State Regulation of Hydraulic Fracturing

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Feb 22, 2014 (3 years and 10 months ago)

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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

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.

Dan River
Basin

Deep River
Basin

Shale Basins in North Carolina

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

Chatham

Lee

Moore

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

Shale Gas Production

Well Pad and
Road
Construction

Drilling

Hydraulic
Fracturing

Production/

Partial Well Pad
Reclamation

Re
-
Fracturing/
Well Closure

Thompson Bros, 2011. “
Nexen

Well Pad 9111 and Access Road.”

Well Pad and
Road
Construction


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


Construction

Time:


7


28 Days

(Bradford County, PA)


Drilling


Drilling, either vertical or
horizontal


Construct casing for
groundwater protection


Store drill cuttings

Granberg
, A. 2009. “Anatomy of a Gas Well”

Drilling

Time:


21
-
24 Days
(Chesapeake Energy)

Hydraulic
Fracturing


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



Fracturing

Time:


2


5 Days


40


100 Hrs

(Pumping)




New York Department of Environmental Conservation, 2009 “
Draft Supplemental Generic
Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory
Program, Chapter 5”

Production/

Partial Well Pad
Reclamation


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



Time:


7
-
10 years

(Harper, 2010)

Veil, J. 2010. “
Water Management Technologies Used by Marcellus Shale Gas
Producers”

Source: Harper, J. and Kostelnik, J. “The Marcellus Shale Play in Pennsylvania.” ref: Dewitt, 2008.


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

Re
-
Fracturing/
Well Closure

Cost Estimates for Production



Well Costs in the
Millions

Royalties

Finding and
Development Cost
(per Mcfe)

Haynesville

$7.20

25%

$1.48

Marcellus

$4.50

15%

$1.26

Barnett

$2.80

25%

$1.41

Fayetteville

$3.10

17%

$1.50

Colony Granite
Wash

$6.25

20%

$1.37

TX PH Granite Wash

$4.50

20%

$1.18

Average

$4.71

20%

$1.37

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

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


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

Water Quantity



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

Oct 2009


Aug 2010

Water Usage Data for 494
Haynesville

(TX
-
LA)

Shale Gas
Wells

Water Stats





Gallons
/Percent

Volume
(Gallons)

Groundw
ater

502,651,947





Fracturing

55%

275,151,196



Drilling Rig

44%

223,467,598



Other

1%

4,033,153

Surface Water

1,892,086,499





Fracturing

98%

1,853,007,067



Drilling Rig

2%

29,078,243



Other

1%

10,001,189

Combined Total



2,394,738,446


Source: Welsh, 2010 “
Creating Successful Community Partnerships



Carrizo
-
Wilcox Aquifer Collaboration in Louisiana”


Average Water Use per Well


4,828,464 gallons

Typical Aquifer


Keithville Compactor

Fracturing Source Aquifer


South Camp

Source: Lewis and Hanson, 2010 “A Watershed Approach”


Water Quality

Fracturing Fluids

Total

Estimated
Chemical
Usage/Fracture:


14,700 gallons


EPA, 2010. “Draft Hydraulic Fracturing Study Plan”

Skin, Eye and Sensory Organ


Respiratory


Gastrointestinal and Liver


Brain and Nervous Sys.


Immune


Kidney


Cardio. and Blood



Cancer


Mutagen


Endocrine Disruptors


Other


Ecological

Health Effects from Hydraulic Fracturing
Chemicals with CAS Numbers

Percent of Total Reviewed Chemicals

Source: Colburn, T. 2010. “Natural Gas Operations from a Public Health Perspective”

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


Water Quality

Constituents in Flowback Water

NYSERDA, 2009. "WATER
-
RELATED ISSUES ASSOCIATED WITH GAS PRODUCTION IN THE MARCELLUS SHALE"

Flow Back

EPA Drinking Water
Quality Standards

Min

Median

Max

Units

TDS (Brine)

1530

93200

337000

mg/L

NA

Metals*











Barium

0.553

661.5

15700

mg/L

2 mg/L



Strontium

0.501

821

5841

mg/L

NA

Radiation











Alpha Radiation

22.41

1414.5

18950

pCi
/L

15
pCi
/L



Beta

9.68

1395

7745

pCi/L

NA

Organics



Benzene

15.7

479.5

1950

ug/L

5
ug
/L



Etylbenzene

3.3

53.6

164

ug/L

700
ug
/L



Touluene

2.3

833

3190

ug/L

1000
ug
/L



Xylenes

16

487

2670

ug/L

10,000
ug
/L

From 56 flowback samples taken from PA and
WV

* These are the metals

limited by the PA DEP

Water & Air Quality

Prevent 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


Air Quality Issues

x = Directly Emitted Emission o = Indirectly Generated Emission

Earthworks 2010 “Sources of Oil and Gas Air Pollution”



