The Party That Failed
An Insider Breaks With Beijing
The energy business has a way of making smart people look dumb. Experts were blindsided by the shale revolution in the United States. For most of the last few decades, they had assumed that U.S. domestic energy supplies were dwindling. Then, advances in horizontal drilling and hydraulic fracturing, or “fracking” -- the injection of high-pressure streams of sand, water, and chemicals into underground shale and other rock to unlock oil and natural gas trapped there -- significantly boosted total U.S. natural gas production, by as much as 25 percent in recent years, forcing many experts to change their tune. Horizontal drilling and fracking are now having an even bigger impact on domestic oil production: five years ago, most new onshore rigs were drilling for shale gas, but today, most are drilling for oil in shale and so-called tight rock formations. Experts are confidently pointing to the benefits of abundant supplies of this unconventional oil and gas for the U.S. economy: lower energy costs, new jobs, and even a revival in some parts of the manufacturing sector. Politicians from both parties, meanwhile, are vying to be the most enthusiastic boosters of domestic natural gas.
Yet these same experts and policymakers are in danger of being blindsided again, by failing to grasp the extent of the growing concern among Americans over the environmental costs of unconventional oil and gas production -- a crisis of confidence that threatens to halt the boom in some states. From Pennsylvania to North Dakota, more and more people are expressing concern about the environmental problems associated with this production, including local air pollution from drilling sites known as “well pads,” the contamination of drinking water from spills or leaky wells, and noise and dust from trucks serving drilling sites.
Some U.S. communities and states, and even entire foreign countries, have responded to these worries by choosing to press pause on the development of their unconventional oil and gas resources. New York State, which sits atop the Marcellus Shale, a rock formation that extends through Pennsylvania to West Virginia and holds an estimated 141 trillion cubic feet of recoverable natural gas, imposed a statewide moratorium on fracking in 2010. Last year, in Colorado, the cities of Boulder and Fort Collins voted to ban fracking for at least five years, and nearby Lafayette prohibited all new oil and gas wells. Similar efforts are under way in other states, including California. In 2011, France declared its own moratorium on fracking; after its 2013 election, the German government did the same, pending an environmental risk assessment. And although the British government appears eager to exploit the United Kingdom’s vast shale gas reserves, public unease and protests could block development there from moving forward, as well.
Until recently, many people assumed that natural gas would, on balance, prove beneficial for the environment. After all, unlike coal-fired power plants, natural-gas-fired ones produce negligible amounts of mercury, sulfur dioxide (which causes acid rain), and other air pollutants. Moreover, when burned, natural gas produces much less carbon dioxide than coal. But producing natural gas can impact the environment in several ways, including by releasing methane, a highly potent greenhouse gas that has the potential to reduce or even erase any near-term climate advantage. So the best one can say is that natural gas has the potential to provide a net environmental benefit -- if the serious problems associated with it can be resolved. And that remains a big if. Add the growing concern that cheap natural gas could crowd out investments in solar and wind power and other renewable sources of zero-carbon energy, and it’s no wonder that so many Americans have turned against shale gas and fracking more generally.
Opposition to shale gas is not irrational. Local concerns stem from real problems. Three years ago, while serving on a panel set up by then U.S. Energy Secretary Steven Chu to examine the risks and realities of shale gas, I visited rural Pennsylvania to see the industry’s impact firsthand. There, I met a mother who told me that she had been forced to leave her family farm because of severe air pollution from shale gas wells. The pollution had made her young son ill. He was staying with friends so that he could attend school; she was living out of her car.
Things were even worse in Pinedale, Wyoming, a town that has just 2,000 residents but, due to its gas operations, smog rivaling that found in Los Angeles. Last year, the American Lung Association, which grades counties annually on their air quality, gave the county containing Pinedale an F for smog. In the last decade, Denver’s once-notorious smog had dissipated, largely because of the introduction of cleaner vehicles. But now, it is back, thanks to the oil and gas industry. In fact, although smog levels are decreasing in cities across the United States, in Colorado, they have ticked upward since 2010. The state’s 51,000 oil and gas wells, most of which were drilled in the past decade, are now its largest source of smog-producing volatile organic compounds -- harmful air pollutants that escape from storage tanks, valves, and other equipment.
Shale gas exploitation may also be polluting the water. The gas industry insists that there is no scientific evidence that fracking, which usually takes place thousands of feet below the water table, can contaminate water. But fracking is only one part of unconventional gas operations, and scientists and observers contend that other parts of the process, when improperly executed, can in fact do so. In a 2011 study, the Ground Water Protection Council, an association of state regulators, concluded that the gas industry, through poor well construction and surface spills, had directly caused ground-water contamination in Ohio and Texas.
