Hydraulic Fracturing in Michigan: Integrated Assessment

1. Hydraulic Fracturing in Michigan Integrated Assessment Wolverine Caucus January 21, 2014

2. • Brief Overview of the Graham Institute and the Integrated Assessment Center • A few key points about Hydraulic Fracturing in Michigan • The Hydraulic Fracturing in Michigan Integrated Assessment • Questions and Discussion Agenda 2

3. Vision: To foster sustainability on local-to-global scales by solving systemic problems at the human-environment interface that endanger ecosystems and the well-being of future generations  Institutional Leadership  Transformative Education  Translational Knowledge 3

4. Translational Knowledge Vibrant collaborations among academic, practitioner, and other stakeholder communities to advance sustainability scholarship and to influence decisions that protect the environment and enhance quality of life for present and future generations. 4 Graham Institute Integrated Assessment Center

5. U-M Ann Arbor Campus Sustainability Detroit Sustainability Indicators & HOPE Village Initiative Michigan Hydraulic Fracturing Great Lakes Cities Adapting to Climate Change & Lake Levels (in development) National Sustainable Transportation Global Water and Health Graham Institute Integrated Assessment Center 5

6. Stakeholder Input Technical Assessments Develop Tools and Information to Guide Decisions Identify and Evaluate Potential Solutions Clarify the Issue (History, Causes and Consequences) Define the Issue, Identify Challenges Offer Direction and Feedback Provide Background Data Develop Goals Prioritize Options Develop New Resources Evaluate Options Conduct Analyses Gather Data Project Overview Policy Options 6

7. As identified by participants in previous assessments • Generates reports and supporting data • Modifies perspectives • Creates new partnerships • Changes processes • Leverages resources Lund, Katie, Keely Dinse, John Callewaert and Don Scavia (2011). “The Benefits of Using Integrated Assessment to Address Sustainability Challenges.” Journal of Environmental Studies and Science 11 November. Benefits of Integrated Assessment 7

8. • Hydraulic Fracturing (HF) has been used in thousands of wells in Michigan for decades • 2003 State Review of Oil and Natural Gas Environmental Regulations (not HF specific ) – “MDEQ has a well-managed oil and gas environmental regulatory program” • Integrated Assessment developed to focus on High Volume Hydraulic Fracturing (HVHF) but data and analyses cover a range of activity depending on topic or issue • Limited HVHF activity in Michigan at present • Broad range of perspectives on benefits/problems of expanded natural gas use Hydraulic Fracturing in Michigan – Key Points

9. Michigan DEQ Proposed HVHF Rule Revisions 1. Water withdrawal assessment and monitoring 2. Water quality sampling 3. Monitoring and reporting 4. Chemical additive disclosure Hydraulic Fracturing in Michigan – Key Points http://www.michigan.gov/deq/0,4561,7-135-3306_57064---,00.html 9

10. Pathways to Dialogue: What the Experts Say about the Environmental Risks of Shale Gas Development 215 experts who responded to the survey questions were asked to choose from a total of 264 “risk pathways” that link specific shale gas development activities—from site development to well abandonment—to burdens such as air pollution, noise, or groundwater contamination. National focus involving Industry, Government, NGO and Academia http://www.rff.org/centers/energy_economics_and_policy/Pages/Shale_Gas.aspx 10 Resources for the Future Expert Survey

11. Of the 12 consensus risk pathways that all of the expert groups most frequently chose as priorities • 7 involve potential risks to surface water quality, • 2 involve potential risks to air quality, • 2 involve potential risks to groundwater quality, and • 1 is related to habitat disruption. • Only 2 are shale gas specific: potential impact of fracturing fluids on surface water during use and storage/disposal http://www.rff.org/centers/energy_economics_and_policy/Pages/Shale_Gas.aspx 11 Resources for the Future Expert Survey

