On August 11, 2011, the Shale Gas Subcommittee of the Department of Energy’s SEAB released a report (“Shale Gas Report”) containing initial findings and recommendations for developing best practices to expand shale gas production in a manner that mitigates environmental risks and impacts and improves safety. At the request of President Barack Obama, the subcommittee was formed earlier this year by U.S. Secretary of Energy Steven Chu. The Shale Gas Report’s findings and recommendations intend to affect ongoing state and federal legislative debates over the proper approaches to existing operational and regulatory oversight of the shale gas production sector.

The key Shale Gas Report findings and recommendations (which are focused exclusively on production of natural gas and some liquid hydrocarbons from shale formations with hydraulic fracturing in vertical or horizontal wells), are set forth below.

  • Creation of Forum To Improve Public Information – According to the subcommittee, the creation of a national database to connect resources of public information with respect to shale gas development and production could assist in bridging the gap between the (1) public’s general understanding of shale gas development, and (2) production practices in the industry.
    • In theory, a national database containing information from various databases nationwide in comparable format, would permit the public easier access to environmental protection and safety measures. The national database could also permit regulatory bodies with a better tool to access and monitor trends in enforcement activities and permit industry members to analyze data on production trends to identity effective practices.
    • According to the subcommittee, this recommendation is not aimed at establishing new reporting requirements.
  • Emissions Risk Management – Shale gas production (e.g., exploration, drilling, venting/flaring, equipment operation, gathering and vehicular traffic) results in the emission of ozone precursors, particulates, toxic air pollutants and greenhouse gases (GHG), primarily methane. But knowledge of the extent, variability and scale of many shale gas production emissions is uncertain, making emissions oversight and mitigation best practices equally uncertain. On July 28, 2011, the U.S. Environmental Protection Agency (EPA) proposed a series of reviews and changes to existing Clean Air Act rules and regulations for certain emissions occurring as a result of oil and gas operations (VOCs, sulfur dioxide and air toxics). The subcommittee stated support for the EPA proposal and for additional federal adoption of new performance standards and rules addressing other types of emission sources involved in natural gas exploration, production, transportation and distribution activities.
    • The Shale Gas Report recommends industry and regulators immediately expand efforts to reduce air emissions using proven technologies and practices. Both methane and ozone precursors (VOCs and sulfur dioxide) were singled out as concerns. The subcommittee also suggests companies should be required to measure and publicly disclose air pollution emissions, including methane, air toxics, ozone precursors and other pollutants. Such disclosure should include direct measurement wherever feasible and characterization of chemical composition. It recommends enlisting a subset of producers in different basins, on a voluntary basis, to immediately launch project to design and implements measurement systems to collect air emissions data.
    • Finally, the report acknowledges GHG emissions associated with shale gas development will have wide-ranging influence on future regulations, federal energy policies, and industry carbon management strategies. The report recommends additional work should start immediately to establish reliable data on the life-cycle greenhouse gas impacts across all aspects of natural gas production, delivery and use. The subcommittee suggests a timetable for the assessment should be in place in the next year, and that the DOE Office of Science and Technology Policy should coordinate an interagency effort to identify sources of funding and lead agency responsibility.
  • Water Quality Protection Measures – As noted by the subcommittee, the EPA is currently undertaking a two-year study under congressional direction to investigate the potential impacts of hydraulic fracturing on drinking water resources. According the subcommittee:
    • Regulators and geophysical experts agree that the likelihood of properly injected fracturing fluid reaching drinking water through factures is remote where there is a large depth separation between drinking water sources and the production zone
    • ◦If methane migration from shale gas production occurs, it is likely the result of loss of well integrity from poor well completion (cementing or casing) or poor production pressure management.
    • Certain common principles should guide the development of integrated water management, including (1) the adoption of a life cycle approach to water management to track and report water flows from the acquisition to the disposal life cycle stages, (2) the measurement and public report of the composition of water stocks and flow throughout the water life cycle stages, and (3) maintaining a manifest of all transfer of water among locations.
    • States and localities should adopt systems for measurement and reporting of background water quality in advance of shale gas production activity, and such measurements should be publicly disclosed.
    • Regulatory entities should immediately develop rules to require disclosure of all chemicals in hydraulic fracturing fluids on both public and private lands.
  • Organizing and Implementing Best Practices
    • The subcommittee recommends the creation of a shale gas industry production organization dedicated to the continuous improvement of best practice through development of standards, diffusion of the standards and assessing compliance.
    • Certain best practice topics identified by the subcommittee include, but are not limited to (1) measurement and disclosure of air emissions including VOCs, methane, air toxins and other pollutants, (2) reduction of methane emissions from all shale gas operations, (3) integrated water management systems, (4) well completion, casing and cementing, and (5) characterization and disclosure of flow back and other produced water.
  • R&D Needs – The subcommittee believes that governmental agencies will need to sponsor R&D and analytic studies addressing topics that benefit the public or industry, but which do not permit individual firms to attain a proprietary position.
    • Examples may include environmental and safety studies, risk assessments, resource assessments, and longer-term R&D efforts including research on methane hydrates.
    • Without providing funding levels or assignments of responsibility to government agencies, the subcommittee noted that given the scale and growth of the shale gas resource, the federal government should sponsor some R&D for unconventional gas.

The subcommittee is scheduled to provide its secondary findings and recommendations 180 days from August 11, 2011. The subcommittee’s meeting agendas, the materials presented to the subcommittee, and public comments which shaped the subcommittee’s findings can be found at shalegas.energy.gov