Federal Government To Sort Out US Fracking Fracas

U.S. Department of Energy Prepares to Take the Floor in the Nation's 'Fracking' Debate

When talking about his department's role in steering U.S. energy policy, Energy Secretary Steven Chu likes to recall its role in last year's oil spill in the Gulf of Mexico.

"It's true that we had no jurisdictional or regulatory authority in the deepwater spill," Chu said in an interview with ClimateWire. "We played a different role. We helped stop the leak."

Chu's behind-the-scenes war room is widely credited with bringing order to chaos in the aftermath of the BP PLC Macondo blowout in April 2010. His team pinned down the oil's flow rate, and it was the joint effort of government scientists and BP engineers that finally stanched the three-month-long seafloor oil gusher.

In an interview, Chu suggested his department will try to play a similar role in sorting out the entangled mess of misinformation and spin about the environmental impacts of gas drilling.

The top two U.S. gas producers, Chesapeake Energy and Exxon Mobil Corp., are expected to drill tens of thousands of wells through 2020, and plenty of other companies remain lined up behind them despite a prolonged slump in natural gas prices. The result is nothing short of industrialization in rural areas outside of some of the nation's largest cities.

"The charge from the president was very clear," Chu noted. "We need to develop this, but we need to develop it in an environmentally responsible way."

Tapping and burning trillions of cubic feet of newly booked gas reserves is becoming a de facto energy policy, one that is growing quickly in the absence of federal policies designed to cut greenhouse gas emissions. Meanwhile, the Obama administration enforcement of the Clean Air Act is pushing the oldest and dirtiest coal-fired power plants out of the nation's electricity fleet. That means that relatively cheap and cleaner gas will replace the coal burners.

Furthermore, using natural gas in cars could have energy security benefits if it means importing less oil from the Middle East and North Africa.

Moving into DOE's 'sweet spot'

"There are more than regional issues at stake; there are national issues," said Gordon Pickering, an analyst with Navigant Consulting. "DOE is playing a larger role."

But the prospect of "game changing" new gas discoveries in America's heartland, near population centers in Pennsylvania and New York, has entered the public consciousness through environmental lenses.

Dominating this corner of the U.S. energy debate is a fear that extracting gas buried some 7,000 feet underground by erecting rigs that can drill a mile in any direction and using high-pressure fluid injections to unleash gas -- popularly known as "fracking" -- is too invasive and fouls air and water. Today's wells traverse aquifers.

States and U.S. EPA have been searching for the right balance that allows companies to expand their drilling operations, ensuring a reliable source of energy, while at the same time government agencies craft a policy that heeds public concern about contaminating water aquifers, toxic waste pits and air pollution.

The nation's massive shale and tight gas reservoirs are spread across the Northeast; in the upper Midwest; under Texas, Louisiana, Oklahoma and Arkansas; and north into the Rocky Mountain region.

From his 7th-floor office in DOE's Washington headquarters, Chu explained President Obama's decision to plant the federal government's flag in the roiling shale gas debate. In March, the president turned to the administration's resident fixer, Chu, to bring his experience in plugging the BP Macondo hole to the fights over onshore shale gas drilling.

"Just as there is in deepwater drilling, there's a wide range of practices," Chu said, referring to the gas industry. "We have expertise in a lot of the technologies. That has to be in our sweet spot."

Here, as with Macondo and to a lesser degree the nuclear disaster in Japan, Chu figures the U.S. government's technological know-how and some imagination can be brought to bear. Before becoming Energy secretary, he was director of the Lawrence Berkeley National Laboratory, and as Chu noted, the lab had a significant geophysics component that built software to study oil reservoirs.

In May, Chu appointed an Energy Advisory Board subcommittee on natural gas, which is led by former CIA director John Deutch and a handful of experienced hands, including Daniel Yergin, chairman of IHS Cambridge Energy Research Associates, and Fred Krupp, president of the Environmental Defense Fund.

