Hydraulic Fracturing - Myths and Maneuvers

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Hydraulic Fracturing - Myths and Maneuvers

  1. 1. Hydraulic FracturingMyths and ManeuversPresented byCindy Bishop1August 26, 2012
  2. 2. Hydraulic Fracturing:Myths and ManeuversI. Hydraulic Fracturing 1011. What is it?2. Why do we care?3. What’s the problem?II. Regulations – Who’s on First?1. Texas2. EPAIII. Myths (Studies)IV. Maneuvers1. US v. Range Production Company2. Maryland v. Chesapeake Energy Corp.3. Town of Dish v. Atmos Energy, et al.2
  3. 3. General Steps•Obtain water source•Well construction•Fracing•Waste disposalFracing•Liquid pressure•Fissures•Propping agent•Flowback water3What is Hydraulic Fracturing (“Fracing”)?
  4. 4. 4
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  6. 6. 6•Natural gas heats ½ of US homes•Natural gas fuels more than 20% ofannual electricity production•Natural gas use will increase as coalplants are retired•20% of U.S. gas supply will be fromshale gas by 2020Why do we care?
  7. 7. NATURAL GAS PRODUCTION BY SOURCE (TCF/YEAR)It is projected that shale gas will comprise over 20%of the total US gas supply by 2020 (EPA)7
  8. 8. •Since 2003 15,675 gas wells drilledand fracked in North Texas•2,000 wells in Fort Worth8Effect Locally
  9. 9. 9
  10. 10.  About 1/3 flowbackliquid returns Disposal well Surface impoundment Land surface10
  11. 11. 11Waste Disposal – SurfaceImpoundment
  12. 12. 12WHAT’S THE PROBLEM?
  13. 13. Natural Gas in Well WaterWhat’s the Problem?
  14. 14. 14
  15. 15. 15•Water for fracing•Fracing•Chemicals in frac water•Methane release•Disposal of flowback water•Air emissions•Noise, light, odor•EarthquakesWhat’s the Problem?
  16. 16. Regulating FracingWho’s on First?16
  17. 17.  The Texas Railroad Commission hasprimary jurisdiction over oil and gasdrilling. Tex. Nat. Res. Code 81.051; 16 Tex. Admin Code 3.5 Texas Commission on EnvironmentalQuality has primary jurisdiction overconservation of natural resources andprotection of the environment 30 Tex. Admin Code 5.01217
  18. 18. • Well Drilling/re-completion• Disposal wells• Pits for storage of oil field fluids or oiland gas wastes.• Spills associated with production• Oil and Gas Waste• Applicable Regs: 16 Tex. Admin. Code 3.8 (Water Protection); 3.13(Casing, Cementing, Drilling, and Completion Requirements); RRCRule 38; 40 CFR 261.4(a)(12)• Surface casing program (eff. 9/1/11)18
  19. 19.  Disclosure of Fracing Chemicals (16 TAC § 3.29)◦ Applies to fracturing operations where RRC has issuedan initial drilling permit on or after Feb. 1, 2012◦ Supplier/service company to operator – 15 days aftercompletion of fracing◦ Operator to RRC – disclose into online database on orbefore submission of well completion report to RRC (30 days after well completion)19
  20. 20.  Disclosure of Fracing Chemicals (16 TAC § 3.29)◦ Disclose: Volume of water used Each fracing chemical Concentrations Suppliers◦ Exception for trade secrets20
  21. 21.  Surface water use Spills of hazardous substances Nuisance Odor Complaints Air Emissions◦ Permit by Rule (30 TAC §106.352) New PBR: applies to Barnett Shale operations constructedor modified after April 1, 2011◦ Existing operations in Barnett Shale claiming old PBRmust notify TCEQ by Jan. 1, 201321
  22. 22.  Memorandum of Understanding:16 TAC § 3.3022
  23. 23.  Wastewater discharges Stormwater Underground injection wells involving diesel TSCA § 8(c) NSPS/NESHAP revisions (final rule 8/16/12)23
  24. 24.  Energy Policy Act of 2005 specificallyexcludes hydraulic fracturing operations.◦ Exemption for: “The underground injection offluids or propping agents (other than dieselfuels) pursuant to hydraulic fracturingoperations related to oil, gas, or geothermalproduction activities.” 42 U.S.C. 300h(d)(1)(B)(ii).24
  25. 25.  No EPA action after 2005 Energy Policy Act Summer 2010 – EPA posts on its websitethat fracing with diesel requires a UICpermit August 2010 – Independent PetroleumAssociation v. EPA (D.C. Cir.)25
  26. 26. Federal Air RegulationsNSPS Revised:• Equipment Leaks (KKK)• SO2 (LLL) New (OOOO):• Hydraulic Fracturing• Gas-driven Pneumatic Devices, Centrifugal andReciprocating Compressors• Storage Vessels Applies to new facilities that were constructed ormodified after August 23, 201126
