An Assessment of Marcellus and
Utica Shale Environmental
Issues
By:
David M. Flannery
Carolyn McLain
Jackson Kelly PLLC
Presented at:
Marcellus and Utica Shale Conference and Expo
April 2, 2012
White Sulphur Springs, WV
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Overview of Presentation
• National Programs
– Zero Discharge Effluent Guidelines
– Waste Management
• Selected State Programs
– Ohio
– Pennsylvania
– West Virginia
•
•
•
•
USEPA Hydraulic Fracturing Study
Interstate Compacts
Air Emissions and Air Quality
Carbon Capture and Sequestration (CCS)
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National: Zero Discharge Effluent
Guideline
Clean Water Act permits:
must meet water quality standards
must meet effluent guidelines
Onshore Oil and Gas Effluent Guideline (40 C.F.R.
§435.32)
“no discharge of waste water pollutants”
exception: “stripper oil wells”
Appalachian Producers requested exemption
“Marginal gas wells” – no action by USEPA
Are Marcellus and Utica Shale wells covered by
effluent guidelines? See September 1976 Development
Document
4
National: Waste Management
• 1987 – EPA Report to Congress - E&P wastes exempt
from RCRA.
– Recommended working with states to improve state regulation of E&P
wastes.
• Interstate Oil and Gas Compact Commission (IOGCC) –
established waste management guidelines; initiated
audits of state regulatory programs of E&P wastes.
– First review completed in 1991.
– Review completed for Ohio, Pennsylvania, West Virginia, others
• 1999 – State Review of Oil and Natural Gas
Environmental Regulations (STRONGER) succeeds to
IOGCC.
• Currently – State audits ongoing
(NC in Feb 2012).
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Ohio
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Ohio
• STRONGER Reviews
– 1995
– 2005
– 2011 – Hydraulic Fracturing
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STRONGER 2011 Ohio Review
Recommendations:
• Complete amendment of hydraulic fracturing
rules
• Consider whether the submittal of MSDS
information is adequate
• Consider providing chemical information from
hydraulic fracturing to first responders.
• Evaluate the need and availability and use of
water for hydraulic fracturing
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Ohio Program Highlights
June 20, 2010 – S.B. 165 overhaul of oil and gas regulations.
– Increased permitting requirements (urban/non-urban). Fees based on
population size ($250 - $1000).
– Mandatory pooling agreements (additional $5,000 fee), established
minimum acreage units.
– Comprehensive reporting requirements.
– Prohibits introduction of waste fluids into groundwater or surface water.
– Injection disposal fee of $.05 / $.20 per barrel for waste fluids (brine).
– Drill cuttings disposed of on-site or sent to a licensed solid waste landfill.
– Establishes minimum distances for surface locations of wells from
dwellings, RRs, property lines, vessels and other equipment.
– Temporary Inactive Status for wells which are not producing within 1
year of completion.
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Ohio Program Highlights
•
•
May 16, 2011 – prohibition against discharge of brine wastewater to
POTWs.
February 2012 - Air General Permit to cover shale gas sites. ($2,300).
Permit To Install and Operate – PTIO
– Covers internal combustion, generators, dehydration systems, storage tanks and
flares.
– Does not cover roadways and glycol dehydration units. (But see Proposed
Federal Air rules).
•
March 2012 – Report on Seismic Events near Class II Brine Injection well in
the Youngstown area. Recommendations:
– Enhanced geologic review for new UIC wells, prohibit UIC wells in known faulted
areas, prohibit UIC wells in Precambrian basement, installation of advanced
equipment (auto shut-off, continuous pressure monitoring system, electronic data
tracking system).
•
March/April 2012 – Ohio S.B 315 and H.B. 474 – Proposed modifications of
brine disposal options (recycling, increased fees).
Pending in the legislature.
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Pennsylvania
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Pennsylvania
• STRONGER Reviews
– 1992
– 1997
– 2004
– 2010 – Hydraulic Fracturing
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STRONGER 2010 Pa. Review
Recommendations
• Finalize new regulations for casing and cementing, blow-out
prevention, etc.
• Enhance pre-drilling drinking water well survey requirements.
• Add depth of surface casing and cementing plan to program.
• Assure appropriate chemical information for fracturing is provided
and made available to emergency personnel.
• Require notification to agency prior to hydraulic fracturing operations
• Enhance procedures for pit construction or create a certification
process.
• Create a specific secondary containment rule for hydraulic fracturing
tanks.