Fugitive
Emissions

Dehydration

Vehicles

Flaring

Engines

Pits

Venting

Particulate Matter



x

x



x





Dust



x

x









Hydrogen Sulfide

x





x





x

Ozone

o

o

o



o





Carbon Monoxide





x

x

x





Nitrogen Oxides





x

x

x





Sulfur Dioxide





x

x

x





VOCs

x

x



x

x

x

x

BTEX

x

x



x

x

x

x

PAHs







x







Methane

x

x







x

x

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


500 mg/L (TDS Limit)

Chloride

Sulfate

TDS

TetraTech, 2009 “
EVALUATION OF HIGH TDS CONCENTRATIONS IN THE MONONGAHELA
RIVER”

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"

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”

City of Fort Worth, 2010 “City of Fort Worth Gas Wells”; Fort Worth City Managers Office, 2010. “Environmental Impacts of Gas

Dr
illing”




Exposure to contaminates


Air Emissions


Noise and light


Scenic Effects


Truck Traffic

Local Regulation by Ft Worth

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”

Leasing & Royalties

for Property Owners



Avg. Lease
Length

Early Leasing Level

2009
-

Leasing Level

Year

Bonus (per
acre)

Royalties

Bonus (per
acre)

Royalities

New York

3
-
5 years

1999

$5

12.50%

$3,000

15%
-
20%

Pennsylvania

5
-
7 years

2002

$12

12.50%

$2,900

17%
-
18%

West Virginia

---

2007

$5

12.50%

$1,000
-
$3,000

16%
-
18%

Texas

---

2000

$1,000

20%
-
25%

$10,000
-
$20,000

25%
-
28%

Andrews, A, et al. 2009. “
Unconventional Gas
Shales
: Development, Technology, and Policy
Issues”

Colorado


2009


House Bill 1292
regulates hydraulic fracturing impacts.

Ohio


2010


Senate Bill 165


Amendments made to many of Ohio’s oil and gas regulations to include provisions
for hydraulic fracturing.

Pennsylvania


July 2010
-

Changes to well casing and cementing rules to prevent blowouts and contamination.


June 2010


Limits for total dissolved solids, barium, strontium, chloride and sulfate in wastewater.



Nov 2010
-

Changes to erosion and sediment control plans for sites greater than 5 acres.

Wyoming


June 2010


Updates oil and gas regulations to require identification of hydraulic
fracturing chemicals


Amendments also include handling of well stimulation fluids


Selected State Responses to Hydraulic Fracturing






Alabama


2000


Extensive changes to oil and gas regulation, partly to regulate hydraulic fracturing in coal bed
methane wells.


2007



Passed the rule Hydraulic Fracturing of Coal Beds

Arkansas


2010
-

Added rule B
-
19
“Requirements for Well Completion Utilizing Fracture Stimulation”


2010



Moritorium

on injection disposal, extended and expanded in Jan 2011

Louisiana


2009


Order No. U
-
HS laid out rules regarding urban development of Haynesville Shale


2009



Oil and Gas amendment encouraging the reuse of flowback and produced water

Texas


2001



Fort Worth sets city ordinances regarding natural gas production in the city
area.

New York


1992

-
Generic Environmental Impact Statement on Oil and Gas Solution Mining Regulatory
Program


2010
-

Revised Draft Supplemental Generic Environmental Impact Statement in 2010

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)

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

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

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


Contact Information

Bill Holman

Director of State Policy

Bill.holman@duke.edu

www.nicholasinstitute.duke.edu

Aurana Lewis, MEM

Aurana.lewis@duke.edu


Extra slides follow


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
f
ederal land


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

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


Water Quantity and Disposal

Water 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

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
f
racture pressures


Areas for Regulatory Consideration:


Truck Traffic Consideration


Air Quality Emissions


Gas Production


Diesel Equipment Usage


Fugitive Emissions


Chemical Transport Considerations


Leasing Issues


Well Types:

Multiple Horizontal Well Pad

Spacing: 640 Acres

Disturbance: 4
-
6 acres


StatOilHydro
, 2011. “Multiple Well Pad Illustration”

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

Horizontal Well

Spacing: 640 Acres

Disturb: 3
-
5 Acres

Vertical Well

Spacing:
40
Acres

Disturb:

2
-
3 Acres