Monday, March 26, 2012

Shale Gas and Oil: What's New (and Is It New)?

America has continued to experience an upsurge in domestic oil and gas production--a trend that the Energy Information Administration predicts will last through the next several decades.  The oil industry in North Dakota's Bakken Shale, for example, is booming thanks to horizontal drilling and hydraulic fracturing, and a March 2012 New York Times article highlights the social effects, from employment of formerly jobless people from around the country to growth in housing demand and, perhaps, crime.  The Times also reports that we are inching "toward the goal of energy independence" as production of gas and oil within our borders keeps rising as a result of hydraulic fracturing and other technologies.  This follows an earlier Wall Street Journal article reporting that the United States in 2011 was moving toward the status of net exporter of energy--partly due to the economic downturn but also rising production and international demand.

Anyone familiar with old stories from Texas and Pennsylvania oil fields knows that this country has a long history of oil and gas production and that in some respects, this boom is nothing new. In response to industry's and state regulators' repeated reminders that fracturing has occurred for more than half a century, I argue that several things are, decidedly, quite new.  First, this boom is occurring in different times:  We now have better renewable technologies, and our abilities to support efficient consumption of energy have expanded.  These solutions won't offer a full substitute for oil and gas--or even close to one.  Booming production of unsustainable fossil fuels occurs against this backdrop, though, and has important effects on the renewable energy industry.  Betsy Burleson has posted an excellent article that addresses this issue, noting that "natural gas production is likely to stunt the direction and intensity of renewable energy by up to two decades" and suggesting a path forward to ensure effective and just policy moving forward. 

Second, as shown by the outpouring of media attention and citizen participation in EPA meetings around the country in 2010, many Americans are worried about the environmental effects of oil and gas extraction--perhaps even more so than in previous booms. To assert that production has long occurred and that there is nothing to worry about ignores important concerns that should be addressed. 

Finally, although we could have long debates about whether slickwater fracturing--a common technology initially developed in Texas in the 1990s--is "new," it is certainly newer than certain other oil and gas technologies, and its widespread use is an even more recent development. The technique, which is now applied to shales and some tight sands around the country, introduces new activities to oil and gas development, including higher quantities of water consumption, the transport of new chemicals to well sites, and the production of more waste to be stored and disposed of.  Combined with horizontal drilling, it also creates new opportunities, including less surface disruption and associated benefits, such as the avoidance of sensitive habitat and reduced habitat fragmentation and erosion.  So there are new benefits and costs, but it seems unproductive to continue to argue about whether any of this is really "new."  The fact is that we're in a boom, which is creating important jobs and growth but also environmental and social concerns. 

States have responded to the boom in a variety of ways.  Ohio, which disposes of large quantities of drilling and fracturing wastes in underground injection control wells, recently proposed new rules for these disposal wells (which are regulated under the Safe Drinking Water Act) after experiencing several earthquakes.  West Virginia has published new fracturing rules, and North Carolina's Department of Environment and Natural Resources issued a draft report and recommendations as the state's politicians continued to consider lifting the horizontal drilling ban. Colorado's Governor Hickenlooper, in turn, has initiated a task force to address local and state regulation of oil and gas development and (impliedly) potential jurisdictional conflicts. For more discussion of state regulation and developments over the past few years, see American Law and Jurisprudence of Fracing (authored by, among others, fracing expert Professor Chris Kulander of Texas Tech University School of Law and since published by the Rocky Mountain Mineral Law Foundation) and (shameless self-plug) this regulatory analysis funded by the University of Texas Energy Institute and a resulting article.

There has been some activity at the federal level, too.  The Bureau of Land Management has published draft fracturing guidelines, and the Shale Gas Production Subcommittee of the Secretary of Energy Advisory Board issued a helpful report last November.

All of these developments continues to raise broader legal and policy issues, such as questions about races to the bottom or top (Ohio boasts of having "among [the] nation's toughest" brine disposal rules, while New York speaks of lessons learned from Pennsylvania and proposes more stringent regulation in some areas), cooperative federalism, regional regulatory options, and public choice concerns at all levels.  Whether the boom is new, or simply reminiscent of previous domestic fossil fuel production cycles, I hope that we'll continue to see more legal scholarship in this area.  In addition to Betsy Burleson's and Chris Kulander's work mentioned above, Patrick McGinley has an excellent article on regulatory takings and shale gas (19 Penn. St. Envtl. L. Rev. 193),  Emily Collins has offered an extremely useful analysis of Marcellus issues, David Spence thoroughly explores the federalism issues in a University of Pennsylvania Law Review article, Richard J. Pierce, Jr. offers an optimistic and interesting account of shale gas, and Susan Sakmar addresses international issues and the potential for U.S. regulation as a model.  Beyond traditional legal scholarship, the University of Colorado Law School has proposed best management practices for hydraulic fracturing. As always, in the limited space of a blog post I likely have omitted very important legal scholarship and projects, and I welcome comments.

-Hannah Wiseman, Florida State University College of Law

http://lawprofessors.typepad.com/environmental_law/2012/03/recent-developments-in-shale-gas-and-oil.html

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Comments

Shale gas seems to be all the rage these days. Articles everywhere. Here in the UK, the Telegraph just had a big piece on it: http://www.telegraph.co.uk/finance/commodities/9165898/Gas-fracking-will-revolutionise-the-US-economy.html. Now, the UK and Poland are actively discussing launching into this area. Legal issues aside, once things like these get a certain pr and political momentum, they tend to careen forward.

Posted by: renewable energy investments | Mar 26, 2012 1:48:12 PM

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