Hydraulic Fracturing: A Technical
and Legal Primer
Marcellus Shale Development and Pennsylvania:
What Lessons for Sustainable Energy?
September 27, 2013
James R. May, Esq.
Professor of Law
Professor of Graduate Engineering (Adj.)
Co-Director, Widener Environmental Law Center
jrmay@widener.edu
1
We must develop our domestic
resources safely, responsibly,
and efficiently.
President Barack Obama, Blueprint for a
Secure Energy Future, March 30, 2011
Presentation Outline
• Hydraulic Fracturing in a nutshell
• Federal Regulation of HF
– Federal legislation
– EPA Activities
• State, Local and Global Regulation of HF
• Emerging Legal Issues in HF
4
Hydraulic Fracturing in a Nutshell
•
•
•
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•
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How shale gas forms
Description of “hydraulic fracturing”
History
Process
Potential production and reserves
Some environmental impacts
5
How Does Shale Gas Form?
• Fossil fuels are the product of the decomposition of carbonbased life forms, called organic matter, e.g., plants and
animals.
• Due to decomposition, pressure, compaction and core
heat, some of this organic matter converts to tight rock
formations, known as “shale strata.”
• This shale embeds natural gas and petroleum in two types
of formations known as “plays”:
– Shallow plays within one mile of the surface that embeds
“newer” (few million years old) gas produced by biological
processes, referred to as “biogenic “ methane gas.
– Deep plays 1-8 miles from the surface produced over hundreds
of millions of years, covered and compacted millions of times
over by other geologic formations (e.g., soil, glaciers, water, etc.)
and subjected to thermal conversion by the Earth’s core,
referred to as “thermogenic” methane gas.
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What is “Hydraulic Fracturing?”
• “Hydraulic fracturing” is a process that injects
large amounts of water under pressure to shatter
shale strata and thereby liberate and capture the
gas and oil embedded within it.
• “Vertical” hydraulic fracturing has been used
industrially for 100 years in the United States
primarily to reach biogenic deposits contained
within shallow shale plays.
• “Horizontal” hydraulic fracturing is a newer
process used primarily to reach the thermogenic
deposits contained in deep shale plays.
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Hydraulic Fracturing: History
• HF was first tested in 1903 and first used
commercially in 1948.
• Most onshore oil and gas wells undergo some
form of HF during their lifetime, usually in the
final, least-commercial production phase, if
market conditions warrrant. Crumbs.
• HF had been applied to one million wells by
1988.
• Nowadays, about 35,000 wells per year in the
U.S. undergo some sort of HF.
Natural Gas Extraction: Expansion
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HF: Potential Reserves and Yield
• Department of Energy Estimates:
– 1,750 Tcf technically recoverable
– 250 Tcf in proved reserves
• DOE: Shale/tight sandstone gas & CBM could account
for 60.0% of onshore natural gas reserves
• NGA: Fracking adds 30% to estimated recoverable
hydrocarbon reserves in the U.S.
• EPA: Marcellus Shale area – roughly size of Greece –
estimated to contain more than 500 Tcf of natural gas.
HF: Processs
Generally, three basic steps
– “The Pad”: Inject hydraulic fluid, without proppant, into target
formation
• Pumped at about 100 bbl/minute; Pressure: around 14,000 psi
• Pressure tests conducted to check for leakage into neighboring formations
– Add “proppant”
• Proppant—sand, ceramics, wire mesh, sintered bauxite
• Proppant carried into fractures—designed to hold the fractures open for
flow
– Flush the reservoir
• 20-50% return—although anecdotal data from industry says 80% or more
– Produce the gas normally thereafter. Productive for 1-2 years.
Geometric decline over time.
