IPEC, Aug. 31, 2010

Drivers of the Environmental RenaissanceAugust 31, 2010

John R. Duda Director, Strategic Center for Natural Gas & Oil

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Source: http://www.msnbc.msn.com/id/36880053

A Tragic, Never-To-Be-Forgotten Disaster …But not the Genesis

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Outline

· Historical context

· Fundamental drivers

· What’s at stake

· What’s to be done

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U.S. Environmental Milestones

1960s 1970s 1980s 1990s 2000s

“Silent Spring”Wilderness Act

Santa Barbara(200 M gal.)

Clean Air Act +Clean Water Act

Endangered Species Act

Love Canal3 MileIsland

Superfund Bill

Exxon Valdez(11-32 MM gal.)

Oil Pollution Act

Kyoto Protocol

RoadlessRule

EPA to regulate CO2

Macondo(~200 MM gal.)

First Earth DayEPA established

Clean Air Act

CA autoemissions

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1950 to 2010 … from Gushers to Green

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Gas Shale Related LegislationW

ellh

ead

Nat

ural

Gas

Pric

e ($

/Mcf

)

Other: Ohio Shale, Antrim, New Albany

EPA concludes hydraulic fracturing no danger to drinking water

EPAct 2005: Congress excludes hydraulic fracturing from Safe Drinking Water Act (UIC)

FRAC Act introduced in Congress to make fractured wells Class II Disposal wells

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Most Active Shale Plays

Source: EIA, with data from Smith International

# rigs drlg for gas

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Result … Active Opposition to Development

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Fundamental Driver 1: Fear

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Fundamental Driver 2: Distrust

BusinessGovernment

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Fundamental Driver 3: Confusion

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Dominion Post, September 15, 2009

“…showed a much higherlevel of total dissolvedsolids…”

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Perspective of 51 “Shale” Web Sites

10% 16%

40%16%

18%

Anti-shale blog/group Impartial informationPro-shale industry Pro-shale informativeState organization

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Web Site Tag Lines· “New York has the best

drinking water in the world. Let's not frack it up!”

· “What the frack?”· “Saving our land, air, & water-

you can't drink gas”· “Your place to speak out on

industrial-scale drilling for natural gas”

· “Protecting our communities and environment from exploitative gas drilling of the Marcellus Shale”

· “The Marcellus Shale: Energy to fuel our future”

· “Your source for information about the benefits of natural gas exploration in the Marcellus Shale”

· “A partnership established to provide the regional community and the natural gas industry with a central resource for workforce development and community education needs related to Marcellus Shale gas”

Anti-Shale Pro-Shale

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New Yorkers Are Not Against All Development

Source: National Geographic Magazine, September 2009

1609

2009

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Marcellus Shale Drillers in Pennsylvania Amass 1435 Violations in 2.5 Years

Improper Construction ofWastewater Impoundment

268

Faulty PollutionPrevention Practices

65

Improper Erosion &Sediment Plans

Developed/Implemented277

Discharge ofIndustrial Waste

154Violations of PA

Clean Stream Law100

Improper WasteManagement

7

Permitting Violations

38Improper

Restorationof Extraction Site

Improper WellCasing

Construction10

Source: Pennsylvania Land Trust Association (August 2, 2010)

1 PALTA identified companies that have had violations, according to news reports, but are not included in the data, received on 5/10/2010 and 7/10/2010, from the PA Department of Environmental Protection. The Association has not been able to reconcile this difference.

2 Pennsylvania Department of Environmental Protection News Release (6/23/2010)For information on methodology, contact Elana RIchman at 717.230.8560 or email erichman@conserveland.org.

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Benefits Need to be Recognized

Table reflects PA analytical results

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Impact of No Shale Gas Development in 2035

Reference Case

No Gas Shale Drilling

High Gas Shale Resource

2035 Henry Hub Spot Price(2008 $/MMBtu) $8.88 $10.37 $7.62

2035 Total Onshore Lwr. 48 Gas Production (Tcf) 23.3 19.1 25.9

2035 Total U.S. Net Imports (Tcf) 1.5 3.7 0.8

Sensitivity Cases for AEO2010Reference: Drilling moves ahead at current pace, unproved shale gas resource 347 TcfNo Gas Shale Drilling: No new onshore, lower 48 shale drilling after 2009High Gas Shale Resource: Unproved shale gas resources increased to 652 Tcf

Source: Energy Information Administration, 2010.

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Public Outreach Challenges· Finding ways to promote regulations that are science-

based and reflect true costs and benefits How to collect and analyze data needed to develop science-

based regulations in a competitive, high-cost environment How to quantify potential future costs and benefits

· Finding ways to support an informed debate in an environment of misinformation

How to build public trust in objective assessments of risks How to carry out public outreach in a way that reaches the

widest possible audience with accurate information How to engage constituencies with diametrically opposed

viewpoints

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Standing Still is Not an Option· Get out the facts … via websites,

publications, commercials, community meetings … whatever works

· Promote reasonable, compromise solutions to address community concerns

· Pursue collaborative research and development (industry, academia, and government) in support of science-based regulations

· Maintain transparency and public accountability

· Participate in joint public/private investment in workforce training to reduce accidents