Unconventional Gas: A Model for European Regulation
In Pennsylvania, the objective was to produce the shale gas but also to protect the environment, recalled John Hanger, Special Counsel, Eckert Seamans Cherin Mellott & Past Secretary, Pennsylvania Department of Environmental Protection, who offered the US state’s experiences with regulation to delegates at the Unconventional Gas & Oil Summit in Warsaw, Poland.
Natural Gas Europe asked Mr. Hanger what sort of approach he suggested for policymakers in Europe regarding the regulation of unconventional gas.
“In Pennsylvania we had our historic Oil and Gas Act, which was passed before we had shale gas or unconventional gas. We found that we needed to completely modernize our historic rules and regulations and in the case of the standards for drilling wells, the materials we use in the design and so forth, that involved a complete re write, because a shale gas well is often bigger and different than traditional shallow wells.
“At a minimum you have to modernize the existing regime – assuming there is one. If you’re starting from scratch, that’s both a problem and a blessing. There are lots of examples, so you don’t have to re invent the wheel in my opinion.
He said to do it right, the rules needed to be on paper, regulatory staff needed to provide oversight, and a culture of safety needed to be established at the companies themselves.
“If you do all of that, you have to level with people about the risks. Any form of energy production – wind, solar, whatever – you’re going to have some impact, but you can reduce the impacts so that they’re well below what we tolerate for coal or oil, both of which we use a huge amount of.”
He added: “Gas has a lower environmental footprint, no matter what aspect you look at: air emissions, methane, carbon, water, etc.”
According to Mr. Hanger, over 9,000 shale gas wells had been permitted and more than 5,000 drilled. Pennsylvania, he said, produced more than 1 TCF of gas, about 6% of US production.
“There are environmental issues, but all of these issues are being addressed,” he explained. “They’re more extreme when talking about coal or oil. The impacts associated with coal mining dwarf the environmental impacts associated with gas drilling.
“Our view is if we use more gas, then less coal and less oil, offering benefits for land, water and air.”
He added, “That doesn’t mean we shouldn’t minimize the impacts.”
Hanger was critical of media regarding shale gas operations in the US: “A lot of what has been written and reported has been badly written and badly reported. If you are an innocent reader, you have probably been misled.”
He went on to list concerns like the impact on water, and how it was necessary to make sure flowback/production water didn’t contaminate groundwater or surface water.
He said that a second set of issues revolved around operational problems/accidents in the oil and gas industry: “These tend to get a lot of publicity, when there’s a spill or a leak in the gas drilling business you can count on it being on the front pages of newspapers, probably in a way that similar accidents in other industries very frequently are not on the front pages of media.
“As a result there tends to be a false, distorted view presented to the public that gas drilling is particularly dangerous and risky compared to other industrial activity – it does have risks, but it’s not any more risky than many of the other things we do in the US in industry.”
Truck traffic, he said, could also be a concern. He explained: “A lot of it is water transfer, congestion, road damage and the mechanical integrity of the trucks themselves.”
Gas migration, he said, was a real issue. “I’m talking about gas that is successfully isolated as a result of the drilling process, through the geology it has reached private areas if they’re not getting water from public sources.”
He said that in Pennsylvania there were over 1 million families with private water wells. There had been 200 gas migration incidents.
According to Mr. Hanger, air impacts in Pennsylvania were more serious than the water impacts. “We have a lot of industry, so it’s important that new industries use the cleanest engines to reduce impacts from air emissions.”
The disclosure of chemicals, he recalled, had been a “self inflicted wound.” He said that industry had paid a heavy price for trying not to disclose what was in its fraccing fluids.
Four big regulatory packages had been enacted in Pennsylvania, including a water withdrawal plan. In terms of total dissolved solids, the state now required full treatment of drilling waste water before it was returned to a stream, he said.
“Most water in PA is recycled and reused. When water needs to be disposed it’s taken to a deep well injection site and disposed of underground.”
He said there were also new, strong drilling standards, that there was a 150 foot buffer requirement from all development for 22,000 miles of streams.
Sufficient staff numbers for regulatory agencies, he said were important for public confidence. “We increased our staff from 88 to 202 positions, and that staff has been very active in enforcing the rules.”
Mr. Hanger said Pennsylvania probably had the most stringent regulatory regime, was trying to create a culture of safety, and paid attention to the details involved in unconventional gas drilling.
He said: “In Pennsylvania we are producing a significant amount of natural gas in a four year period from 2008-12. The impact on the environment is modest to negligible.”
“This approach has certainly created tremendous econ benefits for the state,” he commented, citing that consumers had saved $1,000/year on their heating bills.
Mr. Hanger called gas production in the US “remarkable,” noting it was now the #1 gas producer; oil production, he said, was also increasing, going up to about 15% which had meant a decline in the amount of oil that the US imported. The trends looked likely to continue, he said.
“This has meant a change in our power generation,” he explained. “Coal has declined significantly from 52% to 42%, while gas has risen from 16% to 26%.”