– Total amount of fracking fluid use per well in the Marcellus: 1-5
million gallons
HF Fluid Composition
Generally, fracking fluid is composed of:
– Water—95% or more
– Proppant—typically sand, ceramic beads, wire mesh
– Surfactant (promotes flow into/out of the formation)
• 12-20 different chemicals per site
• More than 1,000 overall, including chemicals that are
irritants and probably or potentially carcinogenic,
teratogenic, mutagenic, or otherwise toxic
Overview of Hydraulic Fracturing:
Water Use
Adverse Environmental Effects
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Some Causes of Environmental Effects
• Construction/Maintenance:
– Road construction
– Soil Compaction
– Habitat destruction by
construction and footprint
– Air pollution
• Operation:
– Casing or piping failures
– Groundwater contamination,
including drinking water
– Surface water discharges
– Gas leaks
– Gas migration
– Air pollution & Flaring
• Flooding (next slide)
• Distribution (pipeline)
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Compaction
Rights of Way disturbance
Habitat fragmentation
Edge effects
Gas leaks
Traffic/road wear
And, of course, using the gas as
a commercial or industrial
product
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Frack Flooding? From Drill Colorado
Last Friday:
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Federal Law and HF
• National Environmental Policy Act (requires environmental studies
for major activities)
• Clean Water Act (requires permit for discharges)
• Safe Drinking Water Act (contaminant levels and standards to
protect drinking water aquifers)
• Emergency Planning and Community Right to Know Act (requires
disclosure of releases and location of toxic chemicals)
• Resource Conservation and Recovery Act (manages hazardous
wastes)
• Comprehensive Environmental Response, Compensation and
Liability Act (responds to releases of hazardous substances)
• Clean Air Act (permits/controls on toxic and methane emissions)
• Toxic Substances Control Act (requires study and registration of
significant new uses of chemicals)
• FRAC ACT of 201X
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As applied to HF: Section 390 of the Energy
Policy Act of 2005: Certain Oil and Gas Drilling
Activities are “subject to a rebuttable
presumption that the use of a categorical
exclusion under the National Environmental
Policy Act of 1969 would apply if the activity is
conducted pursuant to the Mineral Leasing for
the purpose of exploration or development of oil
or gas…”
(No Environmental Impact Assessment)
National Environmental
Policy Act
Ordinarily: Requires completion of an
“Environmental Impact Statement” for “major
federal actions significantly affecting the quality
of the human environment,” based upon
preparation of an “environmental assessment”
Clean Water Act
Ordinarily: Prohibits discharges of pollutants
without a permit.
As Applied to HF:
Injection: The term “pollutant” does not include:
“water, gas, or other material which is injected
into a well to facilitate production of oil or gas,
or water derived in association with oil or gas
production and disposed of in a well, if the
well-used either to facilitate production or for
disposal purposes is approved by authority of
the State in which the well is located, and if
such State determines that such injection or
disposal will not result in the degradation of
ground or surface water resources.”(States
routinely make such determinations)
Direct Discharges into Surface Waters: Zero
discharge standard
Indirect Discharges (stormwater runoff, erosion,
etc.): Exempts most oil and gas field activities
Applied to HF: EPA refused to apply to HF, until
ordered to do so: “EPA's argument that a
methane gas production well is not an "injection
well" because it is used primarily for gas
extraction is spurious…In view of clear statutory
language requiring the regulation of all such
activities, they must be regulated, regardless of
the other uses of the well in which these
activities occur.” Leaf v. EPA (1997).
Safe Drinking Water Act
Ordinarily: The SDWA contains a program
designed to protect underground sources of
drinking water (USDW) from contamination
from underground injection, known as the
“Underground Injection Control Program” (UIC).
2. Both injection of diesel fuels during hydraulic
fracturing and injection of flowback and/or
produced water is subject to UIC permitting
requirements – mostly by “primacy” States
3. In May 2012 EPA issued draft permitting
guidance for EPA permit writers addressing oil and
gas hydraulic fracturing using diesel fuels.
Comment period closed August 2012.
Safe Drinking Water Act
More recently …
1. In 2005, Congress enacted the National Energy
Policy Act to revise the definition of “underground
injection” to exclude “the underground injection of
fluids or propping agents (other than diesel fuels)
pursuant to hydraulic fracturing operations related
to oil, gas, or geothermal production activities.”
(Halliburton loophole)
Emergency Planning and
Community Right-to-Know
Act
Ordinarily:
1. Requires companies to report
releases of chemicals under
ground, onto land, or into water
or air for publicly available
inventory; and,
2. Requires companies to maintain
information on location, types and
amounts for hazardous chemicals
for use by emergency personnel
As applied to HF: Exempts releases
from HF and other O & G
operations
As applied to HF:
-HF Fluid is considered to be a “Federally
Permitted Releases”:
“any injection of fluids or other materials authorized
under applicable State law (i) for the purpose of
stimulating or treating wells for the production of crude
oil, natural gas, or water, (ii) for the purpose of
secondary, tertiary, or other enhanced recovery of crude
oil or natural gas, or (iii) which are brought to the
surface in conjunction with the production of crude oil or
natural gas and which are reinjected.”
Comprehensive Environmental
Response, Compensation, and
Liability Act
Ordinarily:
-CERCLA requires removal and clean up of
sites contaminated by hazardous substances.