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Marcellus Shale Advisory Commission
July 22, 2011 99 report recommendations
include:
• Increasing well bonding to $10,000/$250,000
• Increasing the presumed liability for water well
contamination to 2,500 feet/12 months
• Increasing setback distances from water wells
• Well operators responsible for tracking/reporting
wastewater from wells that use 80,000 gallons or
more
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Pennsylvania Program
Highlights
• Fees for unconventional gas wells – Signed into
law 2/14/2012. Fees determined based on
county.
– Municipalities may impose their own fees, by
municipal ordinance.
• PA DEP revised gas wastewater processing
permit for beneficial reuse of water. (3/21/2012)
Promotes “closed-loop” process but also allows
for tested waters to be managed, stored and
transported as freshwater.
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Pennsylvania Program
Highlights
• Prohibition against discharge of wastewater to POTWs / centralized
treatment facilities (with limited exception) (April 2011)
• Collection of air emissions data in preparation for review of the State
Implementation Program (Due 3/1/2012).
• Erosion and Sediment Control and Stormwater Management Plan
required.
• Water Management Plan required.
• Specifications for dams and impoundments for O&G activities.
• Control and Disposal Plan for fluids and drill cuttings.
• Contingency plans for transportation of residual wastes and
containment practices plans.
• Emergency Response Plans
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West Virginia
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West Virginia
• STRONGER Reviews
– December 1993
– January 2003 (follow-up review)
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West Virginia
• Governor Tomblin Executive Order No. 411, July 12, 2011
– Prohibition of land application of return fluids
– Prohibition of disposal of return fluids to
POTWs
– Increase regulations to ensure no pollutants
are disposed of in violation of water quality
standards or effluent limitations.
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West Virginia
Emergency Rules: Effective August 22, 2011.
• Requiring water management plans for withdrawals greater than
210,000 gallons per month to include: type of water source, volume,
duration, disposal plan, list of anticipated additives for fracturing or
stimulation; current designated and existing uses; in-stream flow
impacts; maintain minimum flow; post signs, etc.
• Requiring well site construction and safety plan
• Prevent fluids/natural gas from entering groundwater or surface
water
• BMPs to prevent suspended or dissolved solids discharge to
streams.
• Require drill cuttings and drill muds to be disposed of off-site (or
managed on-site) as approved by WVDEP.
• Consider other rulemakings to address: well construction, air
emissions, recycling, etc.
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West Virginia
• WV Natural Gas Horizontal Well Control Act (adopted
12/14/2011)
– Applies to new horizontal wells which disturb 3 acres or more or
utilizes >210,000 gallons of water in 30-day period
– Erosion and sediment control plan, water management plan
– Drilling waste can be managed on-site (with surface owner
consent) or to approved solid waste facility
– Additional record keeping requirements for water withdrawals
greater than 210,000 gallons per month
– Pit impoundment specifications
– Appeal available to Environmental Quality Board
– Increased notice requirements to landowners.
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West Virginia
• EPA Region III has taken lead agency status for
all Section 404 enforcement actions (45+) for
WV.
• Proposed NPDES construction general permit
for stormwater runoff from oil & gas sites which
disturb more than 1 acre and are not otherwise
regulated by the Office of Oil and Gas or another
Stormwater permit. Comments due by
4/19/2012.
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WV: Water Disposal*
- Prohibition against on-site stream
discharge
- UIC – “best option”
- Recycling
- POTW option heavily restricted; none
authorized at this time
* Office of Oil and Gas, Industry Guidance, January 8, 2010
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WV: Land Application General
Permit
General Water Pollution Control Permit (GP-1-WV88) – “land application permit”
- no discharge to streams
- pit liquids treated / land applied
- pit solids disposed on site
July 30, 2010 Office of Oil and Gas memorandum
“land application of any return fluids from
completion activities in the Marcellus Shale
formation is prohibited”
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WV: Drilling Pit Reclamation*
Requirements:
1. Pit liners remain intact
2. Pit contents must be solidified with
approved materials
3. A liner must be placed over the top of
pit
* Office of Oil and Gas, Memorandum, March 23, 2010
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WV: Water Withdrawal*
- W.Va. Code Chapter 22, Article 26
requires after-the-fact reporting
- Office of Oil and Gas now requires prior
reporting and approval:
• supplemental permit application form
• no withdrawal allowed “at volumes beyond
which the waters can sustain”
• Water Withdrawal Guidance Tool
* Office of Oil and Gas, Industry Guidance, January 8, 2011
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USEPA Hydraulic Fracturing
Study
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USEPA Hydraulic Fracturing Study
- February 28, 2011 request to EPA Science
Advisory Board
- Initial results: end of 2012
- Additional results: 2014
- Scope:
• acquisition of water
• chemical additives
• fracturing
• flow back management (including treatment
and disposal)
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Interstate Compacts
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Interstate Compacts
- Susquehanna River Basin Commission (SRBC)
• water withdrawal
• water quality standards
- Delaware River Basin Commission (DRBC)
• water withdrawal
• water quality / discharge
- Ohio River Valley Water Sanitation Commission
(ORSANCO)
• water quality / discharge
• evaluating whether to see expanded authority to
address water withdrawal
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Air Emissions and Air Quality
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EPA Proposed Air Rules
Proposed: July 28, 2011; Final Action: April 3, 2012
• NSPS
– New Source Performance Standards (NSPS) for VOCs
• Applies to new completions and re-completions.