One of the mandates was to move quickly. EPA is the other federal agency looking at the environmental impact of drilling for huge volumes of shale gas, but EPA doesn't plan to release its initial findings until 2012 at the earliest. Chu's panel plans to have recommendations on the table in the next few weeks.

The seven-member subcommittee is looking for ways to nudge and cajole gas producers into addressing nagging, and real, environmental issues that could put the kibosh on future supplies. For the past couple of months, Chu's top advisers have been meeting with experts and taking field trips to Pennsylvania's sprawling Marcellus Shale formation.

Issues growing beyond the grasp of state regulators

"DOE has an enormous research budget, but too much time in the past has been spent working with industry to increase profits," said Amy Mall, a gas expert at the Natural Resources Defense Council. "It has internal expertise to bring to bear on this issue, and we hope that will happen in an independent way."

Still, DOE's authority is limited. Land and water management tied to gas production on private and state lands is left to state and local regulators.

"This has to be important to the industry. No pun intended, but there is a spillover impact from Macondo," said Frank Verrastro, director of the energy and national security program at the Center for Strategic and International Studies in Washington, in testimony before Chu's subcommittee in June. "The industry said they could drill in those areas. People watched the flow from a well that was wild. Then 'Trust us, we can drill through an aquifer.'"

Verrastro said gas producers don't follow the same standards for completing wells and drilling. "It can be done," he said of the drilling and hydraulic fracturing process. "It has been done successfully and properly, but it needs to be spread throughout the industry. If this is going to receive the acclaim, and reach the resource potential, then we have to get serious about it."

After Chu's team and BP stopped the Macondo spill last summer, the debate about gas rose quickly to national prominence. Press reports and documentaries spotlighted gas leaks in small towns and New York protests. State officials came under fire for allowing companies to secure drilling rights on millions of acres before updating safe drinking water regulations.

Meanwhile, the multibillion-dollar domestic gas industry appeared intransigent, ridiculing critics and fighting tighter regulations. The notion that the federal government would regulate gas drilling at any level has been anathema to industry groups.

"The government and industry are both on the same side; they just haven't figured it out yet," Verrastro said in an interview. It's important they get it right, he added. "I don't think we'll get another opportunity for a very long time."

Where DOE's report will fit into the broader array of state and federal government-led investigations into the environmental pitfalls of the gas boom is hard to say, he said. "It's not clear to me where all the pieces fit, and the timelines, since everyone's looking at a slightly different variation in terms of approach."

A need for uniform industry standards

The Navigant analyst, Pickering, said improving the technology that has resulted in a twelvefold increase in shale gas production in a decade isn't a stretch.

"We're talking about a technology that's not rocket science; it's been in place for 30 or 40 years," Pickering said. "Doing better is quite within the industry's capability."

Service companies like Halliburton and Schlumberger are heavy hitters in federal and state-level debates about the extent to which technology should be improved, particularly with regard to chemicals blasted into the underground formations. Exxon and Chesapeake, and the cadre of other multinational and domestic gas producers tied in with the shale, have the wherewithal to make improvements and comply with regulations.

Pickering and others say gas companies need to transition from dogged opposition to regulation to an understanding that persnickety landowners and environmental issues are no longer just a local and regional headache. Gas has gone from the second city of energy sources to being a reliable replacement for coal and a point of departure for cutting harmful emissions and diversifying the nation's energy fleet.

It shifts global energy dynamics, too. If environmental issues aren't taken seriously, analysts are telling Chu's panel, companies won't get the gas.

"The stiff-arming needs to stop, because there needs to be communication on these issues to find out what's important," Verrastro said. "If you're drilling somebody's land, it gives you the rights to access the minerals, but not the right to ride roughshod over the community, and I think that needs to be brought home."

"Some companies recognize that," he said, "and some companies don't."

Reprinted with the kind permission of ClimateWire.  ClimateWire is published by Environment & Energy Publishing.