Realizing the Potential of North America's Abundant Natural Gas and Oil Resources

86 Pages·2012·14.83 MB·English

Chapter Two
Operations and
Environment
Abstract
Expanded natural gas and oil resources have resulting variation in environmental impacts and
dramatically improved the North American energy issues. The main focus of this chapter is to con-
supply outlook. However, prudent production and sider ways in which industry and government can
delivery of these resources presents operational improve environmental performance, reduce risk,
and environmental challenges. Technological engage with stakeholders, and develop and com-
advances have made shale gas, tight oil, deepwater municate important information on environmen-
offshore, oil sands, and other resources economi- tal impacts.
cally recoverable. If these resources are to be avail-
able and economic for development, continuous The outline of the Operations and Environment
attention to reducing risks is essential to ensure chapter is as follows:
pollution prevention, public safety and health, and
y Introduction and Summary
environmental protection. These outcomes are
important in their own right, but also in order to y Resource Play Variations and Associated Envi-
enjoy access to the resources for extraction and ulti- ronmental Challenges
mate satisfaction of consumers’ energy demand.
y History of Innovation in Environmental Stew-
Given the importance of these issues, they have
ardship
strongly influenced the study process.
y History of Natural Gas and Oil Environmental
This chapter examines the major environmental
Laws
and safety issues that must be addressed in order to
safely produce and deliver North American natural y Sustainable Strategies and Systems for the Con-
gas and oil resources; examines the historical con- tinued Prudent Development of North American
text of environmentally responsible development Natural Gas and Oil
and improvements in technology, regulation, and
y Offshore Safety and Environmental Management
environmental management; and describes the
variation in natural gas and oil resources and the y Key Findings and Policy Recommendations.
IntroductIon And SuMMArY energy use, benefit the economy, and improve energy
security. Prudent production and delivery of these
Environmental Challenges resources presents operational and environmental
challenges. Through technological advances, tre-
Expanded potential of natural gas and oil resources mendous new natural gas and oil supply sources have
has dramatically improved the North American been identified in the North American resource base.
energy supply outlook. The increased use of natural These advances make shale gas, deepwater offshore,
gas is likely to reduce the overall carbon intensity of tight oil, oil sands, and other resources economically
CHAPTER 2 – OPERATIONS AND ENVIRONMENT 167
recoverable. Continuous attention to reducing risks y Air Emissions – Emissions generated from com-
is essential to ensure pollution prevention, public and bustion, leaks, or other fugitive emissions during
worker safety and health, and environmental protec- the production and delivery of natural gas and oil
tion. These are essential outcomes in order to enjoy present challenges regarding climate change and
access to the resources for extraction and ultimate human health impacts.
satisfaction of consumers’ energy demand. Due to
Offshore operations environmental challenges are
the importance of these issues, their influence on the
somewhat different than onshore due to the sensitivi-
study process has been significant. Risk to the envi-
ties of the marine environment, harsh operating con-
ronment exists with natural gas and oil development,
ditions, remote locations in the case of the Arctic, and
as with any energy source. Local, state, and federal
advanced technologies employed. These challenges
governments have developed a mix of prohibitions,
include:
regulations, and scientific study to reduce potential
environmental impacts of natural gas and oil develop- y Prevention of and Response to a Major Release
ment. Parties discussing energy policy can be missing – The pressures and temperatures associated with
a common vocabulary and set of references to have remote wellhead locations that are difficult to access
a constructive conversation and make educated deci- on the bottom of the ocean floor, and high flow rate
sions. No form of energy comes without impacts to of deepwater wells, make the containment of a sub-
the environment. An appropriate framework for dis- sea release challenging.
cussing energy sources is necessary.
y Safety – Offshore natural gas and oil drilling prac-
Environmental challenges associated with natu- tices, called into question by the recent Deepwater
ral gas and oil development vary by location, such as Horizon incident, have resulted in a weakened pub-
onshore versus offshore, and by the methods employed lic perception of offshore process and worker safety.
to extract the resource. Although each well involves The limited operating space coupled with significant
drilling into the crust of the earth and constructing production volumes can create a higher-risk work
well casing using steel pipe and cement, differences environment.
