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Leadership on Natural Gas and Cleaner Fuels

Submitted by EFC Team on May 12th, 2011

Leadership on Natural Gas and Cleaner Fuels
Remarks by the Honorable Timothy E. Wirth
Energy Future Coalition
EPA Region 8 State Directors Meeting
Denver, Colorado
May 11, 2011
Thank you for that kind introduction, and a special thanks to my old friend and colleague, Jim Martin. We are so fortunate to have him in office as the EPA Region 8 Administrator.
I am pleased to be with you today for another reason as well.  Coming from Washington, I can feel the change in both altitude and attitude – this is a crowd that understands that when carefully conceived and managed, government regulation can be good for our health, good for our environment, and yes, good for the economy.
In this time of sharp partisan politics and heavy campaign contributions, we often hear a blind rejection of the role of government. But I know that the six states and 27 tribal nations of EPA Region 8 are a better place to live and work because of what you all do, day in and day out.  I thank you, and the people of this region should thank you every day.
Last year I had the opportunity to speak at the Colorado Oil and Gas Association’s annual conference – and suggested to them that “sound regulation can be very good for your industry.”
I urged them to form new alliances, advocate for the strongest possible rules, preserve EPA’s authority from Congressional attack, and work with the states in applying these rules. I urged the industry to focus on increasing demand for natural gas through public policies carefully blended with the disciplines of the marketplace. I want to expand on this theme today – and then take a few minutes to suggest an innovative approach to the region’s ozone challenge. But first, natural gas.
At a time of increased dependence on imports, major financial challenges, and looming climate disruptions, one could hardly imagine better news than the discovery of massive quantities of domestic natural gas. Our domestic shale gas resources are very large, and accessible at low cost.  We now have more than a 100-year supply of domestic gas, an estimated 30 years of which can be produced for less than $4 per thousand cubic feet.
Add to this good news the fact that much of this resource is close to major markets, so the incremental pipeline costs should be modest.  This may create a long period of relative price stability – the opposite of the boom-and-bust roller coaster that has affected supplies and prices going back to the late 1960s.  This is flat-out the best news America has had on the energy front in my 35 years of watching and working with the energy sector.
But as you know so well, there are challenges to this good-news story – legitimate concerns about the impacts of this scale of gas development.  With the rapid growth and increasing sophistication of directional and horizontal drilling, coupled with the advancement of hydro-fracturing techniques, other, less benign issues have also arisen in scale:
  • The injection of chemicals underground and the imperative of  the integrity of the bore hole;
  • The use of large amounts of water and the need to dispose of toxic substances in the contaminated water that returns toward the surface;
  • Land use impacts that affect local communities and regional airsheds and increased air pollution from truck traffic and from leaks of methane and other gases during the production process.
These concerns, individually and collectively, have received an increasing amount of attention – in the national press, among community groups, and in presentations like “Gasland,” and in some jurisdictions they have become the basis for denying drilling or water use permits.
I want to share with you today my own thoughts about how these issues can be handled. I believe that while each of them is serious, they can be minimized by the industry’s own best practices.  But a failure to address these concerns runs the risk of derailing the best energy option we have.
First and foremost, the natural gas industry needs to engage pro-actively and productively on the various health and environmental issues that have been raised.  While the industry has engaged in a vigorous public relations campaign to improve the image of natural gas, I fear that it is steadily losing ground in terms of public acceptance for fracking.  The industry should recognize that its long-term interests are served by working with the regulatory community, not resisting it at every turn.
Partnerships must be developed between the industry, public health authorities, and community groups:
  • The industry respecting public health imperatives;
  • Environmental groups helping to make the new resource feasible; and
  • Regulators taking a balanced approach toward the maturing industry.
Partnerships must develop in four key areas where the industry needs to set and meet high standards – disclosure, the use of water, methane leakage, and land use – areas where government regulators must be firm but creative partners.
First, disclosure:  Simply put, the industry must let the public know what it is doing, how it is doing it, and how well prepared it is for contingencies.
Many in the industry have frequently asserted that the volume of chemicals is small, since the various emulsifiers, surfactants, acids, lubricants, and other chemicals injected under pressure into wells to fracture the surrounding shale amount to less than one-half of one-percent of the total volume.  With all due respect, so what?  If these chemical constituents are carcinogenic, endocrine-disruptive, toxic, persistent, or able to seep into drinking water aquifers, half of one percent of the huge volumes of fluids used in a fracturing job is going to add up to a very large volume.  Keeping the chemicals secret only increases public concern.