• Requires use of “green completions” equipment to separate
hydrocarbons from flowback/flaring. Does not apply to
exploratory or delineation wells.
• New controls on compressors, pneumatic controllers,
condensate and crude oil storage tanks and natural gas
processing plants.
- NSPS for Sulfur Dioxide – Natural gas processing plants (with
H2S concentration of at least 50%) need to meet sulfur recovery
efficiency of 99.9%.
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EPA Proposed Air Rules
NESHAP
• Oil & Natural Gas Production
– Remove the 1 ton/year benzene compliance alternative for large
glycol dehydrators.
– Large glycol dehydrators required to reduce toxics by 95%.
– Small glycol dehydrators at major sources – tighter emission
limits.
– Crude oil and condensate tanks reduce toxics by 95%
• Natural Gas Transmission and Storage
- Remove the 1 ton/year benzene compliance alternative for
large dehy units and set tighter emission limits for small units
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PA Short-Term Ambient Air
Screening
• Key Findings (May 6, 2011):
– Concentrations of certain natural gas constituents
including methane, ethane, propane and butane, and
associated compounds in the air near Marcellus
Shale drilling operations were detected during
sampling.
– Results of the limited ambient air sampling did not
identify concentrations of any compound that would
likely trigger air-related health issues associated with
Marcellus Shale drilling.
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O3 Trends by Region
RPO Regional Average O3 Design Values
Ozone Concentration [ppm]
0.1
0.09
0.08
0.07
0.075 ppm
Central States
0.06
Northeastern States
Midwestern States
0.05
0.04
2000
Southeastern States
Western States
Standard
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
• Average ozone DVs have decreased in all five RPO regions
• Trends are not monotonic, possibly reflecting influence of
meteorology
Performed by Alpine Geophysics for the Midwest Ozone Group
(http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)
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PM2.5 Trends by Region
• Both Annual and 24-hr
Average PM2.5 DVs have
decreased (negative
trends) in all five RPO
regions
RPO Regional Average PM2.5 Annual Design Values
PM 2.5 Concentration [ug/m3]
20
16
15 ug/m3
12
8
4
0
2000
Central States
Northeastern States
Midwestern States
Southeastern States
Western States
Standard
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
PM 2.5 Concentration [ug/m3]
RPO Regional Average PM2.5 24-Hour Design Values
50
45
40
35
30
25
20
15
10
5
0
2000
• Trends are not monotonic,
possibly reflecting
influence of meteorology
35 ug/m3
Performed by Alpine Geophysics for the
Midwest Ozone Group
(http://midwestozonegroup.com/files/AQTre
ndsSummary_SoutheasternStates_.pdf)
Central States
Northeastern States
Midwestern States
Southeastern States
Western States
Standards
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
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Air Quality Modeling
Performed by Alpine Geophysics for the Midwest Ozone Group
(http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)
40
Performed by Alpine Geophysics for the Midwest Ozone Group
(http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)
New Haven, Connecticut
90
Hudson, New Jersey
Allegan, Michigan
Butler, Ohio
Monmouth, New Jersey
Cecil, Maryland
Mecklenburg, North Carolina
Warren, Ohio
Hampden, Massachusetts
Hamilton, Ohio
Gloucester, New Jersey
Fairfield, Connecticut
Philadelphia, Pennsylvania
Westchester, New York
Suffolk, New York
Harford, Maryland
Bucks, Pennsylvania
Ozone DV (ppb)
8-hour Ozone Modeling Results
2008 DVB (Obs)
2014 DVF (BAU)
2018 DVF (BAU)
85
80
75
70
65
60
55
50
County
41
8-hr Ozone Nonattainment Area
Highest Modeled Monitor
Baltimore
240251001 Harford Co.,
MD
http://midwestozonegroup.com/files/AlpineGeophysicsOSATAnalysis.pdf
42
Performed by Alpine Geophysics for the Midwest Ozone Group
(http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)
Scott, Iowa
18
Marion, Indiana
Clark, Indiana
Saint Clair, Illinois
Cook, Illinois
New Castle, Delaware
Milwaukee, Wisconsin
Brooke, West Virginia
Beaver, Pennsylvania
Hamilton, Ohio
Cuyahoga, Ohio
Wayne, Michigan
Madison, Illinois
Allegheny, Pennsylvania
Annual PM2.5 dv (µg/m^3)
PM 2.5 (Annual) Modeling Results
20
2008 DVB (Obs)
2014 DVF (BAU)
2018 DVF (BAU)
16
14
