Environmental Issues in

Unconventional Exploration and

Production of Oil and Gas

Jim Morriss

Thompson & Knight LLP

Conventional vs Unconventional

2

● August 1859 – Edwin Drake drills the first commercially

successful oil well in Western Pennsylvania

● 1866 Edward Roberts receives a patent for the

petroleum torpedo --intended to “fracture the rock

containing the oil to some distance around the wells,

thus creating artificial seams…”

History of Hydraulic Fracturing in the US

3

● November 1946 -Stanolind Oil Company attempts the

first slick water frack with proppant in the Hugoton

natural gas field in Kansas.

● May 1948- Fracking Patent filed.

● By 1955 more that 100,000 wells had been fracked.

● June 11, 1998 -Mitchell Energy and Union Pacific use

hydraulic fracturing and 1.2 million gallons of water to

develop a well in the Barnett Shale

● August 2001 Mitchell sells to Devon

History of Hydraulic Fracturing

4

● In 2002 only 1 in 14 wells drilled employed horizontal

drilling

● June and July 2002- Devon drills its first horizontal well

in the Barnett Shale

● June 2002 Devon announces that there is room for five

thousand wells in the Barnett in addition to the 1043

wells already there.

● Number of currently producing oil and gas wells in the

Barnett Shale: over 18,000

History of Hydraulic Fracturing

5

Global Shale Oil and Gas Resources

6

Top 10 countries with technically recoverable

shale oil resources (billion barrels)

7

1. Russia 75

2. U.S. 58

3. China 32

4. Argentina 27

5. Libya 26

6. Venezuela 13

7. Mexico 13

8. Pakistan 9

9. Canada 9

10.Indonesia 8

World Total: 345.

8

1. China 1,115

2. Argentina 802

3. Algeria 707

4. U.S. 665

5. Canada 573

6. Mexico 545

7. Australia 437

8. South Africa 390

9. Russia 285

10.Brazil 245

World Total: 7,299

Top 10 countries with technically recoverable

shale gas resources (trillion cubic feet)

Exponential increase in tight oil

U.S. Tight Oil Production

10

Era of cheap natural gas

Source: U.S. Energy Information Administration

Total Energy Production

13

Source: U.S. Energy Information

Administration

Future Sources of Electricity

Source: EIA Annual Energy Outlook

2014 Early Release

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Failure to address uncertainty may lead to loss

of “license to operate”

15

Why the unprecedented attention/concern?

● Location of development

● Scale of operations

● Speed of growth in development

● Public perception of technology

● Stakeholder Communication Issues

● Absence of a consistent and proven regulatory framework in some areas

What are the Environmental Issues?

● Air

● Water

● Waste

● Induced Seismicity

● Siting- Endangered

Species and Wetlands

● Risk Management and

Spill Prevention and

Response

● Community Response

● Litigation

● Transactions

● Compliance

17

Environmental Issues?

Endangered Species? Wetlands?

Surface Water

DischargePotential Chemical

Release

Air EmissionsWater Supply

Traffic?

● Historical Background on the Regulation of the oil and

gas Industry in the U.S.

● Scope and Source of Regulation Today

Federal

State

Local

Tribal

Legal Framework

19

North American Shale Plays- Many

Jurisdictions

Stage 1 - Drilling

21

Anatomy of a horizontal well

24

Workover Rig and Completion

26

Flow Back

27

Production Site

28

● Sources

The Completion Process

Storage-tank emissions (breathing losses, flash emissions,

loading/unloading)

Engines

Operations- pneumatic devices, leaks, and liquid unloading

Flaring

● Pollutants

Air Issues

29

Emission Sources

Source TCEQ

Emission Sources

31

Permitting

− Permits by Rule, Exemptions, and Standard Permits

− Smaller Sources vs. Major Sources

Technology Forcing Standards

− New Source Performance Standards

− Standards for Hazardous Air Pollutants

Regulatory Approaches

32

● Storage Tanks- to control working and breathing losses

and flash emissions

● Standards for Stationary Engines

● Green Completions

Technology Forcing Standards

33

Reduced Emission Completions (RECs)or Green Completions

for Gas Wells

Economic and Environmental Benefits:

Gas recovered for sales

Condensate recovered for sales

Reduced methane emissions

NSPS for Green Completions

34

October 15, 2012 to January 1, 2015 utilize a combustion device

with continuous ignition or perform “green completions with

combustion at gas wells.