Some progress is being made. One gas association is supporting an effort to develop an online public registry of the chemical components used in the hydraulic fracturing process.  The registry is voluntary among producers and will apparently only include data for wells drilled after the beginning of this year. It does not include a requirement that the drilling contractor disclose as a condition of the drilling contract.
If disclosure seems to be a good idea for some in the industry, why don’t those same industry leaders present a united front and demand total disclosure – voluntary if all will agree, regulatory if outliers remain?
As we have read in the public and trade press, the disclosure problem is receiving increasing public attention, and some of the very large established companies, like Exxon and Shell, are moving rapidly toward requiring full disclosure.
This leads to my second specific area of concern: water standards.  In some formations, large volumes of water under enormous pressure are pumped into shale gas wells to fracture the rock and allow the natural gas to flow.  To protect against contamination, particularly of drinking water aquifers close to the surface, the industry must meet very high standards for completing and cementing its wells, as pressure is highest at the point of the well closest to the surface.  Flaws in cementing of wells can be the cause of groundwater pollution well above the target shale layers.
Even more important is careful management of the water – normally about two-thirds of the amount injected – that comes back out of the well after a fracturing job.  This water not only carries the chemicals added in the fracturing process, but also carries materials picked up in the underground formation, such as dissolved solids and salts of heavy metals, even radioactive substances.
This “produced water” needs to be treated properly, and many State agency reports indicate that the municipal treatment facilities to which it is trucked are not capable of dealing with the many, diverse and often novel substances.  Cooperation is imperative between the industry and local and state governments, with assistance from the EPA, to assure that the water coming out of the wells is appropriately treated, that the substances requiring treatment or removal are identified, and that appropriate separation and treatment can take place.  If holding ponds are used, special attention needs to be paid to any elements of the fluids – such as benzene – that may evaporate and become air toxics.
The third concern is methane leakage.  Methane is a much more potent greenhouse gas than carbon dioxide – perhaps 20 times as strong in trapping heat in the atmosphere.  Fortunately, methane has a much shorter life than CO2, dissipating in decades, while CO2 remains aloft for centuries.
100 years ago natural gas was considered a dangerous and useless byproduct of oil production.  But producers no longer deliberately vent or flare their natural gas – it’s too valuable.  Nonetheless, some leakage occurs in the normal course of the gas business, at all three stages of the business – production, pipeline transmission, and distribution.  Shale gas wells that have been “fracked” pose unique leakage threats.  The large volume of water forced into shale formations – upwards of 50 acre-feet of water per well – absorbs methane under pressure and is accompanied to the surface by gaseous methane.
Whether and how the methane from that water is recovered when it returns to normal surface pressure is a function of the industry’s practices and equipment.  The recent Cornell study may have overstated the threat, but it is clear that the industry needs to take very seriously the issue of methane leakage.
The final area of concern is land use.  All natural gas production activities have an environmental footprint, but shale gas production may have greater land-use impacts than conventional wells.  This is because:
  • The relatively low flow rate of a successful well often means that more wells must be drilled to get the same amount of gas;
  • Several wells are typically drilled sequentially in different directions from the same pad, taking longer and generating several times the cuttings and disposal materials;
  • Hydraulic fracturing typically requires a significant gathering of fluid trucks, pumps, chemical vehicles, and other mobile equipment requiring access to the well site, most of which have their own emission challenges; and
  • The withdrawn fluids have to be put somewhere, and surface storage ponds offer only a temporary solution.
Other impacts include noise, ground vibrations, and dust from truck traffic, generating local air pollution.  In states like Pennsylvania and New York, where there has not been a significant amount of conventional drilling in recent years, these impacts have engendered more controversy than in Texas or other areas more accustomed to oil and gas industry operations.
Shale gas production may not be anyone’s idea of an ideal next-door neighbor, but careful planning to minimize impacts, wide public notice about the extent and duration of those impacts, ready access for public officials and others to learn about the land-use issues, openness to reasonable ways of mitigating those impacts – all of these should be part of the industry’s normal practices.
The nation’s shale gas resources and production potential offers a huge domestic source of clean and relatively low-carbon energy just when we need it most.  I started these remarks by saying that regulation can be good if it is done right – good for our health, good for our environment, and good for the economy.  Precisely the same statement can be made about shale gas – it can be good in all those ways if it is done right – if it is produced responsibly, in ways that minimize risks to human health and the environment.
