Unconventional Oil and Gas Regulations and Policy Relating to Local Environmental Impacts and Climate
By Barry Stevens, President, TBD America, Inc. September 1, 2013
This piece providesa basic insight into the way climate
change in conjunction with environmental and public
health concerns have triggered a regulatory response by
National, State and Local Governments. It will focus on
shale gas regulations and not those pertaining to tight
sandstones or coal bed methane.
A key element in the emergence of unconventional oil and
gas development in shale formations has been the
refinement of cost-effective horizontal drilling and
hydraulic fracturing technologies. Both horizontal drilling and hydraulic fracturing are established
technologies with a significant track record; horizontal drilling dates back to the late1940s, hydraulic
fracturing has a history actually going back as far as 1860’s, when nitroglycerine was used to stimulate
shallow, hard-rock oil reserves, Figure 1.
Horizontal drilling and hydraulic fracturing, along with the implementation of “protective”best practices
have allowed shale gas development to move into areas that previously were not accessible.Herein lays the
problem. Before; shale gas development was essentially sight unseen, and therefore, few had major
concerns about its impact on the environment and public health. Today, drilling can literally be in your
backyardand because of this the neighboring communitiesare in an uproar.
The O&G industry employs a battery of 600 standards and best practices that guide the operations of
exploration and production companies. This chart shows an overview of 112 API guidance and best
practices that support hydraulic fracturing, Figure 2.
This figure shows that 61standards address above ground activities, and 51 below surface activities.
Additionally, nearly 200 API standards are cited over 3,300 times in state regulations and more than 100
standards are citied 270 times in federal regulations.
Unconventional oil and gas development is regulated at almost all levels through the entire wells lifecycle
from cradle to grave. This chart shows the various shale gas development stages that are covered by
regulations; from preconstruction land leasing and seismic testing to end-of-life restoration and
abandonment, Figure 3.
Given the wells expected productive that spans many decades the fact of the matter is that pretty much
everything anyone does within the conventional and unconventional O&G industry is heavily regulated at
the federal, state, and local levels, often at multiple levels simultaneously.Characterizing the industry as “an
unregulated free for all” is simply not true.
Unconventional O&G development brings many socio-economic benefits such as job creation,
royaltypayments and changes in property values, Figure 4.However, it can also pose significant and costly
environmental and public health risks associated with:
water overuse, and
contamination of underground sources of drinking water and surface water resulting from spills, faulty
well construction, or by other means;
adverse impacts from discharges into surface waters or from disposal into underground injection wells;
stress on surface water and ground water supplies from the withdrawal of large volumes of water used
in drilling and hydraulic fracturing; and
air pollution resulting from the release of volatile organic compounds, hazardous air pollutants, and
Success of unconventional O&G development depends on whether society accepts it as a key contributor to
economic growth and development or opposes it, due to apprehension over potential adverse, long-term
impacts.Emerging from the confusion and hostility over the industry’s encroachment into ever more
densely populated regions, best practices are continually changing, and industry can anticipate that such
practices will be driving regulatory requirements as well as investor and community expectations.
Understanding and applying these practices and requirements will move the industry towards more
sustainable project development, capable of entering new markets with an under-developed regulatory
framework andmore vulnerable populations.
Sometimes it appears that the purpose of regulations is to generate jobs for lawmakers and attorneys.
However, the purpose of legislation is:
to establish reasonable and uniform limitations, safeguards, and regulations that will serve as a
standard for the exploration, development and production of oil and gas resources to protect the
health, safety, and general welfare of the public,
to minimize the potential impact to private and public property and mineral rights owners, and
to protect the quality of the environment; and encourage the orderly production of available mineral
Figure 5 shows the relative degree of control by government. In the U.S. with respect to who regulates and
how, the core involvement is states in nearly every stage of development.
States have historically regulated most aspects of the O&G industry and continue to do so. Even in areas
where other governments have important control, states are involved. So while the Federal Environmental
Protection Agency applies certain air and water regulations, the states are responsible to implement those
regulations. The EPA administers the regulations, the states figure out how to issue permits under those
Some states have started to preempt some federal regulations, which they do have the power to do. States
have the police power to regulate the health, safety and welfare of its citizens. States can then choose how
much power they want to delegate to local governments. Finally, some regional regulations have emerged
that apply to shale gas development and once again the states are highly involved.
In closing, new gas development brings change to the environmental and socio-economic landscape,
especially where exploration and production are new activities.
With these changes have come questions about the nature of unconventional oil and gas production, and
the ability of the current regulatory structure to protect public health and the environment.
Today, unconventional oil and gas recovery is accomplished within a solid framework of laws and
regulations that have been developed over many decades.
The challenge is to balance development and regulations between People, Planet and Profits, Figure 6.To
industry with its responsibility to its shareholders for increased profits; adopted, improved and
established best practices and standards, and
government with its responsibility to protect people and the planet - adopted, improved and establish
laws and regulations.
The opinions expressed in this article are solely those of the author Dr. Barry Stevens, an accomplished
business developer and entrepreneur in technology-driven enterprises. He is the founder of TBD America
Inc., a global technology business development group. In this role, he is responsible for leading the
development of emerging and mature technology driven enterprises in the shale gas, natural gas,
renewable energy and sustainability industries. To learn more about TBD America, please visit:
Barry Stevens, Ph.D.
TBD America, Inc.
September 1, 2013