Resources for the Future’s
Center for Energy Economics and Policy (CEEP)
Managing the Risks of Shale Gas:
Identifying a Pathway toward Responsible Development
Sheila M. Olmstead
N o v. 1 4 , 2 0 1 1
A new RFF study focuses on shale gas
development risks
• Managing the Risks of Shale Gas: Identifying a
Pathway toward Responsible Development
• Funded by the Alfred P. Sloan Foundation
• $1.2 million, 18 month timeline
New RFF shale gas study: goal and tasks
Ultimate goal:
• Develop recommendations for regulation & voluntary
action by firms to reduce risks cost-effectively.
Tasks, to that end:
1. Survey experts regarding the risks of shale gas
development.
2. Survey public perceptions, preferences regarding the risks
and benefits of shale gas development.
3. Assess drivers of and policy levers to reduce risks.
4. Assess current and prospective regulatory landscape.
Early work on task #1: assessing risks from
experts’ perspective
• Developing “risk matrices”: catalogs of potential risks
associated with specific shale gas development activities.
• Next step: develop pathways from shale gas development
activities to their impacts on human health, ecosystems,
markets, and quality of life.
• A survey of experts (academics, private industry, NGOs, and
regulators) will be developed from this work.
– Which risks are most salient?
– Can risks be ranked, relative to each other, taking uncertainty into
account?
Overview
Activities
Activities are the
components of the shale
gas development
process. They
encompass potential
sources of risk (from
clearing land to sending
the produced gas to a
major pipeline and to well
closure and
abandonment).
Off-road vehicle
activity: bulldozers
Burdens
Burdens are created
by the activities, such
as air pollutants,
drilling fluids, noise.
They potentially have
impacts that matter to
people.
emits
particulates
Intermediate
Impacts
Intermediate
impacts are to the
air, water, soil, etc.
in which the
burdens first
reside.
reduces
air quality
Final
Impacts
Final impacts are
the ultimate damage
to the environment,
human health, etc.
may have health
effects, e.g.,
increased risks of
respiratory distress
Activities
The shale gas development process has been broken
down into nine steps, which will be used to identify
sources of burdens and impacts.
1
2
3
4
5
Site development and
drilling preparation
Vertical drilling
Horizontal drilling
Fracturing and
completion
Well production and
operation
6
7
8
9
Flowback/produced
water storage/disposal
Shutting-in, plugging
and abandonment
Workovers
Upstream and
downstream activities
Sources of Burdens
1
2
3
4
5
6
7
8
9
Site development and
drilling preparation
Vertical drilling
Horizontal drilling
Fracturing and
completion
Well production and
operation
Flowback/produced
water storage/disposal
Shutting-in, plugging
and abandonment
Workovers
Upstream and
downstream activities
After locating a site, the area must be
leveled, excavated and prepared for drilling.
Sources of burdens include:
•
•
•
•
•
Storage of equipment and materials
Clearing of land for roads, well pads,
pipelines, evaporation ponds, other
infrastructure
Construction of roads, well pads, pipelines,
evaporation ponds, other infrastructure
On-road vehicle activity
Off-road vehicle activity
Sources of Burdens
1
2
3
4
5
6
7
8
9
Site development and
drilling preparation
Vertical drilling
This drilling technique bores a single well
shaft vertically into the desired formation.
Sources of burdens include:
Shutting-in, plugging
and abandonment
•
•
•
•
•
•
•
•
•
•
•
•
•
Workovers
•
Horizontal drilling
Fracturing and
completion
Well production and
operation
Flowback/produced
water storage/disposal
Upstream and
downstream activities
Drilling equipment operation at surface
Drilling of wellbore underground
Casing
Cementing
On-road vehicle activity
Off-road vehicle activity
Use of surface water and groundwater
Venting of methane
Flaring of methane
Storage of drilling fluids at surface
Use of recycled drilling fluids
Disposal of drilling fluids
Accidental releases from wellbore (e.g.
blowouts)
Disposal of drill solids, cuttings
Burdens
The activities create burdens, such as air pollutants, drilling fluids, and noise,
which have impacts that people care about.