Fortunately, more and more industry leaders agree: for example, Marvin Odum, the President of Shell Oil, recently said that his company “supports regulations that require companies to disclose the chemicals they use in the process … and adhere to the highest safety standards.  Responsible operators should have no problem complying.”  He added: “Make no mistake.  It can be done without harming the environment.  Anything less is unacceptable.”
This attitude will certainly characterize the work of the new Department of Energy subcommittee established under the Chairmanship of Professor John Deutch of MIT. A distinguished scientist (University Professor of Chemistry and former Provost at MIT) and long-time public citizen (former Under Secretary of Energy, Director of Central Intelligence, and Deputy Secretary of Defense), Professor Deutch brings unique expertise and experience, and we all look forward to his committee’s report, the first installment of which is due in 90 days.
The second major issue I want to address today – much more briefly – has to do with air quality in the Rocky Mountain region, especially with regard to ozone.  I am not a scientist, I’m a recovering Member of Congress, so I won’t offer as many answers as I will questions.
Designed to protect the public health and required by the Clean Air Act, over the past 30 years a succession of environmental regulations has gradually tightened emissions, largely from stationary sources.  We anticipate that the EPA will issue tougher ozone standards this summer, so you administrators operating on the front lines will have to find new ways to meet the tighter standards.
Question #1: In addressing this challenge, have mobile sources been considered with the same rigor as stationary sources?  Vehicles themselves have improved greatly, in mileage, performance and cleanliness, but what about fuels – the gasoline and diesel that propel our cars and trucks?
For example, should regulators now focus on the fact that 25 percent or more of every gallon of gasoline consists of toxic chemicals known as aromatics – chiefly, benzene, toluene, and xylene – carbon-intensive compounds that are added to gasoline to increase octane.  EPA has gradually ratcheted down the percentage of benzene, a known human carcinogen, but the others have remained untouched, even though toluene and xylene can form benzene during the combustion process.  Aromatics are harder to completely combust than other hydrocarbons and thus lead to more fine particulate matter, one of the most important air pollution and public health problems in the U.S. today.  In 2005 EPA said that aromatics are considered to be the most significant gaseous precursors of carbon-based fine particulates.  They are highly photochemically reactive, adversely affecting ozone levels, particularly in urban areas.  Would reducing the level of aromatics allowed in gasoline improve air quality? Are air quality administrators authorized to consider improvements in liquid fuels as they look for ways to meet the new ozone standards? If not, it looks to me as if they should be.
Question #2: What do we know about the impact of aromatics on public health?
The short answer is: Not enough. May is Asthma Awareness Month, and here in Region 8 EPA recently hosted an asthma awareness workshop for school nurses and other health care professionals. The purpose was to increase public awareness of the asthma epidemic, which now impacts one of every 12 Americans.  Just last week the Center for Disease Control in Atlanta announced this alarming increase in the incidence of asthma.  Is this epidemic related to the use of aromatics to replace lead in gasoline?  Certainly ozone and particulate matter are known to worsen asthma in children.
Another devastating health condition experiencing an unexplained and even more alarming increase is the incidence of autism.  Scientific American reported in 2009 that the diagnosis of autism in California rose from 6 cases per 10,000 children in 1990, to 42 per 10,000 in 2001, and 90 per 10,000 in 2006 – an increase of 15 times in 15 years.  Analysis has ruled out genetics and better diagnostic techniques as being responsible for most of this dramatic increase.  Studies are increasingly suggesting that unknown environmental factors – including air toxics – are among the principal suspects.  We know that our children are breathing more air toxics, but we aren’t studying the effects – nor are we studying the alternatives.
Let me simply suggest that more attention to this issue is needed, including better health research on the effects of aromatics.  Biofuels can be used to replace the octane now provided by aromatics in gasoline, although the standard 10 percent ethanol blend is not helpful for ozone.  Higher-level ethanol blends could reduce ozone (with catalytic converters tweaked to capture aldehydes).  So could natural gas vehicles, hybrid electrics, fleet requirements, and other tools that can help to clean up the fuels of our transportation system. All these steps could help reduce the looming ozone problem.  The economics are certainly cost-effective (especially when compared with further stationary source reductions), and the public health benefits would probably reach deeply into the American public, especially our children.
In short, the rationale for transitioning away from petroleum goes beyond national security and the economic cost of our huge oil import bill.  It may well be that benefits for public health will provide the most compelling case for the new energy economy.
I hope these comments are helpful, and I look forward to any questions or comments you may have.  Again, thank you for inviting me to be with you this morning.
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