arise from the affected environment, resource type,
y Marine Impacts – Seismic noise generated by off-
regional and operating conditions, and proximity to
shore natural gas and oil exploration activities is
environmental receptors. The public, policymakers,
recognized as a concern for whale populations and
and regulators have expressed the following environ-
other marine life, including fish.
mental concerns about onshore operations:
y Arctic Ice Environments – Responding to an oil
y Hydraulic Fracturing – Consumption of freshwa-
spill in seasonal subzero temperatures with the
ter (volumes and sources), treatment and disposal
presence of broken sea ice and 24-hour darkness is
of produced water returned to the surface, seismic
difficult and presents challenges not faced in other
impacts, chemical disclosure of fracture fluid addi-
marine environments.
tives, potential ground and surface water contami-
nation, chemical and waste storage, and the volume The development of oil sands poses unique environ-
of truck traffic. mental challenges that differ from those associated
with other onshore oil resources, including:
y Water Management – Produced water handling
and disposal has created apprehension about exist- y Water Consumption – Large volumes of water have
ing water treatment facilities and the ability to treat generated public and regulatory issues associated
naturally occurring radioactive material, adjust with water sourcing, groundwater withdrawals, and
salinity, and safely discharge effluent. protecting water quality.
y Land Use Encroachment – The encroachment into y Land Disturbances – Removal of overburden for
rural and urban areas results in perceived changes surface mining can fragment wildlife habitat and
to quality of life, especially in newly developed or increase the risk of soil erosion or surface run-
redeveloped natural gas and oil areas. off events to nearby water systems, resulting in
impacts to water quality and aquatic species.
y Methane Migration – Methane in domestic drink-
ing water wells, either naturally occurring or from y Greenhouse Gas (GHG) Emissions – Transporta-
natural gas development. tion fuels produced solely from oil sands result in
168 PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources
well-to-wheels life-cycle GHG emissions 5% to 15% well-to-wheel emissions from oil sands processed
higher than the average crude oil refined. The car- in the United States were only 6% higher than the
bon intensity of oil sands can vary based on extrac- average crude oil consumed in the United States.
tion, refining and transport method. And, in 2009, Over time, incremental efficiency improvements,
Hydraulic Fracturing
Hydraulic fracturing is the treatment applied drilling goes through shallower areas, with the
to reservoir rock to improve the flow of trapped drilling equipment and production pipe sealed
oil or natural gas from its initial location to the off using casing and cementing techniques.
wellbore. This process involves creating fractures
y The technology and its application are continu-
in the formation and placing sand or proppant
ously evolving. For example, testing and devel-
in those fractures to hold them open. Fractur-
opment are underway of safer fracturing fluid
ing is accomplished by injecting water and fluids
additives.
designed for the specific site under high pressure
in a process that is engineered, controlled, and y The Interstate Oil and Gas Compact Commission
monitored. (IOGCC), comprised of 30 member states in the
United States, reported in 2009 that there have
Fracturing Facts been no cases where hydraulic fracturing has
been verified to have contaminated water.‡
y Hydraulic fracturing was first used in 1947 in an
y A new voluntary chemical registry (FracFocus)
oil well in Grant County, Kansas, and by 2002,
for disclosing fracture fluid additives was
the practice had already been used approximately
launched in the spring of 2011 by the Ground
a million times in the United States.*
Water Protection Council and the IOGCC. Texas
y Up to 95% of wells drilled today are hydraulically operators are required by law to use FracFocus.
fractured, accounting for more than 43% of total
y The Environmental Protection Agency concluded
U.S. oil production and 67% of natural gas pro-
in 2004 that the injection of hydraulic fractur-
duction.†
ing fluids into coalbed methane wells poses little
y The first known instance where hydraulic frac- or no threat to underground sources of drink-
turing was raised as a technology of concern ing water.§ The U.S. Environmental Protection
was when it was used in shallow coalbed meth- Agency is currently studying hydraulic fracturing
ane formations that contained freshwater (Black in unconventional formations to better under-
Warrior Basin, Alabama, 1997). stand the full life-cycle relationship between
y In areas with deep unconventional formations hydraulic fracturing and drinking water and
groundwater resources.
