Operations and Environment - Chapter Two - Energy.gov
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
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
yy Introduction and Summary
environmental protection. These outcomes are
important in their own right, but also in order to yy Resource Play Variations and Associated Envi-
enjoy access to the resources for extraction and ulti- ronmental Challenges
mate satisfaction of consumers’ energy demand.
yy History of Innovation in Environmental Stew-
Given the importance of these issues, they have
ardship
strongly influenced the study process.
yy 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 yy 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 yy Offshore Safety and Environmental Management
environmental management; and describes the
variation in natural gas and oil resources and the yy 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 yy 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
the importance of these issues, their influence on the Offshore operations environmental challenges are
study process has been significant. Risk to the envi- somewhat different than onshore due to the sensitivi-
ronment exists with natural gas and oil development, ties of the marine environment, harsh operating con-
as with any energy source. Local, state, and federal ditions, remote locations in the case of the Arctic, and
governments have developed a mix of prohibitions, advanced technologies employed. These challenges
regulations, and scientific study to reduce potential include:
environmental impacts of natural gas and oil develop- yy 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.
yy 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, yy 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:
yy Arctic Ice Environments – Responding to an oil
yy 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:
yy Water Management – Produced water handling
and disposal has created apprehension about exist- yy 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.
yy Land Use Encroachment – The encroachment into yy 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.
yy Methane Migration – Methane in domestic drink-
ing water wells, either naturally occurring or from yy 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
yy 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 yy 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.‡
yy Hydraulic fracturing was first used in 1947 in an
oil well in Grant County, Kansas, and by 2002, yy A new voluntary chemical registry (FracFocus)
the practice had already been used approximately for disclosing fracture fluid additives was
a million times in the United States.* launched in the spring of 2011 by the Ground
Water Protection Council and the IOGCC. Texas
yy 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
U.S. oil production and 67% of natural gas pro- yy The Environmental Protection Agency concluded
duction.† in 2004 that the injection of hydraulic fractur-
ing fluids into coalbed methane wells poses little
yy 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
yy In areas with deep unconventional formations hydraulic fracturing and drinking water and
(such as the Marcellus areas of Appalachia), the groundwater resources.
shale gas under development is separated from yy 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.
The natural gas and oil industry today is notably
Prudent Development
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:
yy Public Awareness of Industry Operations – The Environmentally responsible development is
public has been disappointed by low performance another key element of prudent development, under-
of some operators, creating a sense of alarm about pinning environmental stewardship and sustainabil-
technologies and practices with which they may not ity. In the context of recovering natural gas and oil
be familiar, such as hydraulic fracturing. resources while protecting public health and the envi-
ronment, environmentally responsible development
yy Location – Development is occurring in areas where requires:
there has not been significant activity in decades.
yy Thorough predevelopment planning
yy Transparency – Questions have arisen regarding
the transparency of the industry from policymak- yy Development of effective regulatory approaches
ers, nongovernmental organizations, and stake- yy A commitment to continuous improvement
holders.
yy A commitment to implementing planned actions
yy Regulatory Responsibilities – There is increased
yy 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-
yy Complex Regulatory Framework – There is ate to the task, and incorporating engagement with
increased environmental regulatory complexity at parties impacted by the development of a resource.
the federal, state, and local levels. Due to the diversity of areas with natural gas and oil
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,
production delays, lawsuits, and regulatory actions. ronmentally responsible development, all levels of
In order to make public engagement meaningful and the natural gas and oil industry should be encouraged
successful, companies must listen to stakeholders, ask to use appropriate and comprehensive predevelop-
for alternative views, and reflect stakeholders’ posi- ment planning, stakeholder engagement, risk assess-
tions in strategic objectives and communications. ment, and the innovative applications of technology.
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
environmental advocates believe result in material government owns or controls such mineral rights
deficiencies in environmental protection, particu- or lands. Some entities believe states are gener-
larly in relation to water and air quality. Others, ally more nimble than federal agencies in their
including many in the natural gas and oil industry ability to adapt to changes in technology and
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
To illustrate why a standard EF methodology is impacts. The AESF study addressed a wider range of
needed, it is useful to examine existing studies on energy sources considered under a full primary life-
the subject and their similarities and differences. The cycle assessment, including extraction, processing,
fundamental assumptions and organization of any EF transportation, and generation. There were also many
analysis strongly influence its quantitative results and methodological differences.
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
small assumptions that go into arriving at the final the various stakeholder groups and would result in
estimate of footprint. a comparable set of estimates for the impacts of the
various energy sources.