12. Guiding Question What are the best environmental, economic, social, and technological approaches for managing hydraulic fracturing in the State of Michigan? 12 Hydraulic Fracturing in Michigan Integrated Assessment

13. INTEGRATION TEAM (Graham Institute, Energy Institute, Erb Institute, Risk Science Center) Assignments Final Report Report Sections STAKE- HOLDERS ADVISORY COMMITTEE (external and U-M members) Integrated Assessment Report Team (Graham Staff, U-M Faculty, U-M Students) Stakeholder Perspectives Engagement Input Public Comment Website, Events Guidance Consultation Ongoing Meetings 13 Hydraulic Fracturing in Michigan Integrated Assessment

14. • Maggie Allan, Integrated Assessment Specialist, U-M Graham Sustainability Institute • Mark Barteau, Director, U-M Energy Institute • Valerie Brader, Senior Strategy Officer, Office of Strategic Policy, State of Michigan • John Callewaert, Integrated Assessment Progr. Dir., U-M Graham Sustainability Institute • James Clift, Policy Director, Michigan Environmental Council • John De Vries, Attorney, Mika Meyers Beckett & Jones; Michigan Oil and Gas Association • Hal Fitch, Director of Oil, Gas, and Minerals, Michigan Dept. of Environmental Quality • Gregory Fogle, Owner, Old Mission Energy; Michigan Oil and Gas Association • James Goodheart, Senior Policy Advisor, Michigan Depart. of Environmental Quality • Andy Hoffman, Director, U-M Erb Institute for Global Sustainable Enterprise • Drew Horning, Deputy Director, U-M Graham Sustainability Institute • Andrew Maynard, Director, U-M Risk Science Center • Tammy Newcomb, Senior Water Policy Advisor, Michigan Depart. of Natural Resources • Don Scavia, Director, U-M Graham Sustainability Institute • Tracy Swinburn, Managing Director, U-M Risk Science Center • Grenetta Thomassey, Program Director, Tip of the Mitt Watershed Council • John Wilson, Consultant, U-M Energy Institute Integrated Assessment Advisory Committee 14

15. Technical Reports - The first phase of the project involved the preparation of technical reports on key topics related to hydraulic fracturing Objective: To provide a foundation of information for decision makers and stakeholders, and later policy analysis. • Technology • Geology/hydrogeology • Human Health • Environment/ecology • Policy/law • Economics • Social/public perceptions Technical Reports (Phase 1 – Last Year) 15

16. Technical Report Author(s) Technology Johannes Schwank John Wilson Chemical Engineering Energy Institute Geology/ Hydrogeology Brian Ellis Civil and Environmental Engineering Environment/ Ecology Allen Burton Knute Nadelhoffer School of Natural Resources & Environment Department of Ecology & Evolutionary Biology Human Health Nil Basu School of Public Health (now at McGill University) Policy/Law Sara Gosman Law School Economics Roland Zullo Institute for Research on Labor, Employment & the Economy Social/Public Perceptions Andy Hoffman Kim Wolske Erb Institute for Global Sustainable Enterprise 16 Technical Report Lead Authors

17. Technology. Considerable reserves of natural gas are believed to exist in deep shale formations such as the Utica-Collingwood. In view of the current low price of natural gas and the high cost of drilling deep shale formations it is not clear how much growth will occur in the gas industry in Michigan in the near-term future. Geology/hydrogeology. A recent flurry of mineral rights acquisitions in the state associated with exploratory drilling suggests the potential for growth in natural gas production through high-volume hydraulic fracturing, though only a handful of such wells have been drilled to date. Environment/ecology. Potential impacts of hydraulic fracturing on the environment are significant and include increased erosion and sedimentation, increased risk of aquatic contamination from chemical spills or equipment runoff, habitat fragmentation and resulting impacts on aquatic and terrestrial organisms, loss of stream riparian zones, and reduction of surface waters available to plants and animals due to the lowering of groundwater levels. Some Key Points from the Technical Reports 17