(such as the Marcellus areas of Appalachia), the
shale gas under development is separated from y The Secretary of Energy’s Advisory Board is also
freshwater aquifers by thousands of feet and studying ways to improve the safety and environ-
multiple confining layers. To reach these deep mental performance relating to shale gas devel-
formations where the fracturing of rock occurs, opment, including hydraulic fracturing.
* Interstate Oil and Gas Compact Commission, Testimony ‡ Interstate Oil and Gas Compact Commission, Testimony
Submitted to the House Committee on Natural Resources, Submitted to the House Committee on Natural Resources,
Subcommittee on Energy and Mineral Resources, June 18, Subcommittee on Energy and Mineral Resources,
2009, Attachment B. June 18, 2009, Attachment B.
† IHS Global Insights, “Measuring the Economic and Energy § U.S. Environmental Protection Agency, Office of Water,
Impacts of Proposals to Regulate Hydraulic Fracturing, Office of Ground Water and Drinking Water, “Evaluation
2009; and Energy Information Administration, “Natu- of Impacts to Underground Sources of Drinking Water
ral Gas and Crude Oil Production,” December 2010 and by Hydraulic Fracturing of Coalbed Methane Reservoirs”
July 2011. (4606M) EPA 816-R-04-003, June 2004.
CHAPTER 2 – OPERATIONS AND ENVIRONMENT 169
as well as new technologies, such as the application over $4.3 billion for implementing new technologies
of solvents to mobilize oil in situ (as an alternative and other environment-related expenditures in the
to heat) are expected to continue to reduce the GHG exploration, production and transportation sectors.1
intensity of unconventional operations.
Prudent Development
The natural gas and oil industry today is notably
active. The rig count, for example, has doubled in the
Prudent development of natural gas and oil
United States in the last 10 years, largely as a result of
resources in North America reflects concepts related
deep shale and other unconventional natural gas and
to achieving a broadly acceptable balance of several
oil resources. This has increased the need for regula-
factors: economic growth, environmental stewardship
tors to respond in an appropriate and timely fashion
and sustainability, energy security, and human health
and companies to engage with local communities and
and safety. Prudent development necessarily involves
ensure that responsible and effective environmental
tradeoffs among these factors. Consideration of the
management practices are used. This heightened level
distribution of costs and benefits is a key part of pru-
of activity, especially in shale gas development, exists
dent development.
within a context shaped by:
Environmentally responsible development is
y Public Awareness of Industry Operations – The
another key element of prudent development, under-
public has been disappointed by low performance
pinning environmental stewardship and sustainabil-
of some operators, creating a sense of alarm about
ity. In the context of recovering natural gas and oil
technologies and practices with which they may not
resources while protecting public health and the envi-
be familiar, such as hydraulic fracturing.
ronment, environmentally responsible development
y Location – Development is occurring in areas where requires:
there has not been significant activity in decades.
y Thorough predevelopment planning
y Transparency – Questions have arisen regarding
y Development of effective regulatory approaches
the transparency of the industry from policymak-
ers, nongovernmental organizations, and stake- y A commitment to continuous improvement
holders.
y A commitment to implementing planned actions
y Regulatory Responsibilities – There is increased
y Evolution of development concepts and practices.
pressure on the regulatory agencies to oversee the
growing activity, be knowledgeable about the tech-
Predevelopment Planning – Appropriate planning
nological developments, and administer regulatory
includes identifying and mitigating risks to public
programs during times of extraordinary budget
health, worker safety, and the environment, conserv-
pressures.
ing natural resources, using technologies appropri-
y Complex Regulatory Framework – There is ate to the task, and incorporating engagement with
parties impacted by the development of a resource.
increased environmental regulatory complexity at
Due to the diversity of areas with natural gas and oil
the federal, state, and local levels.
resources, the specific requirements associated with
To address public concerns, some in the industry prudent development vary between locations.