Beginning January 1, 2015: Perform green completion, routing

all “salable quality gas” to the flow line as soon as practicable

and combusting all gas that is not suitable for the flow line

Next step- extend to oil production

Green Completions- New Source Standard

35

● GHG Reporting is applicable to specific segments of the

petroleum and natural gas industry that emit GHGs

greater or equal to 25,000 metric tons of CO2Eq per year

● Not a control requirement, rather sources must monitor

and report GHG emissions annually to EPA. Intended

as an information tool to track progress and inform

policy decisions

● Amendments proposed December 9, 2015

● Adds a number of potential sources of GHG emissions

to the reporting requirements

Green House Gas (GHG) Reporting

36

● 2013- 2100 Facilities

● 224 Million Metric Tons of CO2e

Green House Gas Reporting –Oil and Gas

Sector

37

Flaring in the Eagle Ford

NASA Night Photo of Eagle Ford

Flaring in the Bakken

39

● Flaring of associated gas-Priority action area for EPA

and state regulators

● Reasons for Flaring of Associated Gas:

● Lack of natural gas infrastructure

● Gas plant shutdowns;

● Complications and restrictions on gas line construction

● Proximity to pipelines

● Pressure of the produced gas

● No pipeline capacity

● Inert gas concentrations

Flaring

● Global Gas Flaring Reduction Partnership

● North Dakota policy on flaring-June 1, 2014

● BLM Proposed Rules on Venting, Leaks, and Flaring

● EPA White Paper on Completions

● Notes the development of new techniques for avoiding the

flaring of gas: Liquification, NGL recovery, gas reinjection,

electrical generation

● Suggestion: Success will ultimately depend on the

availability of gas infrastructure

Activities to Address Flaring

41

Methane, CO2 and Climate Change

● White House Climate

Plan- June 2013

Announced that EPA

would commission a

series of white papers

regarding methane

emissions from oil and

gas industry

● White Papers

Completions

Compressors

Leaks

Liquids Unloading

Pneumatic Devices

42

● White House Plan to Control Methane Emissions from the Oil and

Gas Industry

● Standards to address additional new and modified sources within

the industry

Proposal in August of 2015 with final rule in 2016

● Efforts to address existing sources

The New Focus on Methane at the Federal Level

43

IR Camera

44

● Sources of Water

● Disposal, Recycling, and Treatment

● Protection of Groundwater Resources

● Protection of Surface Water Resources

Water Issues

45

Uses of Water

● Enhanced recovery

● Drilling and Completion

● Workover and

Recompletion

● Solution of Underground

Salt Formations

● Cooling and Boiler

Water

● Hydrostatic Testing

● Rig wash water

● Coolant for engines and

compressors

● Sanitary purposes

● Laboratory purposes

46

● On average 2 to 5 million gallons of water (but as high

as 8) per well to complete a multistage hydraulic

fracture

● The amount of water recovered in flowback can vary

greatly, 15% to 80%

● Increasingly, companies are reusing the flowback and

produced water in fracking

● Substantial volumes of both flowback and produced

waters are still disposed by deep well injection

Volumes of Water Used in Fracking

47

● In 2011 water consumption for fracking in the Barnett Shale was

32% of Texas fracking water use and .2% of state water

consumption. Statewide the oil and gas industry accounts for 1%

of overall water use

● In 2013 operators used 19 billion gallons of water for fracking in the

Eagle Ford Shale

● There has been a 60% increase in water use per well since mid

2000’s

● City of Houston loses 22 billion gallons of water each year to

pipeline leaks. Statewide total municipal losses (54% of cities

reporting) equaled 225 billion gallons.

More on Volumes

48

● Marcellus: Mostly surface water

● Bakken, Eagle Ford, and Permian: Mostly groundwater

● Barnett: About 50-50

Sources of Water

49

Why is water a big deal?