18. Public health. Possible hazards in the surrounding environment include impaired local and regional air quality, water pollution and degradation of ecosystems. Possible hazards in nearby communities include increased traffic and motor vehicle accidents, stress related to risk perception among residents, and boomtown-associated effects such as a strained healthcare system and road degradation. Policy/law. The state is the primary source of law and policy governing hydraulic fracturing in Michigan. The operator of a high- volume hydraulically fractured well must disclose the hazardous constituents of chemical additives to the state Department of Environmental Quality for each additive within 60 days of well completion. Unlike some other states, DEQ does not require operators to report to FracFocus.org, a nationwide chemical disclosure registry. Some Key Points from the Technical Reports 18

19. Economics. The gas extraction industry creates employment and income for Michigan, but the employment effects are modest compared with other industries and not large enough to “make or break” the state’s economy. In the future, the number of technical jobs in the industry will likely increase, while less-skilled laborer positions will decline. Public perceptions. A slight majority of Michigan residents believe the benefits of fracking outweigh the risks, but significant concerns remain about the potential impacts to human health and the environment and the social costs to communities. Differences in how the public, industry, and regulatory agencies view the word “fracking” – as either the entirety of the natural gas development process or only the injection of hydraulic fracturing fluids – can lead to miscommunications that increase mistrust among stakeholders. Some Key Points from the Technical Reports 19

20. Integrated Assessment - The IA will build from the technical reports, focusing on an analysis of strategic policy options regarding hydraulic fracturing in Michigan. The IA will likely be formed around topics identified in the technical reports. Key aspects of the IA that will distinguish it from the technical reports include: • Focus on the identification and analysis of key strategies and policy options, • Collaboration and coordination among researchers to identify common themes and strategies, • Regular engagement with decision makers, and • Robust stakeholder engagement process to inform the IA. Integrated Assessment (Phase 2 – This Year) 20

21. Integrated Assessment Report Team Researcher Expertise U-M Unit Diana Bowman Risk science & health policy School of Public Health; Risk Science Center and Department of Health Management and Policy Brian Ellis Geology College of Engineering; Department of Civil and Environmental Engineering Sara Gosman Law Law School Johannes Schwank Technology Chemical Engineering Ryan Kellogg Economics College of Literature, Science, and the Arts; Department of Economics Eric Kort Atmospheric science College of Engineering; Department of Atmospheric, Oceanic and Space Sciences Shaw Lacy Environment/water Graham Sustainability Institute John Meeker Ryan Lewis Environmental health School of Public Health; Department of Environmental Health Sciences Kim Wolske Risk communication & engagement School of Natural Resources and Environment and the Ross School of Business; Erb Institute 21

22. Draft Plans and Policy Topics for the Integrated Assessment Chemical disclosure Chemical Use, Methane & Other Exposure Environmental health & safety Engineering & environmental practices Water Withdrawal & Waste Management Water Withdrawal Assessment Tool Reuse Waste & waste management State & local level data, budgeting, revenue Zoning controls & land use Impact assessments / development plans Public lands leasing Planning & Preparedness Emergency preparedness Before Activity Contamination & Response Liability & remediation Bonding & orphan wells After Activity During Activity Cross-Cutting Agency capacity Additional studies Ban / moratorium Baseline data / monitoring Leases Public participation & information Policy Topics Working List - Key themes from the technical reports and public comments 22

23. Timeline for the Integrated Assessment Timeline Action/Deliverable October ‐ December 2013 Develop IA Plan December 2013 ‐ March 2014 Draft IA Report April 2014 Advisory Committee Review of Draft IA Report Spring 2014 30 Day Public Comment Period Summer 2014 Peer Review of Draft IA and Public Comments Fall 2014 Revise, Finalize, and Release IA Report 23

24. Questions & Discussion jcallew@umich.edu http://graham.umich.edu/knowledge/ia/hydraulic-fracturing 24

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