Sharon Kelly's blog

Tue, 2014-03-11 05:00Sharon Kelly
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Fracking in Public Forests Leaves Long Trail of Damages, Struggling State Regulators

Last Wednesday, the Washington D.C. city council passed a resolution opposing fracking in the George Washington National Forest, making the nation’s capitol the third major U.S. city, after Los Angeles and Dallas, to decry the hazards of shale drilling in recent days.

The D.C. council’s resolution called on the U.S. Forest Service to prohibit horizontal hydraulic fracturing in the forest’s headwaters of the Potomac River, the sole source of water for the nation’s capital, citing the risks of pollution and the costs of monitoring for contamination.

It is unclear whether the DC City Council vote will hold any sway in determining the actual fate of the forest. The decision whether to permit fracking there primarily rests with the U.S. Forest Service, which is currently updating its long-term management plan for the George Washington National Forest.

As the debate over shale drilling intensifies in the nation’s capitol and across the country, Pennsylvania offers useful lessons for how states have mishandled their forests. Pennsylvania has been ground zero for Marcellus shale development and roughly two thirds of Pennsylvania’s state forest land lies above the Marcellus shale, one of the largest shale plays in the U.S.

Cornell University Professor Anthony Ingraffea recently reviewed state data on environmental violations in Pennsylvania state forests, including the 100,000-acre Loyalsock forest in the north central part of the state, a popular tourist destination and the focus of a local controversy over fracking.

What Mr. Ingraffea found highlights the hazards of drilling and demonstrates how a powerful industry can overwhelm regulators’ capacity to protect against environmental harms.

State regulators, the data revealed, have been unable to adequately keep tabs on drilling on state lands.

Over 59 percent of the Marcellus wells already drilled in the Loyalsock had never been inspected, Prof. Ingraffea found, and over a quarter of wells on state lands had no inspection reports available to the public.

Tue, 2014-03-04 05:00Sharon Kelly
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The View from Europe: America’s Shale Boom Looks More Like a Blip

The fracking boom has progressed at breakneck speed across the U.S., with roughly one in 20 Americans now living within a mile of a well drilled since 2000.

So, how much has the economy benefitted from this drilling surge?

Not much, according to a report presented to the European Union Parliament last month, which found “no evidence that shale gas is driving an overall manufacturing renaissance in the US.”

The shale boom’s economic contributions are very narrow, inflating local economies in places where drilling is intense but generating little impact on the country’s overall economic growth, the Institute for Sustainable Development and International Relations, a French think tank, concluded.

Although natural gas prices have fallen from their highs in 2008, benefitting consumers, those low levels are unlikely to be sustained and the U.S. is still expected to remain heavily reliant on importing crude oil, the researchers found.

Even using very optimistic assumptions, the report said, the industry’s cumulative long term effect on America’s Gross Domestic Product (GDP) will be less than one percent. “Despite very low and ultimately unsustainable short-term prices of natural gas, the unconventional oil and gas revolution has had a minimal impact on the US macro-economy,”

That’s not the amount that shale gas will add to the economy each year, the researchers said. Instead, the industry will make up no more than 0.84 percent of total GDP between 2012 and 2035 – the years when the shale boom is projected to be at its height. To put that in context, the personal care products industry – hair styling, cosmetics and the like – contributed 1.4 percent of GDP in 2010 – nearly double the impact that the EU report found the shale gas rush could have.

Mon, 2014-02-24 05:00Sharon Kelly
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Cold Weather Brings Wild Swings in Natural Gas Prices Despite Shale Gas Rush

Last year, natural gas prices hit record lows and shale gas promoters confidently predicted a bright future of stable low prices, making the fuel the best choice for home heating and electrical generation alike.

But last year was also marked by an unusually mild winter amid a still-sluggish economy. This year, cold winter weather returned across much of the U.S.– and consumers and utilities have begun to confront a strikingly different reality. Natural gas prices immediately spiked as high as $8.15/mmBTU Henry Hub this month – the most expensive prices seen since the 2008 economic collapse – as demand for power and heat surged.

And that $8.15 represents the daily price at a Louisiana pipeline hub often referenced by traders and federal energy analysts; regional prices have spiked far more dramatically. In the frigid Northeast, local prices have skyrocketed this year, with some operators paying up to $120 per mmBTU. “I’ve never seen anything like this,” one New Jersey power company executive told Bloomberg Businessweek in January. The spike’s effects have even reached as far south as East Texas, where spot prices topped $40/mmBTU, nearly reaching the highs seen in 2004 when the current onshore drilling rush began in the Barnett shale.

Keep in mind that the same amount of natural gas cost only $1.92 in April 2012.

That’s a little like suddenly finding out that a McDonalds burger that used to be 2 bucks will now cost you as much as full dinner at a five star restaurant.