have made efforts to be more transparent by volun-
tarily disclosing information about chemical additives
1 American Petroleum Institute, Environmental Expenditures
and practices, initiating expansions of training and
by the U.S. Oil and Natural Gas Industry: 1990-2009, February
information exchange programs, investing in research 2011. The estimates in this annual report are derived from sur-
and development efforts, and embarking on exten- vey data. The number of survey responses can vary each year,
and many companies do not track environmental spending
sive community and government outreach programs.
directly. As such, the aggregate estimates for specific indus-
Furthermore, emphasis on safe and environmentally
try sectors may either over or underestimate environmental
responsible performance, coupled with environmen- expenditures, and do not represent the expenditure patterns
tal sustainability, has been or has recently become of any individual company. With increased emphasis on cor-
porate environmental performance and the implementation
part of the business principles in many companies.
of recently proposed or promulgated regulations, aggregate
In 2009, the U.S. natural gas and oil industry spent
industry environmental expenditures may be substantially
about $14.6 billion on the environment, including higher in future years.
170 PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources
Effective Regulatory Approaches – Environmen- tional natural gas and oil resources, such as shale gas,
tally responsible development requires regulatory tight oil, deepwater offshore natural gas and oil, and oil
approaches that are protective of environmental sys- sands, will require even more proactive efforts to suc-
tems, land uses, human safety and health, and the cessfully implement safe and environmentally respon-
development interests of surface and mineral right sible development. However, many in and outside of
owners. In the context of federal and state or provin- the natural gas and oil industry understand that infe-
cial jurisdictional relationships, prudent regulation rior practices could undermine public trust. The result
involves assigning the various responsibilities for dif- could be that parts of the natural gas and oil resource
ferent aspects of development and protection to the base become – or remain – off limits for development.
level of government that can most effectively admin- Maintaining access to the resource does not depend on
ister them. changing public perception so much as earning public
confidence with excellent performance. This is crucial
Continuous Improvement – Continuous improve- to realizing the full potential of North America’s abun-
ment of operations and regulations involves adher- dant natural gas and oil resources.
ence to standards and adoption of improved practices
based on advances in science, technology, methods With that in mind, the following key topics should
for improved risk management, and lessons learned. be considered to ensure that excellent environmental
performance is the norm in all places where natural
Planned Actions – Environmentally responsible gas and oil development occurs. For each of these top-
development includes a commitment by all parties ics, findings and recommendations have been derived
to follow through on planned actions to accomplish from the analysis, summarized in this chapter and
agreed-upon goals. The commitment of the chief exec- discussed more fully in the Key Findings and Policy
utive officer or appropriate leader is critical to success. Recommendations section.
This will be evident, in part, by the leader acting as a
visible and active champion and recognizing the time Environmental Sustainability and
and effort involved in development and integration. Community Engagement
In the end, all levels of the organization must be com-
mitted to and involved with the implementation. The concept of environmental sustainability is
often used to refer to the objective of a government,
Development Concepts and Practices – Societal
company, industry, or organization to set and work
expectations and understanding of the environment
towards achieving goals related to improving society,
have changed over time. This must be reflected in
protecting the environment, and driving economic
the evolution of development concepts and specific
success. The long-term goal of achieving environmen-
practices that constitute environmentally responsible
tal sustainability is often aspirational in nature. In
development. Past practices considered acceptable at
addition, there is not one correct approach to encour-
one time may be inadequate now and in the future par-
aging or implementing environmental sustainability
ticularly due to competition for finite or constrained
within a company or industry. It can be accomplished
land, water, air, and other resources.
by individual companies adopting business strategies
and activities that meet the needs of the company and
Major Findings: Assuring
stakeholders while protecting environmental sustain-
Prudent Development ability and enhancing human and natural resources
for the future. A number of natural gas and oil compa-
The history of natural gas and oil development nies already have environmental sustainability goals
includes continual technological advances, improved incorporated into their business.
systems management, and improved regulatory pro-
cesses. This has allowed for the production of new Providing information to the public is not enough.
and more challenging resource plays while improving Community engagement involves both speaking and
environmental performance. The industry has dem- listening. Natural gas and oil companies should work
onstrated great innovation and success in addressing with the community and seek ways to reduce the neg-
technological needs and environmental issues involved ative impacts of development. This includes predevel-
in accessing and developing conventional resources. opment planning to identify issues such as noise and
Future development of the most promising unconven- traffic and seek ways to mitigate them.
