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Boom & Bust, Boon or Bane: Shale Gas Fever Spreads

| Friday August 22nd, 2008 | 1 Comment

midas-shale_playmap_tn.jpg Huge amounts of relatively clean burning natural gas lie underground across extensive stretches of the U.S., trapped in shale deposits. Raising large amounts of capital and bearing the expense and risk of developing new drilling and production technology, pioneering oil and gas companies are now reaping the rewards, as was seen in Part One of this two part series.
Record high prices have added fuel to an initial shale gas boom that began with Barnett Shale gas production around Forth Worth, Texas. Exploration and production has spread across neighboring Arkansas, Louisiana and Oklahoma and up into western Pennsylvania and New York. It’s also made the jump across the border into Quebec, where Forest Oil’s April announcement that it had discovered what it believes is a commercially viable deposit in the St. Lawrence Valley sent share prices of companies with leases in the area soaring.
As shale gas fever spreads and drilling and production increases, the environmental costs are becoming increasingly apparent, however. Reports of contaminated water supplies, sinking water tables, explosions and drilling accidents are on the rise, even as shale gas drilling spreads into densely populated urban areas, prompting calls for greater oversight, regulation and rules to protect neighborhoods and the environment.


Threatened water supplies
The possibility of contaminating New York City drinking water has prompted city officials to demand that the State Department of Environmental Protection ban natural gas drilling and establish a one-mile buffer zone around the Ashokan Reservoir and each of the six major Catskill Mountains’ reservoirs spread across five counties, as well as the connecting infrastructure, that supply the city’s drinking water, according to an August 6 ProPublica news report.
The Catskill reservoirs, aqueducts and measures to protect them are the main reasons New York City is one of only four major U.S. cities with a special permit that allows its drinking water to go unfiltered. If that status was revoked, the city would have to build a water treatment facility that could run as much as $10 billion, more or less what it’s estimated the state would earn from developing natural gas resources over the next ten years, according to ProPublica’s report.
It’s growing interest in exploring and drilling for natural gas trapped in the Marcellus Shale, a rock formation that stretches across from southeast Appalachia east and north through south central New York State and New York City’s watershed, as well as what city officials fear are casual, off-hand reassurances from the state environment department that shale gas drilling and exploration will not threaten the reservoirs and New York City’s drinking water supply that led city officials to send a formal letter to their state environmental agency counterparts.
Reassurances but little or no actual oversight
The New York City officials have good cause for concern, and a growing amount of evidence to support their concerns and calls for more stringen, more comprehensive environmental protection and transparent oversight.
Shale gas drilling and production is highly water-intensive. Liberating natural gas from shale and getting it to flow from depth to the surface requires large, reliable water supplies, which are mixed with drilling mud, grit and chemicals to fracture, or “frack,” the tightly compressed shale to facilitate gas flow.
Each shale gas well on average requires 4.5 million gallons of water, and there can be many wells on a single site. After it’s used the recovered, tainted water is trucked out and disposed of, how and where no one outside the oil and gas companies and their contractors apparently knows, and they aren’t saying.
More than 1,000 wastewater spills have affected drinking water supplies in other states, according to ProPublica’s report.
The public interest group and WNYC public radio conducted an investigation that found that New York State “had not adequately assessed the risks and did not have a regulatory structure in place to determine where the immense amounts of water used come from, or how it would be disposed of after it was used.”
Federal legislative changes passed during the Bush Administration’s tenure changed the toxic chemicals reporting act so that companies do not have to publicly disclose or report the types, volumes and usage of toxic chemicals to government authorities. Shale gas companies, and other users of toxic chemicals, can consider them proprietary, trade secrets and thus avoid having to disclose or report.
Down Home in Texas
anti-urbanshalegasdrillingyardsign.jpg The regulatory environment back in Fort Worth and Texas is even less stringent and even more prone and ill-equipped to take the issue on in a through manner and long-term perspective.
The Texas Railroad Commission, which traces its roots as the state’s oil and gas industry regulator back to the late nineteenth century and the first discovery of oil in the Lone Star State, does not require shale oil and gas companies to conduct any type of environmental impact study as part of granting exploration and production permits.
Shale gas drilling rigs are sprouting up in neighborhoods around Fort Worth, as residents opt for relatively small monthly royalty checks sold door-to-door through land agents who put together batches of small urban property leases for shale gas companies.
As drilling rigs begin to threaten well-to-do enclaves, Fort Worth residents are increasingly vocal and organized in raising concerns about the loss of neighborhoods and declining property values as the obstructions, noise, water, land and air pollution, as well as loss of livestock and crops, associated with drilling and production grows.
This has prompted Chesapeake Oil, the second largest producer of shale gas in the Forth Worth area, to roll out a nearly ubiquitous multimedia promotional campaign that includes enlisting Tommy Lee Jones to act as a corporate spokesperson on TV, radio and billboard advertising throughout the city and environs. The company has even gone so far as to hire veteran TV news reporters to moderate its own shale gas TV program.
Chesapeake is also lobbying on Capitol Hill for increasing support for shale and natural gas exploration through the American Clean Skies Foundation, which company CEO Aubrey McClendon founded and serves as chairman.
The Industry Side
shalegaspromotommyleejones.jpg Industry participants and shale gas proponents’ claim that the risks are being overblown and that fears being fanned unnecessarily. The industry says proper regulations are in place, and that most of the reports of contamination come from collapsed wells – not the fracing that takes place in shale drilling.
“I’m not saying there has never been a problem with an oil and gas well, but the case against hydraulic fracing has been notoriously poor,” Lee Fuller, a spokesman the Independent Petroleum Association of America, according to a July 29 CNN Money report.
Fuller argued that water contamination and other environmental risks need to be put in proper perspective: “There may be hundreds of cases of contamination, but the country has some 800,000 oil and gas wells,” he was quoted as saying.
Amy Mall, a policy analyst for the Natural Resources Council, was in general agreement but told CNN Money that regulators and regulations are inadequate. “Obviously, natural gas is important and we don’t have any interest in shutting down the operations,” according to CNN Money. “But all the right policies might not be in place.”
She came up with a simple and effective suggestion to rectify the situation at minimal cost: she called shale gas companies to inform state officials what chemicals they are using, how much of them, and how they are being disposed of.


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  • http://jonathanstray.com Jonathan Stray

    In what sense is natural gas “clean”? It’s still carbon dioxide when you burn it.
    Shouldn’t the money going to into shale be invested in sustainable energy instead?