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The Risks of Shale Gas Development: How RFF Is Identifying a Pathway toward Responsible Development

In November, several hundred people came to RFF—and even more joined the audience via live webcast—to listen to RFF experts and outside consultants discuss the opportunities and risks of extracting natural gas from shale. The turnout for the event was a testament to the keen interest in the shale gas development process—and to the strong opinions and confusion that the issue generates.

Depending on whom you ask, natural gas extracted from shale is the path to U.S. energy independence or the road to environmental destruction. The information available about the risks and value of shale gas and hydraulic fracturing is scattered and often contradictory, making it difficult for policymakers and regulators to determine how to take advantage of this promising energy resource while addressing the risks to the environment and the public.

RFF is working to remedy that. The November event, “Managing the Risks of Shale Gas: Charting a Pathway to Responsible Development,” marked the public launch of an 18-month initiative by RFF’s Center for Energy Economics and Policy (CEEP) to identify the risks of shale gas development and recommend strategies for responsible development. This analysis, made possible by a $1.2 million grant from the Alfred P. Sloan Foundation, will be the first independent, survey-based assessment of the key risks associated with the shale gas development process.

The project is led by Senior Fellow and Director of CEEP Alan Krupnick, and the team includes experts and scholars at RFF and around the country specializing in water management, natural gas drilling, risk management, cost–benefit analysis, hydrology, engineering, and geology.

“The ultimate goal of this project is to identify the perceived and potential burdens that shale gas development might impose on the environment and on the community, and to think about how industry and government might address those,’’ said Krupnick.

To get a clear inventory of the risks, RFF is surveying experts to identify the burdens of shale gas development and polling the public to understand its perception of those risks. Both surveys will challenge respondents to make explicit choices and tradeoffs to determine how people understand and prioritize risk.

The CEEP team developed a matrix that follows the activities involved in producing shale gas—from site preparation to drilling to well abandonment—through to their potential impacts on people and the environment. These “impact pathways,” combined with the results of the public and expert surveys, will highlight which specific shale gas development activities are associated with the risks that people care about the most. The team will then identify how regulations and voluntary industry activities are working to address those risks as well as how both groups can do a better job in the future.

“The idea is to map out for each activity the full set of potential burdens, the intermediate impacts, and the final impacts,” said RFF Fellow Sheila Olmstead, a primary researcher on the project, at the November event. “The final impacts matter in an economic sense to people and could be monetized in a benefit–cost framework.”

The CEEP team has visited shale gas drilling and production sites in the Marcellus Shale natural gas play in Pennsylvania to get a firsthand look at each stage of the development cycle. The tours—one on November 3 of Anadarko Petroleum Corporation’s Bull Run drilling sites and one a week later of Chesapeake Energy Corporation’s drilling operations near Towanda—provided a detailed view of the development process, from permitting to water use to drilling and fracturing.

Water management is at the center of much of the controversy. The CEEP team learned that Anadarko spent more than $100 million a year to transport water to its Pennsylvania sites until it invested in large-scale freshwater impoundments and pipelines, which lowered those costs by 30 percent. Chesapeake Energy said it uses as much as 5.6 million gallons of water in drilling, fracturing, and completing each well. Both companies are taking steps to eliminate the hundreds of truck trips required in this process. According to Olmstead, RFF already has begun a statistical analysis of surface water quality and its relationship to nearby shale gas wells, based on data from the Pennsylvania Department of Environmental Protection.

The expert consultants who presented their views at the November event had divergent opinions about shale gas development’s safety and environmental impact, especially on water.

“There have been no documented cases of groundwater contamination due to fracturing itself,” said Mukul Sharma, a professor and the “Tex” Moncrief Centennial Chair in Petroleum and Geosystems Engineering at the University of Texas at Austin.

James Saiers, a professor of hydrology at the Yale School of Forestry and Environmental Studies, said public worry that shale gas development could contaminate groundwater is not misplaced, as hydraulic fracturing can open pathways from the shale to the surface, such as through old abandoned wells. “I believe that in its heart of hearts, industry does not think this is an issue. But there hasn’t been a single study to test their hunch,” he said.

There is less debate about whether methane can reach the surface or groundwater through leaks in the borehole. Karlis Muehlenbachs, a professor at the University of Alberta in Edmonton, said he has used carbon isotope fingerprinting of methane, ethane, and propane to show that gas from shale formations has reached the surface. Muehlenbachs presented data suggesting that nearly 60 percent of natural gas wells show flaws in their casings and cements by the time they have been operating for 17 years or more. A buildup of sustained gas pressure within various casings surrounding the well bores can pose risks of casing failure and hydrocarbon leakage to groundwater, soils, or the air.

RFF’s project will help to illuminate the facts about the risks of shale gas development. For more information on this project, and for the November event video and slides, visit www.rff.org/ShaleGasRisks.

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