Despite the economic benefits of shale gas, the environmental risks have dragged public opinion of it to an all-time low. In a Pew poll conducted in September 2013, 49 percent of respondents opposed fracking, whereas just 44 percent favored it. In 2012, John Deutch, a former director of the CIA and the chair of Chu’s natural gas panel, said that the group’s report showed that “the environmental impacts here were real.” If the gas industry wanted to get people behind shale gas, he said, it “had to have a method of measurement and continuous improvement.”
The industry cannot spin the facts to gain public acceptance or brush aside the harmful local impacts of drilling. Nor can it ignore the prospect that leaks and other releases of natural gas, which is composed primarily of methane (methane is also released all along the natural gas supply chain and from oil wells), could accelerate climate change. Unburned methane is a particularly powerful greenhouse gas. According to the Intergovernmental Panel on Climate Change, during its first 20 years in the atmosphere, methane is 84 times as potent a greenhouse gas as carbon dioxide.
WHAT LIES BENEATH
To understand the dangers of methane leakage from oil and gas development, consider how it affects the balance between the energy the earth absorbs from the sun and the energy the earth radiates back into space -- a concept known as “radiative forcing.” The bigger the difference between the amount of energy coming to the earth and the amount leaving it, the greater the global warming. Climate pollutants, such as methane, soot, and the class of refrigerants called “hydrofluorocarbons,” currently cause over one-third of radiative forcing -- and methane accounts for most of that amount and is expected to continue to do so. So reducing methane emissions is essential to mitigating climate change.
Today, about one-third of methane emissions in the United States come from the oil and gas industry. For natural gas, the most recent scientific research suggests that the break-even point for methane emissions -- when an emissions rate that was any higher would make the switch from coal to natural gas worse for the climate in the short run -- is 2.7 percent of production. No one can say with certainty how much methane is actually leaking from wellheads, processing plants, pipelines, and other natural gas facilities. The Environmental Protection Agency estimated in 2012 that total methane emissions in the United States from the natural gas supply chain represented 1.5 percent of all U.S. natural gas produced, meaning that 1.5 percent of the gas was lost through emissions. But that number may understate the true level: a 2013 Harvard study found that total U.S. methane emissions could be 50 percent higher than the EPA’s estimate.
The Environmental Defense Fund, the nongovernmental organization I have led for the past 29 years, has studied natural gas closely. Two years ago, it launched 16 scientific research projects designed to fill in the gaps in what is known about methane leakage across the natural gas supply chain. The projects involve about 100 universities, research institutions, and, crucially, oil and gas companies.
The first of the 16 studies, the results of which appeared last year in PNAS (Proceedings of the National Academy of Sciences), measured methane emissions from 190 drilling sites in the United States. Although it found total emissions from the production of natural gas to be similar to the EPA’s estimate, it discovered that emissions from certain sources were much higher than the EPA found. Valves and compressors located at well pads, for example, all leaked more methane than the EPA estimated. Emissions from chemical injection pumps, which are used at wellheads to keep pipelines flowing or to neutralize corrosive substances, were found to be twice as high as the EPA’s estimate.
The study also pointed to the promise of new emissions controls mandated by the EPA during well completions -- a technique for capturing methane released at the end of the fracking process. When companies conducted “reduced emissions completions,” as the process is known, the amount of leakage was much lower than the EPA’s estimate for wells not conducting them. The EPA will require all new natural gas wells to employ this technique beginning in January 2015, but it does not cover oil wells, many of which also produce considerable quantities of methane. Given how effective the process is, it should be required across the board.
There is little reason for the gas industry to balk at these requirements and other methods of reducing emissions, since many of them cost very little. A study commissioned by the Environmental Defense Fund and released this year by the consulting firm ICF International analyzed 11 ways to reduce methane from 19 emissions sources. Such measures include shifting to lower-emitting pneumatic valves and closely monitoring and repairing equipment to reduce unintended methane leaks. If the most cost-effective reductions were fully adopted, the gas industry would actually save roughly $164 million annually. Overall, ICF found that using currently available technologies alone, 40 percent of methane emissions could be eliminated over the next five years for less than a penny per thousand cubic feet of gas produced.