  27. 27. Federal Air RegulationsNESHAP Revised• Oil & Gas Production Facilities (HH)• Gas Transmission and Storage (HHH) New• Small Glycol Dehydrators• Storage Vessels at Major Sources Must Notify EPA within 1 year after rule becomesfinal27
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  29. 29. August 23NSPSApplicabilityJune 1-ishPredictFinalPublicationPhase I “Flare-Friendly”2011 2012 2013 2014 2015 2016 Etc.Phase II “Full REC”60 DaysfromPublicationAugust 1-ish Gas vented during flow-back for hydraulicfracturing of gas wellsmust be controlled andcontained, sold or used
  30. 30.  Chemical disclosure statutes in Arkansas,Pennsylvania, Wyoming and Colorado, Michigan,Texas, California Drilling moratoriums: NY, Maryland, PA30
  31. 31.  Barnett Shale◦ City of Fort Worth rules on drilling◦ Town of Dish blocks drilling◦ City of Dallas has not issued any drilling permits task force for considering drilling requirements31
  32. 32. 32
  33. 33.  Sampled 68 drinking water wells in PAand NY Methane concentrations were 17 timeshigher in water wells near active vs.inactive wells Methane was thermogenic “Methane Contamination of DrinkingWater Accompanying Gas Well Drillingand Hydraulic Facturing”33
  34. 34.  85% of wells sampled containedthermogenic methane – regardless oflocation No fracing fluid detected in shallowwater Water properties consistent withhistorical data Methane likely did not come from actualfracing34
  35. 35.  Methane is a GHG Fracing has a higher carbon footprint thancoal 3.6 to 7.9% escapes in fracing 1.7 to 6% escapes in regular drilling “Hogwash”35
  36. 36.  January 6, 2012 New Cornell Study Prior study was “seriously flawed” Fracing has a carbon footprint that is half toa third that of coal36
  37. 37.  2012 - EPA proposed year to releaseinterim results 2012 to 2014 - additional results to bereleased as particular investigationscompleted 2014 - EPA proposed year to releaseanother report37
  38. 38.  Draft Study – Dec. 8, 2011 Studied rural water wells in response tocomplaints Wells in area since the 1950s 169 production wells 33 surface pits EPA collected soil and gw samples Conclusions: (1) pits are a source ofshallow gw contamination (2) likely impactto gw from hydraulic fracturing38EPA Wyoming Study
  39. 39.  Draft Study – no peer review Area has a shallow gas field EPA drilled monitoring wells into a gasreservoir and found natural gas – duh Results from water well tests do not exceeddrinking water standards Pits are already in remediation program May 2012 - An independent review concludedfederal regulators had insufficient data tosuggest the natural gas drilling techniqueallowed methane to contaminate groundwater39EPA Wyoming Study - Problems
  40. 40.  UT Energy Institute Groundwater study in Barnett, Haynesvilleand Marcellus formations Findings – no direct link between fracingand groundwater contamination Undergoing independent review40UT Study
  41. 41.  Austin American-Statesman : “Study links fracking and earthquakes” Lubbock Avalanche Journal: “Study finds no relation between fracking,earthquakes”41UT Study – Part 2Earthquakes (August 2012)
  42. 42. LITIGATION42
  43. 43. • 12/7/10 – EPA issued EmergencyAdministrative Order against Range underSDWA• Methane in 2 drinking water wells in ParkerCounty “likely” due to fracing from Rangewells in the area43
  44. 44.  4/19/11 – Chesapeake well blowoutreleases flowback water ontoneighboring farmlands and into nearbycreek 4/29/11 – Maryland files Notice of Intentto Sue under RCRA and CWA◦ Injunctive relief◦ Attorneys’ fees 5/17/11 – Chesapeake Settles with PAfor $1 million44
  45. 45.  February 2011, Town of Dish, Texas suedsix natural gas pipeline companies that ownand operate compressor stations near thetown for releasing harmful substances intothe air45
  46. 46.  Allegations of Drinking WaterContamination◦ 4 cases in TX46
  47. 47.  Lone Pine Order◦ Expert Opinion on Causation◦ Data Showing Contamination◦ Medical Records◦ Evidence of Diminution in Value47
  48. 48.  Where’s the science? Evolution of Regulations/Laws48
  49. 49. Hydraulic FracturingMyths and ManeuversPresented byCindy Bishop49214-893-5646cbishop@cbishoplaw.comwww.cbishoplaw.com

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