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State Regulation of Hydraulic Fracturing April 12, 2011 Aurana Lewis, MEM Nicholas School of the Environment Bill Holman Director of State Policy Nicholas.

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Presentation on theme: "State Regulation of Hydraulic Fracturing April 12, 2011 Aurana Lewis, MEM Nicholas School of the Environment Bill Holman Director of State Policy Nicholas."— Presentation transcript:

1 State Regulation of Hydraulic Fracturing April 12, 2011 Aurana Lewis, MEM Nicholas School of the Environment Bill Holman Director of State Policy Nicholas Institute for Environmental Policy Solutions

2 Our Mission To help decision makers create timely, effective and economically practical solutions to the world’s most critical environmental challenges We engage faculty & students at Fuqua School of Business, Duke Law, Nicholas School of the Environment, Pratt School of Engineering and Sanford School of Public Policy.

3 Dan River Basin Deep River Basin


5 Shale Basins in North Carolina Reid, J.C. and R.C. Milici. 2008. “Hydrocarbon Source Rocks in the Deep River and Dan River Triassic Basins, North Carolina” Chatham Lee Moore

6 States Take the Lead Limited federal role due to executive and congressional actions – Industry prefers state regulation State experience with conventional oil & gas development predates national environmental laws Interstate Oil & Gas Compact Commission -- STRONGER

7 Shale Gas Production Well Pad and Road Construction Drilling Hydraulic Fracturing Production/ Partial Well Pad Reclamation Re-Fracturing/ Well Closure

8 Thompson Bros, 2011. “Nexen Well Pad 9111 and Access Road.” Well Pad and Road Construction Lease the mineral rights Choose a location 3 – 5 acres Determine restricted areas Obtain appropriate permits Follow state and local setback requirements Construct well pad Engineer well pad and roads Plan for chemical and waste storage onsite /prevent spills and leaks Control sediment and erosion Manage stormwater Construction Time: 7 – 28 Days (Bradford County, PA)

9 Drilling Drilling, either vertical or horizontal Construct casing for groundwater protection Store drill cuttings Granberg, A. 2009. “Anatomy of a Gas Well” Drilling Time: 21-24 Days (Chesapeake Energy)

10 Hydraulic Fracturing Withdraw freshwater Transport chemicals and proppants to site Mix and inject high pressure solution into the well Collect, store and dispose of flowback water and wastes Fracturing Time: 2 – 5 Days 40 – 100 Hrs (Pumping) New York Department of Environmental Conservation, 2009 “Draft Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program, Chapter 5”

11 Production/ Partial Well Pad Reclamation Produce gas Process gas to remove water Compress and pipe gas to processing plants Collect and dispose of produced water and wastes Reduce the size of the well pad Remove well equipment Close pits and tanks storing waste fluids Reclaim a portion of the well pad Time: 7-10 years (Harper, 2010) Veil, J. 2010. “Water Management Technologies Used by Marcellus Shale Gas Producers”

12 Source: Harper, J. and Kostelnik, J. “The Marcellus Shale Play in Pennsylvania.” ref: Dewitt, 2008. Well re-fracturing 7-10 years after initial hydraulic fracturing Impacts similar to original fracturing Well Plugging Plug well to prevent gas releases, surface contamination, and groundwater contamination Restore site Re-Fracturing/ Well Closure

13 Cost Estimates for Production Well Costs in the Millions Royalties Finding and Development Cost (per Mcfe) Haynesville $7.2025%$1.48 Marcellus $4.5015%$1.26 Barnett $2.8025%$1.41 Fayetteville $3.1017%$1.50 Colony Granite Wash $6.2520%$1.37 TX PH Granite Wash $4.5020%$1.18 Average $4.7120%$1.37 Kulkarni, P. 2010 “Arrival of IOCs and increasing legislative interest signal critical mass for Marcellus” ref. Chesapeake Energy

14 Public Health & Environmental Concerns New demand for surface and groundwater resources Sedimentation & erosion from pads, roads & pipelines Wastewater treatment and disposal Leaks and spills Potential groundwater contamination Potential air emissions Management of solid, hazardous and radioactive wastes Reporting requirements Plugging wells

15 State & Local Concerns Permit and inspection fees Expertise Royalties Financial assurance Local zoning? State role? Local role? Property rights of neighbors Truck traffic Terms of leases

16 Water Quantity DOE National Energy Technology Laboratory. 2009. “Modern Shale Gas Development in the United States: A Primer”

17 Oct 2009 – Aug 2010 Water Usage Data for 494 Haynesville (TX-LA) Shale Gas Wells Water Stats Source: Welsh, 2010 “Creating Successful Community Partnerships – Carrizo-Wilcox Aquifer Collaboration in Louisiana” Average Water Use per Well – 4,828,464 gallons Typical Aquifer – Keithville Compactor Fracturing Source Aquifer – South Camp Source: Lewis and Hanson, 2010 “A Watershed Approach”

18 Water Quality Fracturing Fluids Total Estimated Chemical Usage/Fracture: 14,700 gallons EPA, 2010. “Draft Hydraulic Fracturing Study Plan”