CHAPTER 2 – OPERATIONS AND ENVIRONMENT 171
Community engagement needs to be a core value wide variance in how these systems are defined and
of companies. Even though a company may believe applied across the natural gas and oil companies and
its environmental performance is at the highest level, service companies in the industry. There is also vari-
it must nevertheless maintain transparency regard- ance in the effectiveness in managing environmental
ing issues important to public stakeholders. Industry risks. The establishment of councils of excellence will
needs to explain its production practices and environ- go a long way to improve implementation of EMSs
mental, safety, and health impacts in non-proprietary
throughout the industry. A properly implemented
terms. Collaboration among companies, government,
EMS can provide greater efficiencies as consistent
and other stakeholders is often essential to the success
practices are developed and implemented by each
of industry-wide efforts. It can also increase the trust
company, which also helps establish responsibility
and support of government and citizens. Such dis-
to properly mitigate and manage risks. Each energy-
cussions can more effectively incorporate local envi-
producing company is accountable for its health and
ronmental sustainability priorities and challenges.
environmental impacts and each producer is obligated
Listening to these challenges can support a company
to minimize these impacts. In order to ensure envi-
in staying ahead of issues that can impact reputation,
ronmentally responsible development, all levels of
production delays, lawsuits, and regulatory actions.
the natural gas and oil industry should be encouraged
In order to make public engagement meaningful and
to use appropriate and comprehensive predevelop-
successful, companies must listen to stakeholders, ask
ment planning, stakeholder engagement, risk assess-
for alternative views, and reflect stakeholders’ posi-
ment, and the innovative applications of technology.
tions in strategic objectives and communications.
Sufficient resources should be devoted to this effort. These elements must be adapted to the variability of
resource plays and regional differences.
Corporate Responsibility
Councils of Excellence
Natural gas and oil companies should continue to
improve the development and use of Environmental While most natural gas and oil companies oper-
Management Systems (EMSs) and implementation ate at a high environmental performance level, some
of environmental sustainability practices. There is a companies are not as far along. Companies gain
Planning and risk Assessment
Operators and regulators have long recognized abundant again only long after the event and as the
that operations in extreme or sensitive environ- latter stages of the recovery mode lead to detailed
ments, such as arctic climates, deepwater offshore retrospectives and root-cause analysis.
settings, and wetlands, require careful planning
to ensure operational success, worker safety, and Recent events have shown that careful planning
environmental performance. As operations have across the entire operational life cycle is essential.
moved into deeper, more challenging plays in more The tragic events associated with the Macondo well
conventional settings, the need for more careful blowout put a spotlight on the need to have plans
planning of these operations is necessary. The that will prevent accidents, quickly and accurately
new paradigm for planning involves not only care- identify incidents that do occur, and provide effec-
ful operational and logistic plans, but also requires tive response to mitigate the impacts that may
that those plans be developed specifically to accom- occur. In addition, public opposition to coalbed
plish clear environmental protection goals as well natural gas and shale gas development in several
as worker safety and public safety goals. In addi- areas has highlighted the need for public involve-
tion, risks must be identified and assessed. ment and public education to engage stakeholders
and to inform the way firms manage environmen-
Early planning for prevention of hazardous tal and operational risks.
events preserves the largest numbers of response
options; in contrast, during a crisis event, options Shell oil offshore safety study: http://www.
are reduced as urgency overtakes systematic analy- scribd.com/doc/8438367/Bow-Ties-and-Offshore-
sis, planning, and thought. Options become more Safety-Studies.