Texas Drought Map 2011 vs. 2016

50

● In Texas, use of surface water for oil and gas operations

is limited to areas near major rivers (Rio Grande, Trinity)

● Surface waters are used extensively for oil and gas

operations in Louisiana, Arkansas, and Pennsylvania

● Extensive regulations applicable to Operators obtaining

surface water (Corps permits, state permits)

51

Surface Waters and Oil and Gas

● Reuse technologies are being pioneered in plays

outside of Texas

● 70% of the water in Marcellus is recycled

● Quality of wastewater varies with geography

● Reuse technologies include:

● Reverse osmosis

● Electrodeionization

● Flocculation

● Blending

52

Wastewater Reuse

● Chlorides and TDS – increases friction

● Turbidity and Total Suspended Solids (TSS) – can plug

well and decrease biocide effectiveness

● Water hardness

● Sulfates – can be used by bacteria to create hydrogen

sulfide

● Barium – combines with sulfates to create scale

● High iron – can drop out and create plugging

● Bacteria

● Potential for NORM in solids

53

Wastewater Reuse Challenges

● 2013 Texas Railroad Commission amended its rules to

promote recycling

● No permit for recycling needed if operators are

recycling fluid on own leases or transferring fluids to

another operator’s lease for recycling

● Established five categories of commercial recycling

permits

54

Texas Recycling Regulations

● Halliburton has developed a frack fluid technology that

allows the use of brackish water having solids content

similar to sea water

● Apache Corporation announced late in 2013 that it now

is completely off fresh water for HF in Permian Basin

operations sourcing its water from recycled flowback

and brackish formation water.

● Pioneer Natural Resources struck a deal with the City of

Odessa to take the city’s treatment plant effluent for use

in exploration and production.

Specific Examples

55

● Federal Water Pollution Control Act 1972 and Clean

Water Act of 1977

● State and Tribal Laws

Federal Clean Water Act

56

● No direct discharge of process waters

● Discharge of uncontaminated storm water

● Discharges to POTWs

● Deep Well Injection of Flowback and Produced Waters

● Recycling, Reuse, and Sourcing

Recycling, Reuse, Discharge

57

● Common public misconception in the U.S. - that the oil

and gas industry is not regulated

● A long history of regulation dating back to 1879 in NY,

1890 in PA, 1917 in OK and TX, and 1915 in CA

● Casing and Plug and Abandonment designed to protect

oil from groundwater also protected groundwater from

contamination.

Protecting Groundwater Resources

58

State Regulatory Requirements Designed to

Protect Water

● Permitting (all 27

states)

● Prescribed drilling

and construction

methods

● Regulation of

exploration and

production waste

fluids

● Required closure of

wells

● Required

abandonment of well

sites

● Regulation of other

oil and gas activities

59

Safe Drinking Water Act (SDWA)

● Enacted in 1974, the SDWA is the primary federal

statute addressing actual injection

● Under the SDWA, the EPA has created the Underground

Injection Control (UIC) program

● Energy Policy Act of 2005 exempts from definition of

“underground injection” fluids or propping agents

injected in hydraulic fracturing related to oil, gas, or

geothermal production

● Database managed by the Ground Water Protection

Council and the Interstate Oil and Gas Compact

Commission

● GWPC: a non-profit organization of state water quality

regulatory agencies

● IOGCC: a multi-state government agency charged with

balancing oil and gas development with environmental

protection

FracFocus- Information and Transparency

61

● FracFocus

The primary purpose of this site is to provide factual information

concerning hydraulic fracturing and groundwater protection. It is not

intended to argue either for or against the use of hydraulic fracturing

as a technology. It is also not intended to provide a scientific analysis

of risk associated with hydraulic fracturing. While FracFocus is not

intended to replace or supplant any state governmental information

systems it is being used by a number of states as a means of official

state chemical disclosure. Currently, twenty-three states use

FracFocus in this manner.

Finally, this site does not deal with issues unrelated to chemical use

in hydraulic fracturing such as Naturally Occurring Radioactive

Material (NORM).

FracFocus and Disclosure Issues

62

States Using FracFocus

63

● What Chemicals Are Used?