Air pollutants
Fracturing fluids
Condenser &
dehydration additives
Drilling fluids &
cuttings
Flowback
constituents
Habitat &
community
disruptions
Saline water
intrusion
Produced water
constituents
Other
?
11
Burdens
Air pollutants
Habitat and community disruptions
Conventional air pollutants and CO2
• Volatile Organic Compounds (VOC)
Methane
Hydrogen Sulfide
Silica
Others
Habitat fragmentation
Industrial landscape
Light pollution
Noise pollution
Odor
Population increase
Road congestion
Seismic vibrations
Freshwater withdrawals
Stormwater flows
Other
Impacts
Intermediate impacts are to the air,
water, soil, etc. in which the burdens
first reside.
Groundwater
Final impacts are the ultimate damage to
the environment, human health, etc.
Human health impacts
Morbidity
Mortality
Surface water
Soil quality
Air quality
Market impacts
Agriculture
Tourism
Water-using industries
Other
Habitat disruption
Community disruption
Occupational hazard
Ecosystem impacts
Biodiversity loss
Endangered species
Other species population change
Other
Climate change impacts
Quality of life impacts
Recreation
Aesthetics
Time loss
Other
Creating Impact Pathways
Intermediate
Impacts
Activities
Burdens
Site development and
drilling preparation
Air pollutants
Groundwater
Human health impacts
Surface water
Market impacts
Vertical drilling
Drilling fluids and
cuttings
Soil quality
Ecosystem impacts
Air quality
Climate change
impacts
Horizontal drilling
Saline water intrusion
Fracturing and
completion
Fracturing fluids
Well production and
operation
Flowback constituents
(other than fracturing
fluids)
Flowback and produced
water storage/disposal
Produced water
constituents
Shutting-in, plugging
and abandonment
Condenser and
dehydration additives
Workovers
Habitat/community
disruptions
Upstream and
downstream activities
Final Impacts
Habitat disruption
Quality of life impacts
Community
disruption
Occupational hazard
Other
14
Creating Impact Pathways
Activities
Site development
and drilling
preparation
•
•
•
•
•
Storage of
equipment and
materials
Clearing of land for
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
Construction of
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
On-road vehicle
activity
Off-road vehicle
activity
Burdens
Intermediate
Impacts
Final Impacts
Creating Impact Pathways
•
•
•
•
•
Activities
Burdens
Site development
and drilling
preparation
Air pollutants
Storage of
equipment and
materials
Clearing of land for
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
Construction of
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
On-road vehicle
activity
Off-road vehicle
activity
Drilling fluids and
cuttings
Saline water intrusion
Fracturing fluids
Flowback constituents
(other than fracturing
fluids)
Produced water
constituents
Condenser and
dehydration additives
Habitat/community
disruptions
Other
Intermediate
Impacts
Final Impacts
Creating Impact Pathways
•
•
•
•
•
Activities
Burdens
Site development
and drilling
preparation
Air pollutants
Storage of
equipment and
materials
Clearing of land for
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
Construction of
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
On-road vehicle
activity
Off-road vehicle
activity
• Conventional air
pollutants and CO2
o Volatile Organic
Compounds
(VOC)
• Methane
• Hydrogen Sulfide
• Silica
• Others
Habitat/community
disruptions
•
•
•
•
•
•
•
•
Habitat fragmentation
Industrial landscape
Light pollution
Noise pollution
Odor
Population increase
Road congestion
Seismic vibrations
Intermediate
Impacts
Final Impacts
Creating Impact Pathways
•
•
•
•
•
Activities
Burdens
Site development
and drilling
preparation
Air pollutants
Storage of
equipment and
materials
Clearing of land for
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
Construction of
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
On-road vehicle
activity
Off-road vehicle
activity
• Conventional air
pollutants and CO2
o Volatile Organic
Compounds
(VOC)
• Methane
• Hydrogen Sulfide
• Silica
• Others
Habitat/community
disruptions
•
•
•
•
•
•
•
•
Intermediate
Impacts
Final Impacts
Groundwater
Surface water
Soil quality
Air quality
Habitat disruption
Community
disruption
Occupational hazard
Habitat fragmentation
Industrial landscape
Light pollution