172 PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources
exposure to and adopt new technologies and oper- recommendations on sustainable systems and build-
ating practices in different ways and at different ing public confidence in the Key Findings and Policy
rates. Although accidents, spills, and other prob- Recommendations section of this chapter.
lems have occurred, overall environmental protection
has improved. This has occurred as companies have Effective Regulation
applied more sophisticated technologies to drilling
and production practices. High-quality regulation is often risk-based, con-
siders flexible approaches where feasible, encourages
Broad systems (i.e., operational, management, tech- innovation, is informed by public input, and is based
nological, and communications) within the industry on sound science. A balance between prescriptive and
and government must be managed to work together performance-based approaches is sought in develop-
to achieve consistently high environmental perfor- ing high-quality regulation, with consideration given
mance. More systematic mechanisms to identify, to efficiency and effectiveness. Such regulation is
evaluate, and disseminate information about envi- based on the best available data, takes into account
ronmental best practices would promote consistently benefits and costs, evolves as technology changes,
higher environmental performance. North American and has other attributes necessary for implementing
natural gas and oil companies should explore oppor- effective regulatory programs and enabling regula-
tunities to share best practices for protecting the envi- tory compliance without unnecessary burdens. High-
ronment, safety, and public health while developing quality regulation can increase the potential for pro-
different types of resource opportunities. tecting public health, safety, and the environment,
while promoting economic growth, innovation, com-
An existing example of best practice sharing and
petitiveness, and job creation.
recommended practice development is the Petroleum
Technology Transfer Council, a national network of Regulation of oil and gas operations is best accom-
state universities, independent producers, service plished at the state level. A one-size-fits-all approach
companies, federal agencies, and national labs estab- to regulation is not a viable option to ensure the
lished in 1994 to provide a forum for the transfer of highest level of safety and environmental protection.
technology and best practices within the producer State agencies have extensive knowledge of geological
community, adapted to the regional level. The latest conditions, which vary from state to state. State regu-
example is the recently formed Center of Offshore lators are well suited to consider many variables, such
Safety, which will promote the highest level of safety as the regional hydrogeology, topography and sea-
for offshore operations, through an effective program sonal climate variation to ensure wells are constructed
that addresses management practices, communica- properly, environmental footprints are minimized,
tion and teamwork, and which relies on independent, and operations are conducted safely. State regulators
third-party auditing and verification. Natural gas and are in close proximity to conduct inspections, over-
oil companies should draw upon existing activities, see local operations, enforce existing regulations, and
as appropriate, and form regionally focused “councils target new regulations to improve safety and environ-
of excellence” to function as centralized repositories mental performance. State regulators have manage-
and systematic mechanisms to collect, catalog, and ment responsibility for other natural resources (e.g.,
disseminate non-proprietary standards, practices, wildlife, fisheries, etc.) and are in the best place to
procedures, and management systems that would integrate the regulation and management of all natu-
be made available to all appropriate government ral resources, including oil and gas.
and private sources. Because development of natu-
ral gas and oil resources differs depending on factors Regulators should continue to evolve regulatory
such as the geology, water resources, and geography requirements to address new information and best
of the region, what constitutes effective practices is practices for operations and safety programs. Each
regionally defined. As such, there may be a need for state with natural gas and oil development has laws
multiple councils, each with a regional focus. The and regulations governing the conduct of companies
councils would be industry led and should be open to and potential impacts. But each state is not equal
companies, regulators, policymakers, nongovernmen- in maintaining knowledge of the implications of sci-
tal organization stakeholders, and the public. These entific and technological advancements in improv-
recommendations are supported by findings and ing regulations to protect the environment, public
CHAPTER 2 – OPERATIONS AND ENVIRONMENT 173
health, and safety. Similarly, states may vary in the For these government initiatives to be successful,
resources dedicated to conduct timely and thorough state and federal regulatory agencies will need a suf-
reviews of permit applications and plans, inspec- ficient level of staff to carry out new and in some cases
tions, and enforcement. Each state should be able heightened regulatory requirements. To this end,
to ensure that: (1) actions are carried out efficiently state and federal governments must provide the nec-
and effectively; (2) regulatory staff have the appro- essary financial resources to support regulation and
priate technical competencies to provide oversight of enforcement. A fee-based funding mechanism is one
industry actions and keep pace with industry prac- approach to provide these in states where there are
tices and technology; (3) standards evolve over time neither the resources nor adequate industry contri-
to take into account technological innovation, inten- butions to support this function, provided that such
sity of development, and scientific advancements; and fees support the institutional mission of efficient and
(4) regulations are enforced. effective regulation and are not used solely to increase
taxes for general budgetary support.
