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State Regulation of Hydraulic Fracturing April 12, 2011

State Regulation of Hydraulic Fracturing April 12, 2011 . Aurana Lewis, MEM Nicholas School of the Environment Bill Holman Director of State Policy Nicholas Institute for Environmental Policy Solutions . Our Mission.

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State Regulation of Hydraulic Fracturing April 12, 2011

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  1. State Regulation of Hydraulic FracturingApril 12, 2011 Aurana Lewis, MEM Nicholas School of the Environment Bill Holman Director of State Policy Nicholas Institute for Environmental Policy Solutions

  2. Our Mission To help decision makers create timely, effective and economically practical solutions to the world’s most critical environmental challenges We engage faculty & students at Fuqua School of Business, Duke Law, Nicholas School of the Environment, Pratt School of Engineering and Sanford School of Public Policy.

  3. Dan River Basin Deep River Basin

  4. Shale Basins in North Carolina Chatham Lee Moore Reid, J.C. and R.C. Milici. 2008. “Hydrocarbon Source Rocks in the Deep River and Dan River Triassic Basins, North Carolina”

  5. States Take the Lead • Limited federal role due to executive and congressional actions • Industry prefers state regulation • State experience with conventional oil & gas development predates national environmental laws • Interstate Oil & Gas Compact Commission -- STRONGER

  6. Shale Gas Production

  7. Well Pad and Road Construction Construction Time: 7 – 28 Days (Bradford County, PA) • Lease the mineral rights • Choose a location • 3 – 5 acres • Determine restricted areas • Obtain appropriate permits • Follow state and local setback requirements • Construct well pad • Engineer well pad and roads • Plan for chemical and waste storage onsite /prevent spills and leaks • Control sediment and erosion • Manage stormwater Thompson Bros, 2011. “Nexen Well Pad 9111 and Access Road.”

  8. Drilling Drilling Time: 21-24 Days (Chesapeake Energy) • Drilling, either vertical or horizontal • Construct casing for groundwater protection • Store drill cuttings Granberg, A. 2009. “Anatomy of a Gas Well”

  9. Hydraulic Fracturing Fracturing Time: 2 – 5 Days 40 – 100 Hrs (Pumping) • Withdraw freshwater • Transport chemicals and proppants to site • Mix and inject high pressure solution into the well • Collect, store and dispose of flowback water and wastes New York Department of Environmental Conservation, 2009 “Draft Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program, Chapter 5”

  10. Production/ • Partial Well Pad Reclamation Time: 7-10 years (Harper, 2010) • Produce gas • Process gas to remove water • Compress and pipe gas to processing plants • Collect and dispose of produced water and wastes • Reduce the size of the well pad • Remove well equipment • Close pits and tanks storing waste fluids • Reclaim a portion of the well pad Veil, J. 2010. “Water Management Technologies Used by Marcellus Shale Gas Producers”

  11. Re-Fracturing/ Well Closure • Well re-fracturing • 7-10 years after initial hydraulic fracturing • Impacts similar to original fracturing • Well Plugging • Plug well to prevent gas releases, surface contamination, and groundwater contamination • Restore site Source: Harper, J. and Kostelnik, J. “The Marcellus Shale Play in Pennsylvania.” ref: Dewitt, 2008.

  12. Cost Estimates for Production Kulkarni, P. 2010 “Arrival of IOCs and increasing legislative interest signal critical mass for Marcellus” ref. Chesapeake Energy

  13. Public Health & Environmental Concerns • New demand for surface and groundwater resources • Sedimentation & erosion from pads, roads & pipelines • Wastewater treatment and disposal • Leaks and spills • Potential groundwater contamination • Potential air emissions • Management of solid, hazardous and radioactive wastes • Reporting requirements • Plugging wells

  14. State & Local Concerns • Permit and inspection fees • Expertise • Royalties • Financial assurance • Local zoning? State role? Local role? • Property rights of neighbors • Truck traffic • Terms of leases

  15. Water Quantity DOE National Energy Technology Laboratory. 2009. “Modern Shale Gas Development in the United States: A Primer”

