Shale Gas Needs to Allay Environmental Doubts – NYTimes.com
March 8, 2011
Shale Gas Needs to Allay Environmental Doubts – NYTimes.com.
Shale Gas Needs to Allay Environmental Doubts
By CHRISTOPHER SWANN
Published: March 6, 2011
Andrew Harrer/Bloomberg News
A shale gas rig in Pennsylvania. Shale gas is removed by hydraulic fracturing.
Safe havens are the rarest commodity in the energy patch. So oil and gas companies have been drawn to the hydraulic fracturing revolution in the United States by the perception of low political hazard. They’ve committed more than $70 billion to shale deals over the last two years, the consultancy IHS reckons.
But an environmentalist backlash is gaining momentum. One disaster along the lines of BP’s Macondo spill in the Gulf of Mexico, and the whole investment thesis could crumble. Instead of stonewalling new regulations and calls for transparency, the industry — gathering this week in Houston for the annual conference of IHS’s Cambridge Energy Research Associates unit — may want to get out in front by voluntarily accepting some safeguards.
The drumbeat of public opinion against so-called fracking, which involves cracking rocks and injecting chemicals to release oil or gas, is growing louder — even though the polemical “Gasland” missed out on the Academy Award for best documentary last week. Footage of flammable faucets and pools of contaminated water have alarmed many.
Naturally occurring gas means that some people in Pennsylvania have been able to set their tap water on fire for generations. So charges that the mini-earthquakes used by gas drillers despoil the water supply directly are hard to swallow. In the Marcellus shale, a deposit in the Northeast roughly the size of Greece, up to 7,000 feet of solid rock separates the shale deposits from groundwater supplies. Most engineers agree that that buffer makes contamination unlikely.
Still, the concerns demand further study. Radioactive materials brought to the surface along with some toxic fluids used in drilling do constitute a realistic danger to drinking water. The storage and treatment of such fluids need to be unquestionably safe — and it’s not clear that they are.
Many operators are trying to minimize their environmental impact. Chesapeake Energy said it seeks to constantly recycle drilling fluids. Others, like Range Resources, voluntarily revealed the ingredients that make up their secret sauce — something BHP Billiton, which just acquired nearly $5 billion of shale gas assets, also intends to do. But not all players are exemplary corporate citizens.
A single egregious case of environmental damage — even one less severe than BP’s Gulf of Mexico spill — could undermine the assumptions underlying the billions of dollars invested. Last week the United States awarded the first deepwater drilling permit since BP’s debacle 10 months ago. The nuclear industry provides an even more vivid example of how public confidence, once broken, can take years to repair. No new nuclear plants have gotten off the drawing board since the relatively harmless Three Mile Island accident in 1979.
So companies like Chesapeake and Exxon Mobil, which spent $31 billion on the gas driller XTO Energy last year, ought to have an incentive to clamp down on rogue operators. Instead, they’ve formed a united front against regulation. This is myopic.
The industry contends it’s already well supervised by the states. But those standards are patchy. Moreover, the fiscally stretched states have much to gain financially by going soft on energy companies. It was this kind of conflict that reduced the effectiveness of the Minerals Management Service, the combination watchdog and tax collector that oversaw BP in the gulf.
The best solution is to allow the Environmental Protection Agency to draw up nationwide safety standards for the fracking industry. The geology of rocks may differ by state, as the industry points out, but the treatment of the fluids used can still be consistent. By submitting to uniform rules, the industry could lay many safety fears to rest.
In addition, the industry has little to gain from its hard-won exemption from the Safe Drinking Water Act. Environmental activists have made much of this. And if fracking does not contaminate the water supply, as the industry insists, then it has little to fear. The industry is also taking a big risk in fighting to remain exempt from federal laws governing hazardous materials.
Lifting the veil of secrecy surrounding fracking fluids would also help, something a bill proposed by a New York representative, Maurice Hinchey, tries to address. Some concerns would be allayed by knowing contamination could be easily traced to its source.
The energy industry is engaged in the most aggressive onshore drilling campaign in the United States in a generation. It would behoove forward-looking energy chiefs to recognize that their shareholders’ interests are best served by avoiding a Macondo moment. CHRISTOPHER SWANN
GDACC 