These massive fluctuations in natural gas prices over the past year drive home a vital point: natural gas has always been prone to sudden booms and busts. The idea that shale gas – less than ten percent of the nation’s natural gas production and some of the most expensive to produce – could fundamentally transform the natural gas market, keeping prices consistently low, now seems more like a pipe dream than ever before.

Already, utilities and their customers are paying the price.

Fri, 2014-02-14 12:40Sharon Kelly
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New Study Shows Total North American Methane Leaks Far Worse than EPA Estimates

Just how bad is natural gas for the climate?

A lot worse than previously thought, new research on methane leaks concludes.

Far more natural gas is leaking into the atmosphere nationwide than the Environmental Protection Agency currently estimates, researchers concluded after reviewing more than 200 different studies of natural gas leaks across North America.

The ground-breaking study, published today in the prestigious journal Science, reports that the Environmental Protection Agency has understated how much methane leaks into the atmosphere nationwide by between 25 and 75 percent — meaning that the fuel is far more dangerous for the climate than the Obama administration asserts.

The study, titled “Methane Leakage from North American Natural Gas Systems,” was conducted by a team of 16 researchers from institutions including Stanford University, the Massachusetts Institute of Technology and the Department of Energy’s National Renewable Energy Laboratory, and is making headlines because it finally and definitively shows that natural gas production and development can make natural gas worse than other fossil fuels for the climate.

The research, which was reported in The Washington Post, Bloomberg and The New York Times, was funded by a foundation created by the late George P. Mitchell, the wildcatter who first successfully drilled shale gas, so it would be hard to dismiss it as the work of environmentalists hell-bent on discrediting the oil and gas industry.

Thu, 2014-02-06 08:58Sharon Kelly
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In Pavillion, Wyoming Water Contamination Case, Questions Continue To Swirl About Oil and Gas Industry's Role

A funny thing happened when Idaho Dept. of Lands Oil and Gas Program Manager Robert Johnson stepped to the microphone at a public hearing this past fall. He said something that many have long suspected, but few officials have actually been willing to say bluntly and publicly.

He said that the oil and gas industry was responsible for the contaminated groundwater in Pavillion, Wyoming — referring to a high-profile case where environmentalists have alleged oil and gas drilling and fracking caused a town’s water supplies to go bad.  

Everybody's heard of Pavillion, Wyoming,” Mr. Johnson said. “OK. Pavillion was a leaking above ground pit that was not lined.”

Did the industry cause it?” Mr. Johnson said. “Yes they did.”

Later in his talk, Mr. Johnson also pointed to a faulty cement casing in a natural gas well as another factor in the case, describing EPA data showing pollution was caused “by a bad cement job on an Encana well that was drilled in 1985.”

His statement is noteworthy because, before coming to Idaho, Mr. Johnson was directly involved with the Pavillion investigation. He worked for the groundwater division of the Wyoming State Engineer’s Office, which has taken the lead role in the contamination investigation.

The comments, which were recorded by county officials and distributed by anti-drilling advocates, were also significant because they were so candid and because the state of Wyoming maintains that more study is needed before blame can be assigned. The state is currently investigating the Pavillion incident and expects to publish a report in September of this year.

Asked about the comments, Idaho state officials said that the remarks about wastewater pits were intended “to illustrate that the State of Idaho requires lined pits to avoid surface contamination,” adding that Mr. Johnson, an Idaho official, was not speaking on behalf of the State of Wyoming. Mr. Johnson worked for the oil and gas industry before joining the Wyoming State Engineer’s Office.

Wed, 2014-02-05 05:00Sharon Kelly
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At State and Federal Level, Regulators Continue to Struggle With Fracking Wastewater

The oil and gas industry often complains about the patchwork of rules that exist from state to state and county to county. They say that the rules are so variable that it’s like having to get a new driver’s license every time you drive across a state line. Public safety advocates suggest a simple fix: federal oversight of drilling. Standardize the rules. But the drilling industry recoils at the very notion.

Several recent developments illustrate exactly why. Witness the two diametrically opposed directions federal and state regulators are heading. Officials at the U.S. Environmental Protection Agency, on the one hand, are considering strengthening rules on how oil and gas wastewater is handled by classifying some of it as hazardous waste. Meanwhile, state regulators in Pennsylvania, where the most active Marcellus shale drilling is currently underway, are considering a move to loosen wastewater rules.

Pennsylvania is currently poised to enact rules that would encourage oil and gas companies to use the heavily polluted wastewater from abandoned coal mines, called acid mine drainage, instead of fresh water. While supporters of this rule change say it’s a win-win situation for the environment and for drillers, opponents of the bill say that a key incentive in the bill goes overboard and could wind up creating worse problems down the road.

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