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Thursday, July 26, 2012

Key provisions of PA's gas drilling law voided by court - appeal to PA's top court filed - UPDATED

Pennsylvania's Commonwealth Court has thrown out key provisions of the state's Act 13 of 2012, which substantially revised Pennsylvania's natural gas drilling laws.  The controversial preemption of local zoning power and the Department of Environmental Protection's ability to waive setback requirements were rejected by the court.

An excellent synopsis of the decision and an annotated copy of it can be found here.

The case has been appealed to the state's Supreme Court by the Corbett Administration.

NRDC: state fracking disclosure laws miss the mark

The chemicals used in hydraulic fracturing - many of which are toxic or carcinogens - are the source of a significant degree of public concern.  The impact of their use is, at best, uncertain and controversial.  The concern is compounded by the thorny issue of disclosure of those chemicals - or lack thereof – that feeds continuing public angst, as evidenced by this coming Saturday's national day of action against fracking.  

The Natural Resources Defense Council (NRDC) has published and important brief: State Hydraulic Fracturing Disclosure Rules and Enforcement: A Comparison that is worth review.  (Full disclosure: I have been, though am not currently, a paid consultant to NRDC.)  Here is a short summary  of the brief by NRDC’s Amy Mall.

While industry leaders have called for their industry to be more transparent about chemical use, and while strides have been made, we are far from a nirvana of full disclosure or complete transparency, and thus far from calming the troubled public waters around a process that has reshaped our nation’s energy economy and which could, properly regulated, be the best available tool to combat climate disruption.

Wednesday, July 25, 2012

New Penn State study on Marcellus development: who has a say, who benefits? - UPDATED

Part of the public debate about Marcellus Shale development in Pennsylvania centers, rightly, on environmental and public health issues. But this big, complex issue involves much more.  Act 13 of 2012 sharply limits local control over natural gas development and has resulted in legal challenges and growing concern from disempowered local governments.  All of this occurs against a steady drumbeat of the industry and allied groups pounding away at the extraordinary – though sometimes exaggerated, or at least disputed - economic benefits of natural gas development.  

An important new study from researchers at the Penn State University College of the Agricultural Sciences’ Center For Economic and Community Development has provided needed perspective on some of these issues, looking at who has a voice in – and who benefits from – community-transforming Marcellus shale gas development in Pennsylvania.

Marcellus Shale: Land Ownership, Local Voice, and the Distribution of Lease and Royalty Dollars looked at land ownership in 11 Pennsylvania counties where most Marcellus gas drilling activity is occurring: Bradford, Butler, Clearfield, Fayette, Greene, Lycoming, Sullivan, Tioga, Washington, Westmoreland and Wyoming.  Land ownership determines who has a voice in decisions about drilling and pipeline development and how lease and royalty payments are distributed.

The researchers found that ownership of the land in these counties is concentrated among relatively few residents and people living outside the counties.  Half of the resident landowners in these counties control only about 1 percent of the land area.  So, the study found that the top 10 percent of resident landowners, plus outside landowners (both public and private), make the major leasing decisions that affect communities.  The majority of residents, according to the study, have relatively little "voice" - and renters have no "voice" at all - in the decisions that affect whether and how Marcellus Shale drilling will occur in those counties.

Similarly, the study finds that almost half of lease and royalty payments from Marcellus shale development will go to the top ten percent of the resident population in these counties, with much of the remainder – almost 40 percent - going to public or non-resident land owners. That leaves a little over 11 percent of lease and royalty income going to 90 percent of local landowners.

To be sure, local employment and business growth are major benefits of shale gas development.  But this study highlights some fundamental issues of local equity that need to be considered.  In a University press release, lead investigator Timothy Kelsey, professor of agricultural economics, said, “The decisions by nonresident owners and by the relatively small share of residents who own the majority of land thus can have profound implications for the quality of life for everyone else in the community."

July 26 UPDATE: Pennsylvania's Commonwealth Court has struck down the local zoning preemptions of Act 13.  An annotated version of the court's opinion is here.

Tuesday, July 24, 2012

Platts interviews CEO of waterless fracking company

Platts has posted a short video interview with Zeke Zeringue, the President and CEO of GASFRAC Energy Services, the company that uses liquid propane gel (LPG) in place of water for fracking.

In the 8 minute-long video, Zeringue discusses the technology, the early mishaps - explosions - that occurred using the technology, and improved safety measures that his company has developed.  He also discusses his what he says are the benefits of LPG fracking - increased production, reduced chemical use, and drastically reduced truck traffic - that make the process attractive economically.  He mentions the current water withdrawal restrictions in PA which have crimped drilling activity as another driver that favors the adoption of his company's process.

Zeringue said that GASFRAC is working in all of the shale basins in the US - including the Marcellus and Utica basins. While he does not think that water-based fracking will "ever go away," he sees LPG fracking as an increasingly attractive alternative - once it is proven and accepted.

That is the key.  The technology is viewed in the US as experimental. The technology will have to prove itself and the industry will have to accept it if it is to be widely deployed.  And before it can come into wide use, an understanding of the impacts of the technology will need to be developed. Regulations will undoubtedly have to catch up with this new technology, just as it still does with conventional fracking. Time will tell whether LPG and other waterless fracking technologies present an opportunity to safely and economically produce gas with reduced environmental and public health impacts.

Monday, July 23, 2012

Father of fracking calls for increased regulation

Another leader in the oil and gas industry has called for tighter government regulation of hydraulic fracturing.

A couple of weeks ago, the former CEO of BP Lord Browne, joined a growing chorus that is wisely calling for tougher regulations on fracking.  Now, in an interview with Forbes magazine, George Mitchell, the man who essentially invented the process of hydraulic fracturing to access oil and gas deposits in shale formations, has called for increased government regulation of the process.

Mitchell’s insights are illuminating and important.

He is quoted as saying:

“The administration is trying to tighten up controls. I think it’s a good idea. They should have very strict controls. The Department of Energy should do it.  Because if they don’t do it right there could be trouble.” 

Read that last line again.

Mitchell said that, “There are good techniques to make it safe that should be followed properly.”  He feels that most drillers are responsible, but “It’s tough to control these independents (which he characterized as ‘wild’). If they do something wrong and dangerous, they should punish them.”

The “it’s the independents that are the problem” line of thinking is something that deserves closer scrutiny.  An analysis of incidents and fines levied against drillers to see if that assertion is borne out would be an important exercise and inform continued public dialogue. But it would not obviate the need to more strictly regulate the practice of hydraulic fracturing – and all of its practitioners.  
According to the article, Mitchell dismisses any concern that the costs of complying with stronger regulations would be “egregious.” Extra costs associated with best practices would be passed on in the price of natural gas, says the article.

That is the conventional wisdom - often used by industry in arguing against tighter regulatory controls. Remember, however, the International Energy Agency has estimated that the costs of employing the highest standards for fracking are minimal.  They are also treated very favorably for tax purposes.   
There is no excuse for not implementing tougher regulations of fracking. It is a win-win-win-win.  It would benefit the public, the environment, the climate, and the industry.