  16. Water Usage Data for 494 Haynesville (TX-LA) Shale Gas Wells Typical Aquifer – Keithville Compactor Fracturing Source Aquifer – South Camp Oct 2009 – Aug 2010 Average Water Use per Well – 4,828,464 gallons Source: Welsh, 2010 “Creating Successful Community Partnerships – Carrizo-Wilcox Aquifer Collaboration in Louisiana” Source: Lewis and Hanson, 2010 “A Watershed Approach”

  17. Water QualityFracturing Fluids Total Estimated Chemical Usage/Fracture: 14,700 gallons EPA, 2010. “Draft Hydraulic Fracturing Study Plan”

  18. Health Effects from Hydraulic Fracturing Chemicals with CAS Numbers Cardio. and Blood Cancer Mutagen Endocrine Disruptors Other Ecological Percent of Total Reviewed Chemicals Skin, Eye and Sensory Organ Respiratory Gastrointestinal and Liver Brain and Nervous Sys. Immune Kidney Source: Colburn, T. 2010. “Natural Gas Operations from a Public Health Perspective”

  19. Water & Air Quality • Well casing and cementing are critical to prevent groundwater contamination by migration of methane and other pollutants and to prevent explosions Harrison, S. 1983. “Evaluating System for Ground-Water Contamination Hazards Due to Gas-Well Drilling on the Glaciated Appalachian Plateau”

  20. Water QualityConstituents in Flowback Water NYSERDA, 2009. "WATER-RELATED ISSUES ASSOCIATED WITH GAS PRODUCTION IN THE MARCELLUS SHALE"

  21. Water & Air QualityPrevent spills and leaks • Pits • Lining Failures • Pit overflows • Incompatible liner/fluid storage • Volatile chemical releases • Tanks • Tank leaks • Incompatible chemical storage • Secondary containment failure Pedler, 2010 Allegheny Defense Project; Lustgarten, 2009, Propublica

  22. Air Quality Issues x = Directly Emitted Emission o = Indirectly Generated Emission Earthworks 2010 “Sources of Oil and Gas Air Pollution”

  23. Wastewater Treatment • High Total Dissolved Solids • >100,000ppm • Not removed during treatment • High Naturally Occurring Radioactive Material (NORM) • Not tested during disposal • Not fully removed during treatment TDS Chloride Sulfate 500 mg/L (TDS Limit) TetraTech, 2009 “EVALUATION OF HIGH TDS CONCENTRATIONS IN THE MONONGAHELA RIVER”

  24. Underground Injection Wastewater Disposal • Most common disposal method • Possible risks of seismic activity • Arkansas, 2010-11 • Texas, 2008 • Ohio, 1986 US DOE, 2009 “Modern Shale Gas: a Primer"

  25. Recycling and Reuse of Wastewater • Commonly used in the Barnett Shale, TX, Fayetteville Shale, AR and Marcellus Shale, PA • Energy intensive • Limits truck travel by treating on site • Concentrates Radioactivity Rigzone Staff, 2010 “Water Treatment Key to Hydraulic Fracturing's Future”

  26. Local Regulation by Ft Worth • Exposure to contaminates • Air Emissions • Noise and light • Scenic Effects • Truck Traffic City of Fort Worth, 2010 “City of Fort Worth Gas Wells”; Fort Worth City Managers Office, 2010. “Environmental Impacts of Gas Drilling”

  27. Local Impacts: Trucks • Requires between 4,300 to 6,500 truck trips per well • Damage to roads & bridges • Emissions & dust • Congestion Heavenrich, S. Oct 06, 2010. “FrackWaste Truckers Rack up 959 Safety Violations in Three Days” Marcellus-shale.us “Our look at Road Damage from heavy truck traffic”

  28. Leasing & Royalties for Property Owners Andrews, A, et al. 2009. “Unconventional Gas Shales: Development, Technology, and Policy Issues”

  29. Selected State Responses to Hydraulic Fracturing

  30. North Carolina Law • Oil & Gas Conservation Act of 1945 • Permits vertical drilling • Prohibits horizontal drilling • Establishes • Permit fees @ $50/well • Bonding @ $5000/well • Royalties @ $0.005/mcf (1000 cubic feet)

