Knowing the Risks

Much of the attention following the recent panel on hydraulic fracturing has focused on the two polarized perspectives of former Shell Oil CEO John Hofmeister and activist Bill McKibben. Sharing the stage with Hofmeister and McKibben that afternoon were Yale hydrologist Jim Saiers and economist Sheila Olmstead, both of whom provided less politically divisive, less prescriptive viewpoints.

Dr. Olmstead, who investigates the regulations, policy, and potential water-quality implications of hydro-fracking throughout the U.S.— particularly in the Marcellus shale region—offered the panel a dose of on-the-ground evenhandedness. As a fellow at Resources for the Future (RFF), a Washington, D.C.-based think tank that does policy research for sustainability-related issues, Olmstead has collaborated on multiple research projects aimed at better understanding shale gas development in the U.S. Her work has focused primarily on energy policy and water quality.

Prior to the panel, I had the opportunity to sit down with Dr. Olmstead to talk about the impacts and regulations of hydro-fracking and her own personal beliefs about whether the U.S. should continue to pursue shale gas development.

 

How did you identify the need for your research?

Because industry has been improving shale gas development practices for many decades, there is a lot of research on the how to efficiently get shale gas out of the ground from the petroleum-engineering side. However there is very little research about the potential external costs of shale gas, including its effects on the environment. This discrepancy has to be remedied in order to develop policy.

We sought to add information to gaps in the research. Knowing that water issues are a main concern, we tried to estimate some of the water quality impacts in Pennsylvania. We also sought to understand what experts viewed as the main environmental risks associated with shale gas development. We surveyed experts in the industry, academia, government, and non-governmental organizations on what they identified as the main environmental risks. The research showed that of the top 20 risks, all four of those groups agree upon twelve. With this research, which will be released soon, we feel that we better understand where to focus future research to understand those external costs to the environment.

 

On the panel, you’ll be representing the regulation perspective. Is this part of the RFF project on shale gas?

Looking at the regulations, there are significant differences in the way that oil and gas are regulated from state to state. Those differences can affect environmental quality or economic development. The amount of heterogeneity is huge and we don’t have a good understanding for why that’s the case or what the implications are.

One of the things to come out of this research is there are also varying levels at which shale gas is regulated. Many aspects of the shale gas process are regulated not through particular statutes but through permitting. Because there are thousands of well sites, each with their own permit, it is difficult to look through each permit to understand what is being regulated in each state. You can find it, but it’s a whole different level of effort for this type of research.

 

Do you believe that these differences in regulations from state to state may cause variations in environmental degradation across states?

While oil and gas permitting is generally a state issue, other aspects of development affecting environmental quality are regulated under federal statutes, like the Clean Air Act or Clean Water Act.  For those issues, there would be more homogeneous impacts.  However, even many CAA and CWA permitting and enforcement functions are devolved to the states, so there could certainly be some differences in enforcement.

Take New York and Pennsylvania. You have two states that have taken different paths to regulating shale gas. I wouldn’t call one successful over the other. Pennsylvania was the first state to allow large-scale development of the Marcellus Shale and regulate it. Many other states have watched Pennsylvania and tried to use its regulations as a guide to adopt their own regulations. New York took the opposite approach by placing a moratorium on shale gas development over the past two years, while they spent more time understanding the environmental implications of shale gas.

 

Do you think that your current work has the potential to influence how New York approaches shale gas development after the moratorium lifts?

We definitely hope so. The work estimating the water quality impacts has that potential.

Because RFF is a policy outreach institution, it’s very important that we not only produce the research, but also deliver it in an explicit way to make it helpful to the people who are making the decisions. They ought to know if we find that there is pollution from this source but not another source.

 

Should the U.S. continue developing shale gas?

As an economist, I look at these vast new domestic gas resources and believe that there are very significant economic benefits. In combustion, natural gas is cleaner than coal. It’s certainly also cleaner in terms of local air pollutants.

But an unknown still exists in the question of whether there is methane leaking out of the wells, and if there is, how much. The climate change question has yet to be resolved. This question is a big variable that needs to be understood in order to approach the question of whether shale gas has less of an impact on climate change than coal. If you weighed even the very significant environmental costs against shale gas’s benefits, you would probably still find that for the country this is a good thing.

That doesn’t mean that regionally there wouldn’t be net costs associated with its development, or that we shouldn’t have very careful regulations so that we don’t irreversibly damage New York City’s water supply. But my perspective is that this is a really important resource, and that there ought to be some practical ways of how to develop it sustainably.

 

If you were placed in charge of water pollution control in the U.S., how would you regulate shale gas?

The water quality issues that we identified are largely about the problem of disposing of the large volume wastewater stream that comes out of the shale gas process. That problem is relatively much more severe in the Northeastern states than in the west, because the geological make-up in the west makes it possible to use deep injection for wastewater. Deep injection has its own issues, but in general, if we have to dispose of wastewater that is the best way of doing it relative to the options.

Pennsylvania and New York are not suitable for deep injections geologically, so there are not many options. Some wastewater is currently treated in these places by water treatment industrial plants. I would be focused on this problem. It’s a regional problem but a serious constraint on the sustainable development of that resource.

When people think about water quality and shale gas, they tend to get scared about things that are special about shale gas, like the examples of lighting sink water on fire. Those issues may be realistic concerns. But another thing you need to consider is that we talking about a very large amount of new industrial development on a huge scale. When you go to the sites, you realize that shale gas operations create a massive change in the landscape. It has conventional pollution implications— just like any other industrial development— in the form of the construction, the trucks, and the impervious surfaces. It’s just an issue of scale. These issues are not anything we don’t know about or that we need to research. I just don’t think that anyone foresaw the scale of this activity. I would be focused on these conventional pollution issues as well and how to deal with them on the scale that they are now occurring.