that can be added to fracking fluids to trace the path of the fluid and identify it when it is found. They provide a fingerprint to an individual company’s fracking fluids. Their paths can also be studied to give a better understanding of how fracking fluids move through the ground (Maguie-Boyle, 2014, pp. 221-222). It is possible to identify whether or not methane is thermogenic  “deep methane” (meaning its likely source is in the shale) or  biogenic  “shallow methane” (Mooney, 2012, p.83). However, chemical tracers can definitively tell us if fracking is the cause of the methane leak, and maybe more importantly, what driller is responsible. As mentioned earlier, not all companies involved in fracking are the same. Chemical tracers are inexpensive and would provide companies with good protections against competitors who may not use safe practices. These tracers could also be tracked so companies, scientists, and regulators could identify problem areas in the process. They would also provide industry and academia valuable information, on how cracks propagate in shale, as well as how fluids and gas flow through the ground.  Finally they would give landowners definitive proof of the source of contamination and possibly its extent (Prud’homme, 2013, pp.115-117).

Disclosure of Chemicals Used

The disclosure of chemicals used in hydraulic fracturing fluid is a major point of contention for drilling and exploration companies. They claim that disclosing their proprietary formulas would be unfair because their competitors could steal and tweak the formula they spent large amounts of money developing (King, 2012, p. 28). While this fear is certainly not unfounded, it seems there is a better solution then outright non-disclosure. Without knowledge of potential pollutants flowing into the ground, it is impossible for regulators to discover risks, and mitigate them through regulation.

Wyoming and Colorado have regulations in place that require disclosure to a certain extent. If potentially hazardous chemicals are used, at least twenty must be publicly disclosed. Wyoming is an example of how this type of regulation can work. They are a state that is considered friendly to the drilling industry, while keeping environmental concerns a priority. With increased regulation, Wyoming is still fourth in natural gas production, despite the fact that it’s reserves are far smaller than states in the Marcellus Shale region (Galbraith, 2013).

Inspection of Cement Casing

Of the cases of groundwater contamination determined by regulators to be caused by the hydraulic fracturing process, improperly cemented casings are usually seen as the most likely cause. Improper cement casing of the steel pipe in a well is the weak link in fracking operations because there are thousands of feet of potential error (Gold, 2012). A leak anywhere below the water level could cause buoyant methane to travel up natural fissures and contaminate groundwater (Scientific American, 2011).

In a worst case scenario, an improperly cemented casing can cause a “blowout”. The Deepwater Horizon explosion in the Gulf of Mexico in 2010 is a sobering example of how members of the oil and gas industry have been penny wise but pound foolish. BP (formerly British Petroleum) botched the cement job on the Deepwater Horizon to save at most a few hundred thousand dollars, with the rig itself worth nearly a billion dollars. Now the cleanup from the disaster will cost over $100 billion dollars (Gold, 2012).

It is not useful to set a standard for cementing of the casing at a national level since the type and amount of cement used will vary based on local conditions.  Therefore, it is important that not only should industry’s best practices be researched and used, but inspections should be conducted. Monitoring should occur prior to cement casing (during the drilling process), during the cementing, and on a bi-yearly basis to inspect the structural integrity of the casing. State and local governments should also provide guidelines and minimum standards based on drilling site conditions. Companies would be free to cement how they see fit based on conditions but they would have to justify their decision to the inspector.

    These four practices should be implemented into the proposed updated regulation that removes hydraulic fracturing companies from being exempt from the Comprehensive Environmental Response, Compensation and Liability Act and the Safe Drinking Water Act to ensure that fracking is practiced in a safe and responsible manner. To meet increasing demands for energy in today’s society, hydraulic fracturing is necessary in providing the United States with natural gas. All of our current energy sources have issues: solar and wind are expensive and unreliable, hydro power is expensive and has ecological issues, nuclear power poses potential catastrophic environmental and national security issues, and oil and coal produce large amounts of greenhouse gases. Natural gas is not perfect, but it is cleaner burning than other fossil fuels, cheaper and more reliable than renewable power, and can be extracted cleanly with proper regulation. However, the industry must wake up and realize that current practices are not sustainable and will not serve to bridge the gap between nonrenewable and renewable energy.

    Old policies endured decades without any alterations or updates, even with advancing technology and newly innovated practices. These proposed regulations will help the industry, landowners, and the nation as a whole. Proper guidelines along with legal consequences for those who choose to ignore regulation is a way to ensure natural gas is a feasible fuel option long into the future, providing an important source of energy that will benefit the nation immensely.


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