The body of literature on EF represents an evolving
set of related estimates rather than a set of indepen- The federal government should support the devel-
dent analyses. Most EF analyses use previous stud- opment of a methodology(ies) for conducting an EF
ies as the sources for their data so that estimates analysis. As sound methodologies are established
from different studies cannot necessarily be seen as and vetted, regulators and other policymakers should
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-
tal Protection Agency, May 2006, accessed June 29, 2011, the different nature and intensity of impacts. As envi-
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
5,145,900
MILLION GALLONS PER 11,000 MEGAWATT HOURS
5
4,290,000
4
3,312,400
3
2,095,000
2
1
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
20
ACRES PER 11,000 MEGAWATT HOURS
10
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 Resourcesmore relevant in a carbon-constrained economy, through production, plugging of the well, and final rec-
developing better, more complete information about lamation. Industry has implemented new technologies
impacts from producing, transporting, and consum- and innovative practices to better control water use,
ing different forms of energy will provide a more reduce air emissions, and ensure groundwater protec-
robust foundation for public policy decisions that tion. Additional performance improvements have been
affect the future energy mix of North America. Simi- developed for hydraulic fracturing, materials manage-
larly, such information could be incorporated into ment, and overall operations and management.
analyses used in making investment and purchasing
decisions by consumers, producers, and state and fed- Continued development of advanced technologies
eral governments. and operating practices is critical to future recovery of
high potential natural gas and oil resources along with
Technology improved environmental performance. Research and
development conducted by both industry and gov-
Improvements in environmental performance have ernment, in such areas as siting and planning, drill-
occurred in every phase of natural gas and oil develop- ing, stimulation, and environmental management to
ment for both offshore and onshore operations, from minimize water, air, and land impacts, will make it
construction, drilling, completion and stimulation, possible to develop future natural gas and oil supplies
Examples of Industry Technological and Environmental Advances
Well Control Methods (such as rotary rigs, downhole conditions – i.e., another set of eyes to
mud systems, casing and cementing, and blow- review ongoing operations and provide feedback on
out preventers): Designed to stop the uncon- critical operations.
trolled releases of oil and gas from wells.
Underground Injection Control Program (e.g.,
Drilling Advances (such as directional/hori- construction of enhanced oil recovery and dis-
zontal drilling and multi-well drilling pads, and posal wells): Protects groundwater and allows
elimination of open pits through closed loop subsurface disposal instead of surface disposal.
mud systems): Greatly reduces the number of
wells drilled and surface area footprint (and atten- Water Treatment and Reuse Technology: Con-
dant environmental impacts), allows for centraliza- serves freshwater, reduces transportation impacts,
tion of facilities, and avoids/minimizes risk to sen- and decreases discharge volumes.
sitive environments.
Modern Plugging Methods (such as cement
Deepwater Subsea Production Systems (such formulation and plugging techniques): Greatly
as subsea completions with tie back to produc- reduces environmental risks from abandoned
tion platforms): Offer an automated and leak- wells.
resistant system that significantly reduces the
environmental footprint and enables recovery of Remote Operated Vehicles: Enables robotic
previously uneconomic reservoirs. capabilities in ultra-deepwater operations.
Subsea Well Containment: Subsea contain- Long Distance Transport of Natural Gas
ment systems are available that can operate in up (including pipeline technology and compres-
to 10,000 feet of water and contain up to 60,000 sion): Greatly reduces the venting of natural gas
barrels of oil per day. Equipment designed to con- as a “waste.”
tain 100,000 barrels of fluid per day will be avail-
able by the end of 2012. Pipeline Leak-Detection Systems: Enables
increased monitoring capability to determine pipe-
Remote Monitoring Systems and Downhole line integrity and provide for rapid response at the
Instrumentation: Allow for real-time view of earliest signs of a pipeline leak or failure.