To deal with the limitations of prescriptive regula-
tions, some agencies have developed performance-
Environmental Footprint Analysis
based requirements allowing for the use of new prac-
tices and technologies while meeting environmental As discussed in the section entitled “Sustainable
protection goals. This approach potentially allows Strategies and Systems for the Continued Prudent
greater flexibility and innovation while ensuring envi- Development of North American Natural Gas and
ronmental protection, but both operators and regula- Oil,” an environmental footprint (EF) analysis can be
tors have recognized that this is not the best approach a valuable tool for considering the environmental ben-
in all cases. State and federal agencies must seek a efits, impacts, and risks associated with each energy
balance between prescriptive and performance-based source in comparison to the other energy sources that
regulations to encourage innovation and environ- are available. In theory, an EF analysis is an objec-
mental improvements while maintaining worker and tive, science-based assessment of the potential posi-
public safety. tive and negative impacts of each energy source. In
Issues on the Horizon: decisions for the regulatory Path Forward
State, federal, and in some cases, regional regula- There is a range of views on whether particular
tions are in place to govern oil and natural gas pro- outstanding regulatory issues are best addressed
duction for the purpose of achieving environmen- through state or federal regulatory action. Many
tal protection. The interaction of these many layers state agencies have unique knowledge and exper-
of regulation is complex and generally effective. tise relative to the local geological, hydrological,
However, regulation among jurisdictions is uneven
environmental, and land use setting, and are
and in some cases requires strengthening resources
responsible for regulation and development of
available for staffing, continuous training to keep
private and state natural gas and oil resources,
current with changes in the industry, and enforce-
as well as for implementing certain federal laws.
ment. In certain circumstances, there are federal
Federal agencies have similar responsibilities for
legislative exemptions or special considerations
federal mineral development where the federal
afforded the natural gas and oil industry that some
government owns or controls such mineral rights
environmental advocates believe result in material
or lands. Some entities believe states are gener-
deficiencies in environmental protection, particu-
ally more nimble than federal agencies in their
larly in relation to water and air quality. Others,
ability to adapt to changes in technology and
including many in the natural gas and oil industry
and in state governments, maintain that the spe- new industry practices. Others believe that only
cial classifications under federal law are appropri- through federal regulation can there be assur-
ate and supported by scientific or economic find- ance of a reasonably consistent level of envi-
ings, and addressed by state laws. These special ronmental and public health protection across
considerations exist for many industries. the country.
174 PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources
practice, EF analyses tend to remain in early stages of independent – nor can their agreement be taken as
development, with analyses exhibiting widely varying evidence for the reliability of the results if they are
assumptions and different techniques for measuring interdependent. Furthermore, due to the large scope
impacts that often produce apples-to-oranges com- of EF analyses, they face a wide assortment of ana-
parisons across fuels and energy resources. An EF lytical issues that arise from research in other fields
analysis is often conducted in a manner to consider such as geology, biology, health sciences, chemistry,
the environmental impacts across the life cycle of an engineering, climate studies, and social science. Add-
operation or product. When this is done, a life-cycle ing to the difficulty of comparing the results is the fact
assessment (LCA) is typically employed to define the that different EF studies have different definitions of
beginning, middle, and end phases or steps to be con- what represents an environmental impact and may be
sidered in the EF analysis.2 estimating quantities whose definitions only partially
overlap.