● Access to Records

FracFocus- Ingredients not the Recipe

64

● EPA

● BLM

BLM rules apply to 700 million subsurface acres of Federal

mineral estate and 56 million subsurface acres of Indian mineral

estate

98% of all wells on BLM land located in CA, CO, MT, ND, NM, UT,

and WY

Federal Agencies Struggling with Role in

Insuring Access to Information

65

Waste

66

Water Disposal

● Both flowback and

produced waters are

disposed of through Salt

Water Disposal wells

● SWD wells are regulated

as Class II disposal wells

under the federal Safe

Drinking Water Act

Underground Injection

Control (UIC) program

● We can expect to see

increased attention given

to the use of SWD wells

Scarcity of Water as a

Resource

Concern about

Groundwater Pollution

and Overpressurization

Induced Seismicity

67

● Publicly Owned Treatment Works

● Brine Plants - Facilities designed to remove

contaminants from produced water and HF flowback

● Effluent discharged to surface waters under a Clean

Water Act permit

● Questions about efficacy of removal technology

68

Treatment Options

● Oil and gas exploration and production wastes are

exempt from regulation as hazardous waste

Not related to toxicity or other hazardous characteristic but

rather to origin of the waste

• Product of a different time

Solid wastes associated with exploration and production are

subject to state regulation

Waste

69

● Possible Sources

Well Sites

Storage

Transportation

Disposal Wells

Casing Failure

● National Contingency Plan

Spills and Releases

70

Must Report to the National Response Center the

Discharge of oil in such quantities as ‘‘may be harmful’’

pursuant to section 311(b)(4) of the Clean Water Act.

(a) Violate applicable water quality standards; or

(b) Cause a film or sheen upon or dis-coloration of the surface of the water

or adjoining shorelines or cause a sludge or emulsion to be deposited

beneath the surface of the water or upon adjoining shorelines.

National Contingency Plan

71

The Oil Pollution Act of 1990

● Response to Exxon Valdez

● Addresses Spill Prevention, Reporting, and Response

● Requires Spill Prevention, Control, and Countermeasure (SPCC) Plan if the facility has a storage capacity of:

● 1,320 gallons abovegroundWho is covered? Aggregate aboveground oil storage capacity greater than 1320 gallons and there is a reasonable expectation of an oil discharge into or upon navigable waters of the U.S. or adjoining shorelines

● A mixture of wastewater and oil is “oil” under the

statutory and regulatory definition of the term

● Produced water is a example of an oil and water mixture

● Produced water from a “dry gas” production facility is

not subject to the SPCC rule.

What about produced water?

73

● What do you have to do?

Prevent oil spills

Prepare and implement an SPCC Plan:

• Operating procedures at the facility to prevent oil spills

• Control measures installed to prevent oil spills from entering

navigable waters or adjoining shorelines

• Countermeasures to contain, cleanup, and mitigate the effects

of an oil spill that has impacted navigable waters or adjoining

shorelines.

SPCC Plans

74

Tanks Within Containment at a Production Site

75

Heater Treater and Separators Within

Containment at a Production Site

76

● If regulated by the SPCC rule, must report the discharge

to EPA when more than 1000 U.S. gallons of oil are

discharged to navigable waters or adjoining shorelines

in a single event.

● More than 42 U.S. gallons in each of two discharges

within any twelve-month period.

● Don’t forget local and state notification requirements.

SPCC Plans and Reporting

77

● Endangered Species Act

● Migratory Bird Treaties Act

● The Bald and Golden Eagle Protection Act

● Wetlands and Other Waters of the United States

Siting Issues

78

North American Shale Plays and Siting Issues

● Mussels in Arkansas and potentially elsewhere

● Dune Sagebrush Lizard

● Lesser Prairie Chicken

● Greater Sage Grouse

ESA Issues in the Oil Patch

80

● The Speckled Pocketbook Mussel and the Hills of

Arkansas

● Texas is home to 12 state-threatened freshwater mussel

species that are under review for federal listing as

threatened or endangered

Fresh Water Mussels

81

Wetlands and Other Waters of the U.S.

82

Environmental Audit - A Definition

A systematic evaluation,

review, or assessment

of a facility or operation

or an activity at a facility

or operation to

determine compliance

with environmental laws

or any permit issued

under those laws

Why Environmental Auditing?

