Hydraulic Fracturing Presentation

1. Hydraulic Fracturing Myths and Maneuvers Presented by Cindy BishopSociety of Texas Environmental Professionals Meeting January 10, 2012 1

2. Hydraulic Fracturing: Myths and ManeuversI. Hydraulic Fracturing 101 1. What is it? 2. Why do we care? 3. What’s the problem?II. Regulations – Who’s on First? 1. Texas 2. EPAIII. Myths (Studies)IV. Maneuvers 1. US v. Range Production Company 2. Maryland v. Chesapeake Energy Corp. 3. Town of Dish v. Atmos Energy, et al. 2

3. What is Hydraulic Fracturing (“Fracing”)?General Steps•Obtain water source•Well construction•Fracing•Waste disposalFracing•Liquid pressure•Fissures•Propping agent•Flowback water 3

5. Why do we care?•Natural gas heats ½ of US homes•Natural gas fuels more than 20% ofannual electricity production•Natural gas use will increase as coalplants are retired•20% of U.S. gas supply will be fromshale gas by 2020 5

6. It is projected that shale gas will comprise over 20%of the total US gas supply by 2020 (EPA) NATURAL GAS PRODUCTION BY SOURCE (TCF/YEAR) 6

7. Effect Locally•Since 2003 15,675 gas wells drilledand fracked in North Texas•2,000 wells in Fort Worth 7

9.  About 1/3 flowback liquid returns Disposal well Surface impoundment Land surface 9

10. Waste Disposal – SurfaceImpoundment 10

11. WHAT’S THE PROBLEM? 11

12.  What’s the Problem? Natural Gas in Well Water

13. April 11, 2011 13

14. What’s the Problem?•Water for fracing•Fracing •Chemicals in frac water •Methane release•Disposal of flowback water•Air emissions•Noise, light, odor•Earthquakes 14

15. What’s the Problem?   Chemical Mixing  Well Injection  What are the possible impacts of inadequate treatment of hydraulic fracturing wastewaters on drinking water resources? FIGURE 1. FUNDAMENTAL RESEARCH QUESTIONS POSED FOR EACH STAGE OF THE HYDRAULIC FRACTURING WATER LIFECYCLE  What are the possible impacts ofwithdrawalsof flowback and Whatmight large volume water releases of hydraulic fracturing What are the possible impacts of releases from ground and How arethe possible impacts of the injection and fracturing Wastewater Treatment Flowback and and Waste Disposal Produced Water surface wateron drinkingwaterwater resources? produced water on drinking water resources? processWater drinking resources? fluids on drinking water resources? impact Acquisition DRAFT Hydraulic Fracturing Study Plan February 7, 2011 -- Science Advisory Board Review --

16. Regulating Fracing Who’s on First? 16

17.  The Texas Railroad Commission has primary jurisdiction over oil and gas drilling.  Tex. Nat. Res. Code 81.051; 16 Tex. Admin Code 3.5 Texas Commission on Environmental Quality has primary jurisdiction over conservation of natural resources and protection of the environment  30 Tex. Admin Code 5.012 17

18. • Well Drilling/re-completion• Disposal wells• Pits for storage of oil field fluids or oil and gas wastes.• Spills associated with production• Oil and Gas Waste • Applicable Regs: 16 Tex. Admin. Code 3.8 (Water Protection); 3.13 (Casing, Cementing, Drilling, and Completion Requirements); RRC Rule 38; 40 CFR 261.4(a)(12)• Surface casing program (eff. 9/1/11) 18

19.  Disclosure of Fracing Chemicals (16 TAC § 3.29) ◦ Applies to fracturing operations where RRC has issued an initial drilling permit on or after Feb. 1, 2012 ◦ Supplier/service company to operator – 15 days after completion of fracing ◦ Operator to RRC – disclose into online database on or before submission of well completion report to RRC  (30 days after well completion) 19

20.  Disclosure of Fracing Chemicals (16 TAC § 3.29) ◦ Disclose:  Volume of water used  Each fracing chemical  Concentrations  Suppliers ◦ Exception for trade secrets 20

21.  Surface water use Spills of hazardous substances Nuisance Odor Complaints Air Emissions ◦ Permit by Rule (30 TAC §106.352)  New PBR: applies to Barnett Shale operations constructed or modified after April 1, 2011 ◦ Existing operations in Barnett Shale claiming old PBR must notify TCEQ by Jan. 1, 2013 21

22.  Memorandum of Understanding: 16 TAC § 3.30 22

23.  Wastewater discharges Stormwater Underground injection wells involving diesel TSCA § 8(c) Proposed NSPS/NESHAP revisions (final rule by Feb. 28?) 23

24.  Energy Policy Act of 2005 specifically excludes hydraulic fracturing operations. ◦ Exemption for: “The underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities.”  42 U.S.C. 300h(d)(1)(B)(ii). 24

25.  No EPA action after 2005 Energy Policy Act Summer 2010 – EPA posts on its website that fracing with diesel requires a UIC permit August 2010 – Independent Petroleum Association v. EPA (D.C. Cir.) 25