-CERCLA requires that reporting of “releases”
of hazardous substances, including into
ground.
-HF fluid is a hazardous substance.
As applied to HF:
• Pursuant to congressional instruction in 1988, EPA
determined that HF and other O & G injection fluids
do not warrant regulation as hazardous wastes.
Resource Conservation and
Recovery Act
Ordinarily:
• Producers must make sure hazardous wastes are
treated, stored and disposed properly.
• Transporters must follow DOT labeling and route
requirements
• Owner/operators of treatment, storage and disposal
facilities must obtain a permit and comply with
technology and performance standards
As applied to HF:
1. NSPS for Oil and Gas Production Industry, promulgated
April 2012. Identified unregulated sources of emissions:
–Well completions (and re-completions)
--Pneumatic controllers
--Storage vessels (condensate and crude oil tanks)
2. Sets NSPS for Well Completions (and re-completions),
but allows combustion “flaring” for certain wells (wildcat,
delineation, and low pressure wells) and for portion of
flowback emissions where green completion is not feasible.
3. MACT not set for HF facilities.
4. States can still regulate, but usually don’t.
Clean Air Act
Ordinarily:
1. Requires “New Source Performance Standards” for new
stationary source emitters
2. Requires permit and use of “Maximum Achievable
Control Technology” (MACT) for mid- to large-size
sources
As applied too HF:
1. EPA (and CDC) have not applied TSCA to HF or
chemical constituents.
2. In August 2011, Earthjustice and others petitioned
EPA to use TSCA to issue rules requiring makers of
chemicals used in oil and gas production to provide
information to EPA on the health effects of these
chemicals.
3. In November 2011, EPA notified the petitioners that it
is partially granting the petition and will initiate a
rulemaking process to obtain data on chemical
substances used in HF to complement state well-bywell disclosure programs.
4. No rule or proposed rule as of yet.
Toxic Substances Control
Act
Ordinarily: Requires registration of certain toxic
chemicals and/or processes or practices. Process
usually commences with a call for information and
studies about the health impacts of exposure.
CONGRESSIONAL DEVELOPMENTS:
“FRAC” ACT OF 2009, 2010, 2011, 2012
“A bill to amend the Safe Drinking Water Act to repeal a certain
exemption for hydraulic fracturing, and for other purposes.”
• Requires disclosure of chemical composition of “Frac Fluids”
•Not Enacted
Federal Action: EPA
1. Study of Potential Impacts of HF
2. Requests for Voluntary Disclosure of
Information
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Nov. 2011: EPA Plan of Study on Drinking Water Impacts of HF
Questions To Be Addressed by EPA
HF/Water Study
• Water acquisition: What are the possible impacts of large
volume water withdrawals from ground and surface waters on
drinking water resources?
• Chemical mixing: What are the possible impacts of hydraulic
fracturing fluid surface spills on or near well pads on drinking
water resources?
• Well injection: What are the possible impacts of the injection
and fracturing process on drinking water resources?
• Flowback and produced water: What are the possible impacts
of flowback and produced water (collectively referred to as
“hydraulic fracturing wastewater”) surface spills on ornear
well pads on drinking water resources?
• Wastewater treatment and waste disposal: What are the
possible impacts of inadequate treatment of hydraulic
fracturing wastewater on drinking water resources?
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December 2012:
Study of the Potential Impacts of Hydraulic
Fracturing on Drinking Water Resources
PROGRESS REPORT
U.S. Environmental Protection Agency Office of Research and
Development
Bernadette Rappold, Director
Special Litigation and Projects Division
Rappold.Bernadette@epa.gov
EPA HF/ Water Progress Report:
• Information from 9 Companies
• Reviewed well construction records for 333
wells
• 24,925 wells between September 2009 and
October 2010
• More than 12,000 well records from FracFocus
• More than 1,000 unique chemical substances
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EPA HF/Water Study: Next Steps
•
•
•
•
•
•
Issue “Draft Report” in 2014
Public Comments by ??
Peer Review by ??
Final Report by ??
Rules by ??
And so on …
34
Other EPA Action
• In 2009, EPA Issues Voluntary Information Requests
to Nine Hydraulic Fracturing Companies Requesting
Detailed Information About the Chemical
Composition of Fracking Fluids, known as
“Halliburton Request”
– Among chemicals disclosed are materials found in
cleaners, car wax, and paint thinner.