• Environmental issues can be a significant source of liability

• A primary function of corporate leadership is management and avoidance of risk

• Important to understand the sources of liability and techniques or tools available to control or avoid it

• Auditing is a key ingredient to informed decision making and risk avoidance and a key component of environmental management

84

Environmental Issues in Transactions

86

Types of Liability

• Liability for conditions on the property

• Liability for offsite conditions caused by the onsite operations

• Liability for offsite shipments (CERCLA or Superfund liability)

• Liability for violations of permits and laws governing operations (air, water, solid waste)

• Third party claims

• Contractual obligations

87

Factual Sources of Environmental Risk

Environmental Conditions Activities

Air Emissions

Water Discharges

Waste Management

Hazardous Materials

Handling

Conduct of

Business Activities

Potential Contaminants /

Structures

Asbestos

Lead Paint

Contaminated Soil /

Groundwater

PCBs

Indoor Air Pollution

Vapor Intrusion

Tanks

Specially Protected

Property or Biota

Endangered Species

Historic Sites

Wetlands

Floodplains

Sole Source Aquifer

Protected Watershed

88

Benefits of Due Diligence

● Risk Avoidance –

● Remove well sites and facilities that present unacceptable risks of liability due to contamination or significant compliance issues

● Risk Management

● Remediate conditions or bring operations into compliance before closing

● Address known conditions and risk of unknown conditions in deal terms (price adjustments and post closing obligations)

● Use regulatory programs and defenses to address conditions and avoid liability

89

Due Diligence – Basic Concepts

● Due Diligence – One size doesn’t fit all.

● Factors influencing the scope of diligence

● Familiarity with properties, past operations, and the conditions

involved

● Level of site development and nature of operations

● Time and cost considerations

● Buyer’s tolerance for risk and dependence on third parties

(lenders)

● Seller’s continued existence and viability

● Representations and warranties

● Disclosures

● Defect process

90

Key Environmental Issues

in Transactional Due Diligence

• Onsite conditions and releases (Phase I and II)

• Compliance

• Permits and licenses

• Potential liability for offsite conditions

• Records

• Communications with regulatory agencies

• Environmental management system

• History of prior ownership or operators

• Insurance coverage

91

Due Diligence – Be Specific

as to Consequences

● Buyer’s alternatives

● Don’t close

● Remove specific properties

● Condition closing on correction

● Obtain concession on price

● Accept with escrow

● Indemnity? Probably not if deal relies upon a defect process

92

Due Diligence – Be Specific

as to Consequences

● Seller’s alternatives

● Fix it

● Deny the problem or contest the cost of the solution in the defect process

● Adjust price

● Exclude asset

93

● USGS estimates that there are several million

earthquakes each year

● Many go undetected-microearthquakes

● Naturally Occurring vs. Induced Seismicity or Triggered

Seismicity

● Number of quakes is increasing

● Average number 1970 to 2000=20 per year over 3.0

● Average number 2010 to 2013= 100 per year over 3.0

Seismic Activity

94

Seismic Activity

95

Increases in Seismic Activity

● Oklahoma

● Ohio

● Kansas

● Texas

● Azle

● Reno

● Cleburne

● Irving

96

2011 Prague, Oklahoma Earthquake Damage

97

● Mining

● Dam and Reservoir Construction

● Deep Well Injection Through Class 2 Wells

● Approximately 150,000 such wells

● Very small percentage of these wells associated with Induced

Seismicity

● Fracking?

Sources of Induced Seismicity

98

Induced or Triggered Seismicity

99

● Hired of a State Seismologist

● Provide the results of a survey review of information

from the USGS regarding the locations of any historic

seismic events within a circular area of 100 square

miles centered around the proposed disposal well

location.

● May require more information if necessary to demonstrate that

fluids will be confined if well is located in an area where

conditions exist that may increase the risk that the fluids will not

be confined to the injection interval.