26.  Chemical disclosure statutes in Arkansas, Pennsylvania, Wyoming and Colorado, Michigan, Texas, California Drilling moratoriums: NY, Maryland, PA 26

27.  Barnett Shale ◦ City of Fort Worth rules on drilling ◦ Town of Dish blocks drilling ◦ City of Dallas has not issued any drilling permits  task force for considering drilling requirements 27

28. 28

29.  Sampled 68 drinking water wells in PA and NY Methane concentrations were 17 times higher in water wells near active vs. inactive wells Methane was thermogenic “Methane Contamination of Drinking Water Accompanying Gas-well Drilling and Hydraulic Facturing” 29

30.  85% of wells sampled contained thermogenic methane – regardless of location No fracing fluid detected in shallow water Water properties consistent with historical data Methane likely did not come from actual fracing 30

31.  Methane is a GHG Fracing has a higher carbon footprint than coal 3.6 to 7.9% escapes in fracing 1.7 to 6% escapes in regular drilling “Hogwash” 31

32.  January 6, 2012 New Cornell Study Prior study was “seriously flawed” Fracing has a carbon footprint that is half to a third that of coal 32

33.  2004 EPA study – little to no risk of drinking water contamination during fracing of coalbed methane wells Al’s Study 2011 EPA study pending Wyoming Study 33

34.  2012 - EPA proposed year to release interim results 2012 to 2014 - additional results to be released as particular investigations completed 2014 - EPA proposed year to release another report 34

35. EPA Wyoming Study Draft Study – Dec. 8, 2011 Studied rural water wells in response to complaints Wells in area since the 1950s 169 production wells 33 surface pits EPA collected soil and gw samples Conclusions: (1) pits are a source of shallow gw contamination (2) likely impact to gw from hydraulic fracturing 35

36. EPA Wyoming Study - Problems Draft Study – no peer review Area has a shallow gas field EPA drilled monitoring wells into a gas reservoir and found natural gas – duh QA/QC issues with blank samples Results from water well tests do not exceed drinking water standards Pits are already in remediation program 36

37. UT Study UT Energy Institute Groundwater study in Barnett, Haynesville and Marcellus formations Final Report Expected January 2012 Preliminary findings – no direct link between fracing and groundwater contamination 37

38. LITIGATION 38

39. • 12/7/10 – EPA issued Emergency Administrative Order against Range under SDWA• Methane in 2 drinking water wells in Parker County “likely” due to fracing from Range wells in the area 39

40.  EPA ordered Range to submit: ◦ A survey of all private water wells in the area and a sampling plan for approval. ◦ A plan to conduct soil gas surveys and indoor air analyses for all properties serviced by the nearby water wells. ◦ A plan to identify and eliminate gas flow pathways to the Trinity Aquifer. ◦ A plan to remedy the areas of the aquifer that had been affected by Range’s activities. 40

41.  1 day after the EAO issued, Railroad Commission sets a hearing on Range Meanwhile, EPA sues Range to enforce the EAO (1/18/11) 3/7/11 – RRC finds no evidence that Range caused damage to the drinking water wells 3/22/11 – Range sues EPA, seeking dismissal of EAO on constitutional and evidentiary grounds 41

42.  EPA seeks: ◦ Permanent injunctive relief to require Range to comply with the EAO. ◦ Civil penalties up to $16,500 per day of violation. 42

43.  4/19/11 – Chesapeake well blowout releases flowback water onto neighboring farmlands and into nearby creek 4/29/11 – Maryland files Notice of Intent to Sue under RCRA and CWA ◦ Injunctive relief ◦ Attorneys’ fees 5/17/11 – Chesapeake Settles with PA for $1 million 43

44.  February 2011, Town of Dish, Texas sued six natural gas pipeline companies that own and operate compressor stations near the town for releasing harmful substances into the air 44

45.  TIMELINE ◦ 2005: residents complained of odors but assured there were no harmful gases ◦ April 2009: city officials confirmed presence of hydrocarbons in the air ◦ Summer 2009: compressor stations expanded; air quality allegedly worsened 45

46. ◦ Sept 2009: independent testing confirmed presence of Benzene, Xylene, Toluene and Ethylbenzene◦ April 2010: TCEQ installed permanent monitoring stations 46

47. Allegations Nuisance ◦ Odor ◦ Noise ◦ Light Trespass No Allegations of Regulatory Violations 47

48.  DAMAGES ◦ Residents suffered loss of land market value, eroded tax base and loss of revenue in the amount of $15,000 per year ◦ $45,000 in legal fees ◦ $15,000 in “other” costs associated with Defendant’s activities ◦ Trespass damages of $1,000 per day ◦ Exemplary Damages 48

49.  Allegations of Drinking Water Contamination ◦ 4 cases in TX 49

50.  Where’s the science? How can we help? ◦ Technical/legal opinions ◦ Baseline study ◦ Disposal audits 50

51. Hydraulic FracturingMyths and Maneuvers Presented by Cindy Bishop 214-893-5646cbishop@cbishoplaw.com www.cbishoplaw.com 51

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