– Typical Response: “Additives used in hydraulic fracturing
fluids include a number of compounds found in common
consumer products…”
• Request for Peer-Reviewed Information (Nov. 9,
2012)
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State (not PA), Local and Global
Developments
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State Actions
• Most state and local actions involve Marcellus
Shale
• Some are Legislative; others constitutional;
others hybrids
• Many are from PA and NY
• Promote: Tx, WV, Ohio
• Ban: Vermont
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Emerging State Law Provisions
• Express inclusion HF into laws & regulations
• Requirement that logs and pressure test results are included
in disclosures to state authorities
• Disclosure of HF fluids, proppants and ratios
• Specific disposal regimens for HF fluid, focusing on the
protection of existing surface- and groundwater assets.
• Replacement/remediation of contaminated water assets.
• Minimum depths of HF—not close to the surface
• Stringent Casing Standards (next slide)
• Bonding
• Insurance
Casing Standards
• Pennsylvania as an example.
25 Pa. Code chap. 78
• Numerical performance
standard for inside casing
gas pressure. Section
78.73(c).
• Casing design standards.
Sections 78.81-87.
New York
• Statewide moritorium pending development of
rules
• NY-DEC strict regulation all but banning in
Skaneateles Lake and Finger Lakes regions of
Catskills
• County Bans:
– Onondago
– Tomkins
– Cortland
• City Bans: Syracuse, Lake, Tully, Elbridge, DeWitt,
Enfield, Ithaca, Danby and Ulysses
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Other State Developments
• Statewide Bans! (e.g., Vermont)
• Statewide Backlash! North Carolina returns
$580,000 federal grant to study impact of
fracturing on surface and groundwater and
wetlands. (Tues., Sept. 24, 2013).
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Emerging Local Regulations
Certain fracking matters have been considered at
the county/city level
– Bans (Berks & Montgomery Counties)
– Noise control
– Traffic control
– Other measures
•
•
•
•
Hours of operations (daylight or hour-based) (Santa Fe County, NM)
Restrictions on contents of the fracing fluid (Santa Fe County, NM)
Logs to be kept and turned into county authorities (Lovington, NM)
Pressure test failures must be reported to city (Lovington, NM)
Global Developments: Embracing HF
• Poland (thought to have among the largest
resident reserves of shale oil gas).
• Denmark (commissioned most of its shale gas
reserves for development).
• China (estimated to have fifty percent more
shale gas reserves than the United States)
• The United Kingdom (recently given the green
light to HF shale gas).
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Global Developments: Prohibiting
• France (This is despite some predictions of possible
fossil fuel resources of up to 100 million cubic meters
of shale oil in the Paris basin and five billion cubic
meters of shale gas in a bed across the south of
France.)
• Bulgaria (forbidding Chevron from using fracking to
search of large seams of embedded natural gas)
• At Subnational level:
–
–
–
–
New South Wales (Australia)
Victoria (Australia)
Quebec (Canada)
Karoo (ZA
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Global Developments: Highly
Regulated or Restricted
• Chemical-free (Ireland, New Zealand)
• Non-hydraulic (Mexico granted a permit to the
U.S. Chimera Energy Corporation to deploy its
new non-hydraulic shale oil extraction
technology in Mexico’s Chicontepec Basin,
considered Mexico's largest certified
hydrocarbon reserve, totaling more than 139
billion barrels of oil equivalent.
45
Emerging Legal Issues
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Constitutional Issues
• Whether states may preempt local actions to
prohibit fracturing? E.g., Robinson et al. v.
Commonwealth of Pennsylvania
• Whether states may require that gas produced
from fracturing be sold in-state?
• Whether states may prohibit shale gas produced
in-state from entering global markets?
• Whether, and for what, Congress may get
involved?
• What degree of regulation constitutes a
compensable taking?
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Constitutional Questions?: Principles
of Constitutional Environmental Law
Emerging Property and Tort Law Issues
•
•
•
•
•
•
Application of the rule of Capture
Riparian and Rights to Water
Nuisance
Trespass
Negligence
Strict Liability for Abnormally Dangerous
Activities
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Emerging Corporate Law Issues:
Forfeiture of Corporate Charters?
• Section 284(a) of the Delaware General
Corporation Law gives the Delaware Attorney
General power to seek forfeiture of corporate
charters “for abuse, misuse of nonuse of [ ]
corporate powers.”
• As open-ended as Section 274(a) sounds, State of
Delaware has not used as a roving means of
policing noncompliance with regulatory laws
(federal or state), or curbing behavior not
otherwise prohibited.
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Sunrise or Sunset for DSHF?
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Questions?