  31. Policy Options • Study economic and environmental advantages and disadvantages of developing shale gas in North Carolina • USGS/NCGS Resource Assessment, Spring 2011 • Learn from other States, the industry, EPA, and the public • States are primary regulators of this industry • Develop a comprehensive regulatory program/avoid inefficient, fragmented regulatory program

  32. Policy Options • 2010 UNC-CH-Duke Water Allocation Study recommended a moratorium on water withdrawals for shale gas until the Division of Water Resources completes hydrologic models for the appropriate river basins to ensure that water withdrawals will not adversely impact other water users • Collect baseline data before development

  33. Resources for States • State Review of Oil and Gas Environmental Regulations (STRONGER): • Hydraulic Fracturing Guidelines, 2010 • America Petroleum Institute (API) releases : • Hydraulic Fracturing Operations - Well Construction and Integrity Guideline, 2009 • Water Management Associated with Hydraulic Fracturing, 2010 • Practices for Mitigating Surface Impacts Associated with Hydraulic Fracturing, 2011 US Environmental Protection Agency (EPA) Potential Impacts of Hydraulic Fracturing on Drinking Water Resources – due 2012

  34. Contact Information Bill Holman Director of State Policy Bill.holman@duke.edu www.nicholasinstitute.duke.edu Aurana Lewis, MEM Aurana.lewis@duke.edu

  35. Extra slides follow

  36. Federal Statues: • Clean Water Act • Prevents discharges of oil and gas waste to waters of the US with a permit • CERCLA • Holds drilling companies accountable for all non-petroleum or natural gas pollution on site • Hazardous Materials Transport Act and Hazardous Materials Transportation Uniform Safety Act • Regulates the transport of hazardous fracturing chemicals to the site • Endangered Species Act • Functions when working on federal land

  37. Local Land Use Issues • Restricting well development in scenic areas • Requiring stormwater management plans • Requiring erosion control plans • Setting well spacing requirements • Mandating setbacks • Residences • Water bodies • Road ways • Setting Noise and Light Standards: • Setting hours of operation in urban areas

  38. Water Quality Issues: AR, CO, LA, OH, PA, WY • Pit and Tank Storage • Set standards for construction • Ensure compatible fluid or volatile compound containment • Spill Prevention* • Require spill prevention and containment pollution plans • Identify chemicals used in hydraulic fracturing • Well casing and cementing • Identify and test surrounding water wells before and after fracturing* • Require reporting of well casing and cementing logs * Not required in all States

  39. Water Quantity and DisposalWater Management Plans: Ex: Delaware River Basin Commission • Fresh Water Report • Obtain water use permit • Identify sources • Create Invasive Species Control Plan • Submit hydrologic report (groundwater) • Obey Pass-by flow guidelines • Record volumes delivered • Identify water conservation efforts • Waste Water Storage • Store only in enclosed tanks • Test for chemical constituents • Waste Water Report • Obtain waste disposal permit from approved facility • Address all wastewater produced on site • Record produced wastewater volumes • Record locations and volumes of disposal

  40. Hydraulic Fracturing Reporting STRONGER Recommendations: • Identification of contaminate migration pathways • Several states require identification and pre-testing of surrounding wells • Reporting should be required before and after hydraulic fracturing operations • Notification should allow time for state oversight of operations • Reporting should include • Identification of the materials used • Aggregate volumes of fracturing fluids • Proppant used • Continuous logs of fracture pressures

  41. Areas for Regulatory Consideration: • Truck Traffic Consideration • Air Quality Emissions • Gas Production • Diesel Equipment Usage • Fugitive Emissions • Chemical Transport Considerations • Leasing Issues

  42. Well Types: Vertical Well Spacing: 40 Acres Disturb: 2-3 Acres Horizontal Well Spacing: 640 Acres Disturb: 3-5 Acres Multiple Horizontal Well Pad Spacing: 640 Acres Disturbance: 4-6 acres DOE National Energy Technology Laboratory. 2009. “Modern Shale Gas Development in the United States: A Primer” StatOilHydro, 2011. “Multiple Well Pad Illustration”

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