There are technical issues such as incomplete data
and the lack of consensus around quantification of A comparison of two such studies serves to illustrate
impacts and risks. This latter fact complicates the a few of these issues. The Bonneville Power Administra-
ability of this potentially important analysis to pro- tion Fish & Wildlife Implementation Plan Final Environ-
vide policymakers with useful information to evalu- mental Impact Statement (BPA study) and The Environ-
ate the relative importance of the different impacts.
mental Cost of Energy prepared by the Applied Energy
Moreover, the different resource types for the same
Studies Foundation (AESF) took different approaches
fuel may have different impacts, such as with shale gas
to determining the EF for a range of energy sources.
versus conventional gas. The results of an EF analy-
While the former focused on health effects and mon-
sis are not intended to be a rationale to avoid miti-
etized those effects, the latter analyzed a broader
gating the impacts of any fuel. An EF analysis can be
range of environmental impacts and did not assign
an effective tool for evaluating the relative impacts of
dollar values. The BPA study assessed a variety of
each energy source by each type of impacted environ-
energy sources but did not evaluate a full life cycle,
mental resource.
neglecting to include transportation and production
impacts. The AESF study addressed a wider range of
To illustrate why a standard EF methodology is
energy sources considered under a full primary life-
needed, it is useful to examine existing studies on
cycle assessment, including extraction, processing,
the subject and their similarities and differences. The
transportation, and generation. There were also many
fundamental assumptions and organization of any EF
methodological differences.
analysis strongly influence its quantitative results and
the validity of comparisons to other studies. Different
Figures 2-1 and 2-2 display some of the results from
studies have different boundaries around the analysis
the two studies on water and land resources. The fig-
– i.e., how far back and forward in the life cycle they
ures show that the results of the two studies vary
go. Results will be very different when comparing the
widely, for the reasons stated above. Such differences
footprint of raw fuels vs. end uses, where the latter
argue for the development of a sound, consistent
takes into account efficiencies of end-use technologies
approach to footprint analysis that is vetted through
and their impacts. There are many other large and
the various stakeholder groups and would result in
small assumptions that go into arriving at the final
a comparable set of estimates for the impacts of the
estimate of footprint.
various energy sources.
The body of literature on EF represents an evolving
The federal government should support the devel-
set of related estimates rather than a set of indepen-
opment of a methodology(ies) for conducting an EF
dent analyses. Most EF analyses use previous stud-
analysis. As sound methodologies are established
ies as the sources for their data so that estimates
and vetted, regulators and other policymakers should
from different studies cannot necessarily be seen as
refine their understanding of the environmental foot-
2 Science Applications International Corporation (SAIC), Life print of energy sources, including natural gas and oil,
Cycle Assessment: Principles and Practice, EPA/600-R-06-060, as part of providing a high-quality information base
prepared for the National Risk Management Research labora-
for making decisions about energy choices that reflect
tory, Office of Research and Development, U.S. Environmen-
the different nature and intensity of impacts. As envi-
tal Protection Agency, May 2006, accessed June 29, 2011,
http://www.epa.gov/nrmrl/lcaccess/pdfs/600r06060.pdf. ronmental considerations of energy choices become
CHAPTER 2 – OPERATIONS AND ENVIRONMENT 175
Figure 2-1. Water Consumed to Provide Electricity to 1,000 Average U.S. Households Annually
Figure 2-1. Water Consumed to Provide Electricity to 1,000 Average U.S. Households Annually
6
BONNEVILLE POWER ADMINISTRATION ENVIRONMENTAL COST OF ENERGY
S 5,145,900
R
U
O 5
H
T
T 4,290,000
A
W
A 4
G
E
M
0 3,312,400
0
0
1, 3
1
R
E
P
S 2,095,000
N
O 2
L
L
A
G
N
O
LI 1
L
MI
0 16,500
0
NATURAL GAS COAL WIND
Figure 2-2. Area Disturbed to Provide Electricity to 1,000 Average U.S. Households Annually
Figure 2-2. Area Disturbed to Provide Electricity to 1,000 Average U.S. Households Annually
BONNEVILLE POWER ADMINISTRATION ENVIRONMENTAL COST OF ENERGY
21.2
S 20
R
U
O
H
T
T
A
W
A
G
E
M
0
0
0
1, 10
1
R
E
P
S
E
R
C
A
2.59 2.45
1.77
0.63
0.3
0
NATURAL GAS COAL WIND
176 PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil Resources