Wednesday, October 5, 2011

US Senate Hears Promises and Caveats of Shale Gas

Development of shale gas is possibly one of the few economic good news of the US.  Shale gas has made the country self-sufficient in gas supplies over the past five years and dramatically reduced gas prices at a time of decline of conventional gas production.  It now accounts for 30 percent of natural gas production in the US.  Many energy experts believe that shale gas would satisfy the US needs for the next 100 years.  Using techniques of shale gas production such as horizontal (lateral) drilling and hydraulic fracturing, where rock formations are broken apart and pumped with slick water and sand at a high pressure to break the sediment and release the gas, shale oil production in the US is increasing as well.  While shale gas production created an unprecedented economic boon and improved the US energy supply security, it also caused serious concerns about the industry’s effects to the environment and public health.  As these issues are increasingly in public limelight, a hearing at the Senate Committee on Energy and Environment on October 4, 2011, discussed a new study report by the Secretary of Energy’s Subcommittee on Shale Gas on the safety and environmental performance of shale gas production. 
This task force, led by Daniel Yergin, concluded that hydraulic fracturing and chemicals used in fluids to get gas out of shale rocks were safe, but it warned about outstanding issues related to water use and pollution, air emissions, and community impact.  The task force testimonies tried to shift emphasis from concerns over hydraulic fracturing to improving well construction and casing to prevent leakages, spill and leakage containment, efficient use of water, controlling and recycling of flow-back water, and capturing fugitive methane from gas production.  The task force’s recommendation that the industry should improve its impact measurements, community engagement, and disclosure and transparency of all non-proprietary information on public websites is a welcome development, particularly, given that most companies have maintained secrecy of chemical components used in shale gas production.  An important takeaway from the hearing was that there was a well-developed state regulation without the need of added federal regulation.
A more alarming account on environmental and public health effects from harmful chemicals used in hydraulic fracturing appeared in an April 2011 report by the House Committee on Energy and Commerce.  According to the report, 14 companies have used over 780 million gallons of hydraulic fracturing products, containing 750 various chemicals.  Chemicals included harmless substances such as salt and citric acid as well as toxic benzene and lead.  Energy companies used 29 chemicals, including benzene, toluene, ethylbenzene and xylene, which are potential human carcinogens as well as air pollutants, regulated under the Safe Drinking Water Act (SDWA) or Clean Air Act.  The report criticized gas producing companies for not knowing about some of the chemicals they used in hydraulic fracturing.  Various other reports and allegations of pollution are yet to lead to more probing and empirical study of hydraulic fracturing and chemicals used in fluids to prove or disprove their hazardous effects. 
Similar to the Heisenberg uncertainty principle, calculating damage costs from hydraulic fracturing and determining discounting of its future damages, long-run impacts as well as abatement costs remain largely uncertain, owing to a limited study of this relatively novel industry’s alleged harmful impact on the environment and public health.  The existing knowledge on hazards of hydraulic fracturing is often contradictory. 
At the moment, the field of shale gas and oil seems to suffer from a similar problem of incompleteness and uncertainty, as was the case surrounding the hazards of the tetraethyl lead in the 1920s.  The 1926 review and discounting of hazards of tetraethyl lead by the US Surgeon General resulted in a ruling that allowed continued sale of leaded gasoline, based on its finding that there were “no good grounds for prohibiting” it.  As the case with tetraethyl lead, it may require time, trial and error before the shale gas and oil industry is well understood and regulated.  The first step towards it would be public disclosure of measuring the volume and composition of what goes in and comes out of the ground and what happens to the flow-back water, as recommended by the Secretary of Energy’s Subcommittee on Shale Gas at the Senate hearing.

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