Noise pollution
Odor
Population increase
Road congestion
Seismic vibrations
18
Creating Impact Pathways
•
•
•
•
•
Activities
Burdens
Site development
and drilling
preparation
Air pollutants
Storage of
equipment and
materials
Clearing of land for
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
Construction of
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
On-road vehicle
activity
Off-road vehicle
activity
• Conventional air
pollutants and CO2
o Volatile Organic
Compounds
(VOC)
• Methane
• Hydrogen Sulfide
• Silica
• Others
Habitat/community
disruptions
•
•
•
•
•
•
•
•
Habitat fragmentation
Industrial landscape
Light pollution
Noise pollution
Odor
Population increase
Road congestion
Seismic vibrations
Intermediate
Impacts
Final Impacts
Groundwater
Human health impacts
Surface water
Market impacts
Soil quality
Ecosystem impacts
Air quality
Climate change impacts
Habitat disruption
Quality of life impacts
Community
disruption
Occupational hazard
Creating Impact Pathways
•
•
•
•
•
Activities
Burdens
Site development
and drilling
preparation
Air pollutants
Storage of
equipment and
materials
Clearing of land for
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
Construction of
roads, well pads,
pipelines,
evaporation ponds,
other infrastructure
On-road vehicle
activity
Off-road vehicle
activity
• Conventional air
pollutants and CO2
o Volatile Organic
Compounds
(VOC)
• Methane
• Hydrogen Sulfide
• Silica
• Others
Habitat/community
disruptions
•
•
•
•
•
•
•
•
Habitat fragmentation
Industrial landscape
Light pollution
Noise pollution
Odor
Population increase
Road congestion
Seismic vibrations
Intermediate
Impacts
Final Impacts
Human health
impacts
Groundwater
Surface water
Soil quality
•
•
Morbidity
Mortality
Climate change
impacts
Air quality
Habitat disruption
Quality of life
impacts
Community
disruption
Occupational hazard
•
•
•
•
Recreation
Aesthetics
Time loss
Other
Creating Impact Pathways
Activities
Burdens
Intermediate
Impacts
Final Impacts
Morbidity
Conventional air
pollutants and
CO2
On-road
vehicle activity
Air quality
Climate change
impacts
Noise pollution
Community
disruption
Aesthetics
Road congestion
Time loss
Impact pathway development:
an interdisciplinary process
• The RFF team: several economists, one lawyer, one
environmental engineer, research assistants
• Input from physical scientists who are consultants on
the project (our panelists).
• Survey, itself, will tap an even broader range of
expertise.
Early work on task #3:
understanding risk drivers
• Some of this work will wait for results of expert and public
surveys, so that we analyze “drivers” of risks identified as
most salient (to both experts and public).
• Given 18-mo. project timeline, have started in two directions:
– Major data collection effort to support eventual empirical analyses of
risk drivers
– Early focus on surface water quality impacts in Marcellus (PA/NY)
Shale gas wells, WWTPs, and water quality
monitors in PA Marcellus
Surface water quality analysis, cont.
• Statistical analysis of relationships between:
– occurrence of surface water contaminants (e.g., TSS, TDS, Chloride) at
monitors; and
– density of shale gas wells in a monitor’s sub-watershed, shipments of
waste to private and municipal WWTPs upstream.
• Statistical analysis of factors that may be driving these
relationships, if any:
–
–
–
–
well characteristics
waste shipment characteristics
firm characteristics
regulatory environment
Several other analyses planned,
with other topics TBD after surveys
• Would like to do similar analysis for groundwater, but
haven’t identified a large-N database of groundwater
quality monitors (need pre- and post- drilling)
• Local road wear and tear/damage
• Air quality
Unique contributions of RFF study
• Focus on behavioral aspects of shale gas
development risks
– How individuals assess risks and benefits
– How behavior of firms, well operators affect risks
– How regulations have affected risks to date and might do so costeffectively in the future
• Analysis of public preferences and perceptions
– Structured economic survey will simulate tradeoffs between risk
reduction (firms, regs) and higher costs.
– Informs “monetization” of potential benefits of regulation/ voluntary
actions by firms, to be balanced against costs.