Texas Response

100

● The permit may be modified, suspended, or terminated by the

commission for just cause after notice and opportunity for hearing,

if:

Injection is likely to be or determined to be contributing to

seismic activity

● Commission can require more frequent monitoring of the well and

reporting to the commission if it finds that conditions exist that

may increase the risk that fluids will not be confined to the injection

interval. Such conditions may include, but are not limited to,

complex geology, proximity to the basement rock to the injection

interval, transmisive faults, and/or a history of seismic events in the

area as demonstrated by the information available from the USGS.

Texas Response

101

● Small quakes

● Lack of adequate monitoring network

● Large number of injection wells

● Texas has over 7500 active class 2 disposal wells

● Other contributing factors- quakes are a natural

process

Difficulty in Making the Connection

102

● Further Research Underway- Texas Study

● Multistate Working Group

● Better Monitoring and Information Gathering Process

● “Traffic Light” System

● Dependent upon an improved monitoring system

● Oklahoma Experience

Current Approach

103

● Negligence

● Negligence per se

● Nuisance

● Nuisance per se

● Trespass

● Strict Liability-Ultrahazardous or Abnormally Dangerous

Activity?

Tort Theories and Oil and Gas Development

104

● Over 80 cases filed nationwide in 10 states including

AR, CO, LA, NY, ND, OH, OK, PA, TX, WV

● 23 dismissed, 21 settled, 30 pending, other status

The numbers

105

Local ordinances and regulation

Photo Courtesy TxDOT

● A person, group or entity that has interest or concern in

an organization and its activities is consider a

stakeholder. Stakeholders can affect or be affected by

the organization’s actions, objectives, and policies.

● Examples: employees, partners, suppliers, investors,

customers, communities, consumers and consumer

associations, mineral rights owners, landowners, media,

special interest groups, and non-governmental

organizations, government (local, state, and federal

elected officials) and shareholders

What is a “stakeholder?”

107

● What contributes to NIMBY?

● Conflicting Interests

● Actions by local governments

● Actions by state governments

Not in My Backyard (NIMBY)

108

● What is it?

● Are there ways to plan for it?

Boom & Bust Cycle

109

HF Studies – Who?

110

HF Studies

HF Studies – a sample

● Government Studies

● EPA

● DOE

● Academic Studies

● Duke

● Colorado School of Public Health

● Interest Group Studies

● Barnett Shall Energy Education Council

EPA’s 2010 study of HF and potential impacts

on drinking water resources

EPA Study: Questions being asked

● What is the quantity and quality of well cement in the industry?

● What is the extent of integrity testing?

● What chemicals are used?

● What drinking water resources are located near wells?

● What baseline water quality monitoring is conducted?

● What is the water source for HF operations?

EPA Study: Questions being asked

● What are the potential impacts to drinking water treatment facilities?

● Does the discharge of treated hydraulic fracturing wastewater contribute to the formation of disinfection by-products?

● How do hydraulic fracturing wastewaters affect the efficacy of activated sludge wastewater treatment processes?

● Does hydraulic fracturing occur more often in counties home to predominantly low-income, minority, young, or elderly populations?

EPA Study

● Conclusions:

EPA Study – Pavillion Wyoming

117

Pavillion

118

EPA Study – Pavillion, Wyoming

● December 2011 EPA published draft report

● Conclusion: Hydraulic fracturing may have led to groundwater contamination; glycol ethers and other compounds detected

● But EPA also stated that improper casing and cementing of wells, or discharges from legacy pits may have caused problem

● Findings disputed by industry groups and Wyoming regulators

● Sept. 2013 – EPA discontinued study

US Department of Energy Study (2011)

● Task: Identify measures to reduce the environmental

impact and help assure the safety of shale gas

production

● Initial 90-Day Report: 20 recommendations

● Final Report : How to implement recommendations

US Department of Energy Study (2011)

● Improve public information

● Improve regulator communication

● Reduce emissions of air pollutants, ozone precursors, and methane

● Acquire data regarding overall greenhouse gas footprint of natural gas use

US Department of Energy Study (2011)

● Encourage efforts to reduce air emissions using proven technologies and practices

● Additional field studies on methane migration from shale gas wells to water reservoirs

● Disclosing fracturing fluid composition

● Elimination of diesel use in fracturing fluids

● Expand DOE, EPA, and USGS funding for R&D

US Department of Energy Study (2011)