CHAPTER 2 – OPERATIONS AND ENVIRONMENT 177while protecting the environment. The accompany- that much of the data is not easily shared. Different
ing text box includes examples of industry technology software packages and data standards have been used
advancements that have led to better environmental over the years, which made it difficult for agencies to
protection. receive data from companies and also difficult, if not
impossible, to share operational and environmental
While it is important not to jeopardize this private data.
enterprise system of innovation, sometimes the pay-
off period for such research is too long to attract pri- Additional efforts are needed in the area of stan-
vate support. Therefore, private investment cannot dardization of data and its communication between
always be counted on to perform this research, and entities. This standardization is expected to provide
federal government agencies should also perform benefits to the public in environmental and health
important roles in supporting the development of protection, and could also provide industry with cost
new technology. In other cases, the intellectual prop- savings. These cost savings will result from mak-
erty developed by research is better held as a public ing the data easier to communicate with others and
good rather than being held privately. This can occur report to regulators, as well as from streamlining
when the benefits of the research would accrue to the regulations, reducing duplicative reporting, and pro-
United States as a whole, yet do not meet the criteria viding means to review and learn lessons from past
of any individual company to justify the investment incidents.
such as with methane hydrate extraction technolo-
gies. Public research and development investment Industry Transparency and
may also be justified when it improves recovery of fed- Public Education
erally owned natural gas and oil, producing benefits
that accrue directly to the government through the Earning public trust through excellent environ-
collection of royalties. mental performance includes maintaining transpar-
ency and informing the public about operations and
Data Management risks. This information and understanding is critical
to achieving and maintaining the public’s permission
Modern computer systems have provided a means to operate in many parts of North America. Indus-
for more data to be readily available to operators, try needs to clearly explain nonproprietary produc-
regulators, and the public. Use and analysis of these tion practices and environmental, safety, and health
data have provided a means to conduct more com- impacts. The public should have the information nec-
plex technical and environmental assessments, which essary to have a clear understanding of the challenges,
may, in turn, increase regulatory requirements. The risks, and benefits associated with natural gas and oil
increased complexities of new technologies require production. Transparent reporting of comparable
that operators and regulators have access to and can and reliable information can provide companies the
quickly assess larger and more complex data sets so tangible and intangible benefits of stronger relation-
that they can minimize risk and maximize environ- ships with communities, employees, and public inter-
mental protection. Widespread access to the Internet est groups. This is an essential part of earning public
has also increased the opportunities for more efficient trust and critical to establishing appropriate public
data sharing in the areas of regulatory reporting, data policies and regulations. In addition to ensuring pub-
sharing between partners, and increased public access lic access to important data about environmental and
to operational and compliance information main- operational performance, public education can take
tained by public agencies. many forms, including information libraries, K-12
curricula, media campaigns, speakers’ bureaus, web-
A common issue is that both private and public sites, and studies of risks in areas of special consid-
organizations have not created standard data man- eration.
agement processes or common programs across their
own enterprises. Non-centralized data limits the One recent example of the natural gas and oil
ability of users to share information and make more industry’s efforts at transparency is found in Frac-
effective use of the information gathered. Histori- Focus, the hydraulic fracturing chemical registry
cally, many agencies and companies developed their website. A joint project of the Ground Water Protec-
data management systems in relative isolation so tion Council (GWPC) and the Interstate Oil and Gas
178 PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil ResourcesFraming Questions
The Operations & Environment Task Group was 3. What is the environmental and regulatory
tasked with answering the following framing ques- framework for growth and development of
tions: North American natural gas and oil resources?
1. What is the evolution of environmental 4. What technological and operational advances
improvements in operating practices and tech- are on the horizon to improve efficiency and
nologies used across the range of resource environmental performance in offshore and
plays and regional differences? onshore operations?
2. What is the environmental footprint of 5. What sustainable development principles and
upstream and midstream natural gas and oil practices will enhance and demonstrate North
operations, including greenhouse gas emis- American environmental leadership into the
sions, compared to other energy sources? future?
Compact Commission (IOGCC), FracFocus pro- unique aspects of offshore safety and environmen-
vides information about the chemicals used in the tal management that must be considered to ensure
hydraulic fracturing of natural gas and oil wells along that offshore production is both safe and environ-
with educational materials on hydraulic fracturing, mentally responsible. The Key Findings and Policy
groundwater protection, and regulation. Many natu- Recommendations section presents a more complete
ral gas and oil companies participate in FracFocus but discussion of the Operations & Environment Task
not all do so. Increasing the participation in FracFo- Group’s findings and recommendations.
cus to all natural gas and oil companies that engage in
hydraulic fracturing, and adding into the system all Resource Play Variations and
wells currently in drilling and production, would be
important steps in raising the level of industry trans- Associated Environmental
parency. Challenges
The accumulation of natural gas and oil requires
Chapter Organization three elements: a hydrocarbon source, a reservoir to
This chapter presents discussion and analysis store the hydrocarbons, and a trapping mechanism
leading to the major findings and recommenda- to hold them in place. These three elements exist
tions presented above. The Resource Play Varia- in a wide range of resource plays throughout North
tions and Associated Environmental Challenges America. Consequently, North American producers
section describes how variations in natural gas and operate in diverse geographic regions, characterized
oil resource types lead to associated variations in by differences in topography/geomorphology, rain-
environmental impacts and challenges. The History fall, and ecosystems, as summarized in Table 2-1.