19 Skin, Eye and Sensory Organ Respiratory Gastrointestinal and Liver Brain and Nervous Sys. Immune Kidney Cardio. and Blood Cancer Mutagen Endocrine Disruptors Other Ecological Health Effects from Hydraulic Fracturing Chemicals with CAS Numbers Percent of Total Reviewed Chemicals Source: Colburn, T. 2010. “Natural Gas Operations from a Public Health Perspective”

20 Water & Air Quality Well casing and cementing are critical to prevent groundwater contamination by migration of methane and other pollutants and to prevent explosions Harrison, S. 1983. “Evaluating System for Ground-Water Contamination Hazards Due to Gas-Well Drilling on the Glaciated Appalachian Plateau”

21 Water Quality Constituents in Flowback Water NYSERDA, 2009. "WATER-RELATED ISSUES ASSOCIATED WITH GAS PRODUCTION IN THE MARCELLUS SHALE" Flow Back EPA Drinking Water Quality Standards MinMedianMaxUnits TDS (Brine)153093200337000mg/LNA Metals* Barium0.553661.515700mg/L2 mg/L Strontium0.5018215841mg/LNA Radiation Alpha Radiation22.411414.518950pCi/L15 pCi/L Beta9.6813957745pCi/LNA Organics Benzene15.7479.51950ug/L5 ug/L Etylbenzene3.353.6164ug/L700 ug/L Touluene2.38333190ug/L1000 ug/L Xylenes164872670ug/L10,000 ug/L From 56 flowback samples taken from PA and WV * These are the metals limited by the PA DEP

22 Water & Air Quality Prevent spills and leaks Pits – Lining Failures – Pit overflows – Incompatible liner/fluid storage – Volatile chemical releases Tanks – Tank leaks – Incompatible chemical storage – Secondary containment failure Pedler, 2010 Allegheny Defense Project; Lustgarten, 2009, Propublica

23 Air Quality Issues x = Directly Emitted Emission o = Indirectly Generated Emission Earthworks 2010 “Sources of Oil and Gas Air Pollution” Fugitive Emissions DehydrationVehiclesFlaringEnginesPitsVenting Particulate Matter xx x Dust xx Hydrogen Sulfidex x x Ozoneooo o Carbon Monoxide xxx Nitrogen Oxides xxx Sulfur Dioxide xxx VOCsxx xxxx BTEXxx xxxx PAHs x Methanexx xx

24 Wastewater Treatment High Total Dissolved Solids – >100,000ppm – Not removed during treatment High Naturally Occurring Radioactive Material (NORM) – Not tested during disposal – Not fully removed during treatment 500 mg/L (TDS Limit) ChlorideSulfateTDS TetraTech, 2009 “EVALUATION OF HIGH TDS CONCENTRATIONS IN THE MONONGAHELA RIVER”

25 Underground Injection Wastewater Disposal Most common disposal method Possible risks of seismic activity – Arkansas, 2010-11 – Texas, 2008 – Ohio, 1986 US DOE, 2009 “Modern Shale Gas: a Primer"

26 Recycling and Reuse of Wastewater Commonly used in the Barnett Shale, TX, Fayetteville Shale, AR and Marcellus Shale, PA Energy intensive Limits truck travel by treating on site Concentrates Radioactivity Rigzone Staff, 2010 “Water Treatment Key to Hydraulic Fracturing's Future”

27 City of Fort Worth, 2010 “City of Fort Worth Gas Wells”; Fort Worth City Managers Office, 2010. “Environmental Impacts of Gas Drilling” Exposure to contaminates Air Emissions Noise and light Scenic Effects Truck Traffic Local Regulation by Ft Worth

28 Local Impacts: Trucks Requires between 4,300 to 6,500 truck trips per well Damage to roads & bridges Emissions & dust Congestion Heavenrich, S. Oct 06, 2010. “FrackWaste Truckers Rack up 959 Safety Violations in Three Days” “Our look at Road Damage from heavy truck traffic”

29 Leasing & Royalties for Property Owners Avg. Lease Length Early Leasing Level2009 - Leasing Level Year Bonus (per acre) Royalties Bonus (per acre) Royalities New York3-5 years1999$512.50%$3,00015%-20% Pennsylvania5-7 years2002$1212.50%$2,90017%-18% West Virginia---2007$512.50%$1,000-$3,00016%-18% Texas---2000$1,00020%-25% $10,000- $20,000 25%-28% Andrews, A, et al. 2009. “Unconventional Gas Shales: Development, Technology, and Policy Issues”

30 Colorado 2009 – House Bill 1292 regulates hydraulic fracturing impacts. Ohio 2010 – Senate Bill 165 Amendments made to many of Ohio’s oil and gas regulations to include provisions for hydraulic fracturing. Pennsylvania July 2010 - Changes to well casing and cementing rules to prevent blowouts and contamination. June 2010 – Limits for total dissolved solids, barium, strontium, chloride and sulfate in wastewater. Nov 2010 - Changes to erosion and sediment control plans for sites greater than 5 acres. Wyoming June 2010 – Updates oil and gas regulations to require identification of hydraulic fracturing chemicals Amendments also include handling of well stimulation fluids Selected State Responses to Hydraulic Fracturing