● Measure and publicly report the composition of water

stocks and flow throughout the fracturing process

● Manifest all transfers of water among different locations

● Adopt best practices in well development and

construction, especially casing, cementing, and

pressure management

● Adopt requirements for background water quality

measurements

Duke University Study – Marcellus GW

● Analyzed water from drinking water wells in PA and NY

● Looked for correlations between methane concentrations in the drinking water wells, and proximity to Marcellus shale gas wells

● Defined “active” drilling area as area within 1 km of gas well

Duke University Study – Marcellus GW

● Methane detected in 51 of 60 drinking water wells (85%)

● Correlation between methane concentrations in drinking water wells and proximity to nearest natural gas well

● Methane concentration 17X higher in shallow wells in active drilling and extraction areas than non-active areas

● methane in water wells in active areas was consistent with thermogenic (deeper) methane sources

● methane in water wells in non-active areas was consistent with biogenic (shallower) methane sources

Duke University Study – Marcellus GW

● Did not detect brines or fracturing fluids in any of the water wells

● Possible mechanisms identified to explain presence of thermogenic methane in water wells in active areas

● Physical displacement of gas-rich solutions from deep formations (unlikely)

● Leaky gas well casings

● Fracturing process increases connectivity of historical faults and wells, allowing deep gas to reach shallow aquifers

● Looked at methane and chloride concentrations in 127

wells

● Asked: Thermogenic or biogenic?

● Groundwater quality is derived from natural processes

and not affected by natural gas production activities

● What is different in Arkansas v. Pennsylvania?

Duke University Study – Fayetteville GW

● Vertical migration of fracturing fluids unlikely, but not

impossible

● Potential for groundwater contamination from:

− Faulty or inadequate steel casings

− Imperfections in the cement sealing of the annulus

What do these studies show about

groundwater?

Duke University – Surface Water

129

● Water quality and isotopic composition of effluent,

surface waters, and sediments

● Elevated chloride, bromide, barium and radium

● Consistent with Marcellus produced waters

● 226Ra levels in stream sediments at discharge point were

200x greater than background and above radioactive

waste disposal thresholds

Duke University – Surface Water

130

● Potential for surface water contamination through

spills and inadequate treatment of flowback

● Potential for surface water quality to be affected by

discharge of treated produced water

What do these studies show about surface

water?

Studies – Air Quality

132

Studies – Air Quality in the Barnett Shale

133

TCEQ Air Monitoring Sites

134

● No compounds detected above levels sufficient to

create short-term acute threat

● 1,2 dibromoethane present at level considered sufficient

to pose chronic threat at two sites near local airports

● “Shale gas production activities have not resulted in

community-wide exposures to chemicals at levels that

would pose a health concern.”

Barnett Shale Energy Education Council

135

● Unconventional O&G operations result in emissions

of VOCs

● Debate about the relative health effects of such

emissions

● Expect greater focus on air quality in plays with

greater urban and suburban populations

What do these studies show about air quality?

● Methane escapes during well drilling and completion

● Methane escapes from pneumatic controllers and other

equipment

● A number of studies have attempted to quantify fugitive

methane – 2012 NAS paper: 0.42% of gross gas

production

Studies – Climate Change

137

Seismic Activity

138

● July 3, 2014 Study - Science

● Fluid migration from high-rate disposal wells is

potentially responsible for earthquake swarms

Seismic Activity

139

● Broad summary of literature:

● Water supply - Unconventional drilling water demand

can be better or worse than alternatives.

● Drinking water contamination – risk is poor well

integrity and wastewaters

● Induced seismicity – wastewater injection, felt

earthquakes uncommon

● Air – emissions quantities uncertain, but potential to

improve air quality over alternatives

2014 Stanford/MIT

140

● More science

● Greater transparency regarding potential biases

● Recognition by industry that establishment of binding

standards may have benefits

● Disclosure laws

● API well construction standards

How should uncertainty be addressed?

141

● Proactive approach to address areas of greatest

concern

● Well construction standards

● Water use, reuse, and disposal

● Air quality impacts

● Climate change

How should uncertainty be addressed?

142