of Innovation in Environmental Stewardship sec-
Most natural gas and oil wells incorporate a common
tion presents information showing how innovation
set of processes3 that result in a common set of opera-
in technology and practices has improved environ-
mental performance throughout the history of the tional and environmental challenges. Despite these
industry. The History of Natural Gas and Oil Envi- similarities, a one-size-fits-all approach to explora-
ronmental Laws section describes this history as it tion and production would be impossible. Operators
applies to natural gas and oil development. The Sus- face unique or more intense challenges in developing
tainable Strategies and Systems for the Continued resources of certain types or with certain physical,
Prudent Development of North American Natural geographic, or physiographic characteristics. Unique
Gas and Oil section addresses these topics and how
3 Paul Bommer, A Primer of Oilwell Drilling: A Basic Text of Oil and
they could be applied into the future. The Offshore Gas Drilling, 7th ed. Austin: The University of Texas Continu-
Environmental Management section includes the ing Education Petroleum Extension Service, October 2008.
CHAPTER 2 – OPERATIONS AND ENVIRONMENT 179Table 2-1. Play Variation by Geographic Distribution
Region Topography Rainfall Ecosystem
Onshore
Northeast/Midwest USA/ Hills and valleys, Rain and snow prevalent Deciduous forests
Canada open flood plains
Southwest/ Midcontinent Relatively flat plain/ Mainly dry with Open rangeland
uplifted plateau rainy periods
Western mountain region Upthrusted mountain Mainly dry with Alpine
USA Canada ranges and foreland basins winter snows
West Coast USA/Canada Mixed terrain of high Rainy on coast, Rainy forests near Pacific,
mountains and flats very dry inland desert
Offshore
Coastal/Shallow 1,000’ water depth Severe hurricane potential Marine habitat
Shelf
Arctic Open water to Severe weather, ice Open water to
ice-covered water ice-covered water
strategies, technologies, and environmental consid- associated with development of conventional natural
erations are required when developing and managing gas and oil resources both onshore and offshore, and
each individual resource play. Table 2-2 summarizes then those associated with unconventional resources.
some important operational and environmental con-
cerns inherent in each type of play. Overview of the Life Cycle
Significant geographic and physiographic diversity of Natural Gas and Oil Exploration
can be found within a single resource play type, again and Production
necessitating varying development strategies, as illus-
trated in Table 2-3 for current shale plays. Multiple The following brief overview of natural gas and oil
play types may even be located in a single physio- exploration and production is a general description
graphic basin, as in the Uinta-Piceance basin in Utah that applies to all play types, both onshore and off-
and Colorado.4 Figure 2-3 presents the play types shore, and provides context for this chapter.
found in the Uinta-Piceance basin, which include, but
yy Exploration – Performed to establish the presence
are not limited to, coalbed natural gas, shale gas, oil
of hydrocarbon-bearing rocks in an area of interest,
sands and tight oil, oil shale (kerogen), and conven-
tional natural gas and oil. exploration typically begins with geologic evalua-
tion to identify underground geologic structures
Operational and environmental differences are par- and properties characteristic of hydrocarbon accu-
ticularly pronounced between onshore and offshore mulations. Various surveys are employed to assess
development, and between conventional and uncon- specific traits of rocks such as: magnetic surveys
ventional resource development.5 Accordingly, this evaluate magnetic field intensity variations; geo-
section addresses the challenges and potential impacts chemical surveys look for the presence of naturally
migrated hydrocarbons near the surface; gravimet-
ric surveys find variations in the gravity field; and
4 Charles W. Spencer, “Uinta-Piceance Basin Province (020)” seismic surveys, the most common survey type,
(n.d.), accessed June 27, 2011, http://certmapper.cr.usgs.gov/ evaluate the acoustic properties of the rock.
data/noga95/prov20/text/prov20.pdf.
5 U.S. Department of Energy, Environmental Benefits of
Once a potential oil or natural gas accumulation
Advanced Oil and Gas Exploration and Production Technology, is identified, an exploration well is drilled to con-
DOE-FE-0385, October 1999. firm the presence of hydrocarbons and further
180 PRUDENT DEVELOPMENT: Realizing the Potential of North America’s Abundant Natural Gas and Oil ResourcesYou can also read