Reducing the shale gas industry’s methane emissions is important, but that alone will not restore the public’s confidence in natural gas. The creation last year of the Center for Sustainable Shale Development, in Pittsburgh, however, could help. A collaboration among oil and gas companies, environmental groups, and philanthropic organizations, the center set 15 voluntary environmental standards to improve shale gas development practices in the Appalachian basin. Drilling companies can seek certificates of operational excellence in two categories -- air and climate and water and waste management -- through an independent auditor. Among the companies participating are Chevron, Shell, EQT, and CONSOL Energy. Although these voluntary efforts by industry leaders can help distinguish the best from the rest and raise the bar for all, only strong rules enforced by a system that demands compliance will fully protect public air, water, and health from hazardous oil and gas development.
States have the leading role in regulating the oil and gas industry. More than 20 of them have adopted rules requiring companies to disclose which chemicals they use in fracking; at least another seven have such requirements under consideration. But work must still be done to develop regulations that can get around the industry’s claims of trade secrecy, which oil and gas companies invoke to resist public disclosure of the chemicals they use. Eighty-four percent of all fracking jobs use chemicals that the industry says are trade secrets. Competitive businesses rely, of course, on intellectual property protections to foster innovation, and trade secrecy could, in some cases, encourage the development of greener chemistry. But when it comes to chemicals that could threaten water tables, the public’s interest should trump the industry’s concerns, and strict disclosure rules should be put in place for these chemicals.
States are also getting better at monitoring the construction and maintenance of wells. Gas wells consist of steel pipes surrounded by cement, which isolates ground water from the gas and fluids that travel through the wells. But poorly constructed well casings and weak cement can increase the chances that the ground water will be contaminated. Texas recently overhauled its outdated well-construction requirements, incorporating several dozen improvements, such as enhanced testing of well integrity, more stringent criteria for cement jobs, and new safety procedures during fracking. Many of these improvements were part of the model regulations that the Environmental Defense Fund and the company Southwestern Energy had drafted over the past several years. Environmental activists have hailed the new rules.
States are making progress on methane leakage, too. In February, Colorado adopted the first rules anywhere in the United States that directly regulate methane emissions, over the opposition of industry trade associations in the state. Taking a cue from the leadership of Governor John Hickenlooper, who declared last year his intention to eliminate methane emissions in Colorado, the Environmental Defense Fund and three of Colorado’s largest oil and gas producers -- Anadarko Petroleum, Encana, and Noble Energy -- developed a proposal for regulations to reduce air pollution, which shaped the final rules. Now, companies must find leaks and fix them and use stronger emissions controls for storage tanks, dehydrators, and gas vents from wells. For that equipment, the regulations force companies to eliminate 95 percent of uncontrolled toxic pollutants and volatile organic compounds.
The Colorado rules are a major breakthrough and a bellwether for other states seeking to minimize the air pollution produced by the oil and gas industry. The process led by Hickenlooper could chart a path for the energy industry and environmentalists to work together to not only reduce emissions but address other environmental issues as well.
Other countries with large shale gas reserves are likely to follow the United States’ lead in developing them, so the regulations in Colorado and elsewhere in the country will set the tone well beyond U.S. borders. China has the world’s largest recoverable shale gas reserves, over 1,000 trillion cubic feet, more than the United States and Canada combined. Poland, with 148 trillion cubic feet, has the largest shale gas reserves in western Europe, and France isn’t far behind. European countries currently import much of their natural gas from Russia, and many Europeans worry about the use of gas supplies as a political weapon, so tapping these reserves could reduce Russia’s leverage.
Shale gas is not the solution to global climate change. But it can help reduce the use of high-carbon coal in the United States -- and perhaps in China, Europe, and elsewhere. Reforming this growing segment of the gas industry must not overshadow another, bigger challenge: accelerating the transition to truly clean, renewable energy.
For the next 20 years, however, slowing the rate of climate change is critical in order to give communities and wildlife a better chance to adapt. Reducing emissions of climate pollutants such as methane can reduce the rate of warming over the next few decades. Scientists have long warned that the unprecedented current rate of climate change is the greatest threat to biodiversity. And the human cost is apparent in more frequent and more intense extreme weather, from hurricanes and heat waves to droughts.
Working to reduce the emissions of pollutants that accelerate climate change is a project that industry leaders and environmentalists in the United States should be able to agree on. By forging unlikely alliances based on a mutual understanding of what is at stake, the environmental community and the oil and gas industry can create strong, sensible standards that reduce the risks of unconventional oil and gas development -- and ensure that the economic windfall benefits the environment, too.