12
10
8
County
43
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PM 2.5 (24-hour) Modeling Results
60
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2008 DVB (Obs)
2014 DVF (BAU)
50
2018 DVF (BAU)
45
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35
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25
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Performed by Alpine Geophysics for the Midwest Ozone Group
(http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)
County
44
Air Quality Modeling Results
• Residual ozone non-attainment is associated with mobile
sources along I-95
• The annual PM NAAQS can be achieved with no new
controls no later than 2014 with the possible exception of
local controls at the Allegheny PA location
• The 24-hr PM NAAQS can be achieved with no new
controls no later than 2014 with the possible exception of
local controls at the Allegheny PA and Brooke WV
locations
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CCS
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Carbon Capture and
Sequestration (CCS)
Regulatory drivers for carbon capture and sequestration
(CCS)
- President’s goal for 83% reduction in CO2 by 2050
- USEPA’s BACT Guidance (November 2010)
- USEPA’s NSPS Proposal (March 2012)
Recent developments
- National Coal Council
- West Virginia CCS Working Group
Implications for oil and gas
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USEPA BACT GUIDANCE*
• CCS is not in widespread use
• CCS is considered “available” for:
“fossil fuel-fired” power plants
industrial facilities with high-purity CO2 streams (e.g.,
hydrogen production, ammonia production, natural gas
processing, ethanol production, ethylene oxide
production, cement production and iron and steel
manufacturing)
• CCS may be presently available where CO2 can be sold
for EOR
• Research may make CCS more widely applicable in the
future
*http://www.epa.gov/nsr/ghgdocs/ghgpermittingguidance.pdf (December 2010)
48
USEPA NSPS Proposal*
• Proposal limit: 1,000 pounds CO2/megawatthour (30 year avg.)
• Applicable: new fossil-fuel EGUs (boilers, IGCC,
stationary combined cycle units)
• Natural gas combined cycle: no add-on controls
Coal fired units: CCS
*http://epa.gov/carbonpollutionstandard/pdfs/20120327proposal.pdf
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NATIONAL COAL COUNCIL*
RECOMMENDATIONS:
• Accelerate near term (2015-2020) development of commercial
scale CCS for coal-based generation
• Promote CO2 storage opportunities for EOR
• Exempt CCS from RCRA and CERCLA
• Reduce regulatory barriers with PSD and NEPA
• Allow a CCS permit to authorize use of pore space which is not
being used by its owner
• Limit an operator’s legal liability during operation phase
• Transfer liability during post closure phase
“Expedited CCS Development: Challenges & Opportunities”, March 18, 2011.
http://www.nationalcoalcouncil.org/reports/03_29_11_Final_NCC_Report.pdf
50
WVCCS Working Group*
Conclusions:
• CO2 storage up to 226 years
• Storage below 2500 feet needed for supercritical CO2
• Sequestration operations are similar to oil and gas
operations
• Use of pore space below 2500 feet (not already being
used) should generally be considered public use
• A trust fund should be linked to liability transfer
• A robust regulatory program is necessary
• New legislation is required
* Report to Legislature, July 1, 2011;
http://www.dep.wv.gov/executive/Documents/WVCCS%20Working%20Group%20Final%
20Report%20-%20June%2030,%202011.pdf
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Implications of CCS for Gas
Industry
• Increase in market share (since no controls will
be needed to meet NSPS for gas fired EGUs)
• CCS deployment will be driven by
– BACT
– NSPS
– on-going debate over climate change
• CCS for EOR may be a “win - win”
• CCS development will be similar to oil and gas
activities
52
Conclusion
53
Conclusion
• States have developed a Shale gas regulatory
program based upon historical approaches
• New legislation has strengthened (and will
continue to strengthen) those programs
• Even with new legislation, continued objection to
horizontal drilling is likely to occur
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Contact Information
David M. Flannery
Jackson Kelly PLLC
PO Box 553
Charleston, WV 25322
Telephone: (304) 340-1017
Email: dmflannery@jacksonkelly.com
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