31 Alabama 2000 – Extensive changes to oil and gas regulation, partly to regulate hydraulic fracturing in coal bed methane wells. 2007 – Passed the rule Hydraulic Fracturing of Coal Beds Arkansas 2010 - Added rule B-19 “Requirements for Well Completion Utilizing Fracture Stimulation” 2010 – Moritorium on injection disposal, extended and expanded in Jan 2011 Louisiana 2009 – Order No. U-HS laid out rules regarding urban development of Haynesville Shale 2009 – Oil and Gas amendment encouraging the reuse of flowback and produced water Texas 2001 – Fort Worth sets city ordinances regarding natural gas production in the city area. New York 1992 -Generic Environmental Impact Statement on Oil and Gas Solution Mining Regulatory Program 2010 - Revised Draft Supplemental Generic Environmental Impact Statement in 2010

32 North Carolina Law Oil & Gas Conservation Act of 1945 – Permits vertical drilling – Prohibits horizontal drilling – Establishes Permit fees @ $50/well Bonding @ $5000/well Royalties @ $0.005/mcf (1000 cubic feet)

33 Policy Options Study economic and environmental advantages and disadvantages of developing shale gas in North Carolina – USGS/NCGS Resource Assessment, Spring 2011 Learn from other States, the industry, EPA, and the public – States are primary regulators of this industry Develop a comprehensive regulatory program/avoid inefficient, fragmented regulatory program

34 Policy Options 2010 UNC-CH-Duke Water Allocation Study recommended a moratorium on water withdrawals for shale gas until the Division of Water Resources completes hydrologic models for the appropriate river basins to ensure that water withdrawals will not adversely impact other water users Collect baseline data before development

35 Resources for States State Review of Oil and Gas Environmental Regulations (STRONGER): – Hydraulic Fracturing Guidelines, 2010 America Petroleum Institute (API) releases : – Hydraulic Fracturing Operations - Well Construction and Integrity Guideline, 2009 – Water Management Associated with Hydraulic Fracturing, 2010 – Practices for Mitigating Surface Impacts Associated with Hydraulic Fracturing, 2011 US Environmental Protection Agency (EPA) Potential Impacts of Hydraulic Fracturing on Drinking Water Resources – due 2012

36 Contact Information Bill Holman Director of State Policy Aurana Lewis, MEM

37 Extra slides follow

38 Federal Statues: Clean Water Act – Prevents discharges of oil and gas waste to waters of the US with a permit CERCLA – Holds drilling companies accountable for all non- petroleum or natural gas pollution on site Hazardous Materials Transport Act and Hazardous Materials Transportation Uniform Safety Act – Regulates the transport of hazardous fracturing chemicals to the site Endangered Species Act – Functions when working on federal land

39 Local Land Use Issues Restricting well development in scenic areas Requiring stormwater management plans Requiring erosion control plans Setting well spacing requirements Mandating setbacks – Residences – Water bodies – Road ways Setting Noise and Light Standards: – Setting hours of operation in urban areas

40 Water Quality Issues: AR, CO, LA, OH, PA, WY Pit and Tank Storage – Set standards for construction – Ensure compatible fluid or volatile compound containment Spill Prevention* – Require spill prevention and containment pollution plans – Identify chemicals used in hydraulic fracturing Well casing and cementing – Identify and test surrounding water wells before and after fracturing* – Require reporting of well casing and cementing logs * Not required in all States

41 Water Quantity and Disposal Water Management Plans: Ex: Delaware River Basin Commission Fresh Water Report – Obtain water use permit – Identify sources – Create Invasive Species Control Plan – Submit hydrologic report (groundwater) – Obey Pass-by flow guidelines – Record volumes delivered Identify water conservation efforts Waste Water Storage – Store only in enclosed tanks – Test for chemical constituents Waste Water Report Obtain waste disposal permit from approved facility Address all wastewater produced on site Record produced wastewater volumes Record locations and volumes of disposal

42 Hydraulic Fracturing Reporting STRONGER Recommendations: Identification of contaminate migration pathways – Several states require identification and pre-testing of surrounding wells Reporting should be required before and after hydraulic fracturing operations – Notification should allow time for state oversight of operations – Reporting should include Identification of the materials used Aggregate volumes of fracturing fluids Proppant used Continuous logs of fracture pressures

43 Areas for Regulatory Consideration: Truck Traffic Consideration Air Quality Emissions – Gas Production – Diesel Equipment Usage – Fugitive Emissions Chemical Transport Considerations Leasing Issues

44 Well Types: Multiple Horizontal Well Pad Spacing: 640 Acres Disturbance: 4-6 acres StatOilHydro, 2011. “Multiple Well Pad Illustration” DOE National Energy Technology Laboratory. 2009. “Modern Shale Gas Development in the United States: A Primer” Horizontal Well Spacing: 640 Acres Disturb: 3-5 Acres Vertical Well Spacing: 40 Acres Disturb: 2-3 Acres

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