Peer Review Comments

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Peer Review Comments Wissenschaftliche Statuskonferenz des Neutralen Expertenkreises im InfoDialog Fracking, Berlin, 6. und 7. Mrz 2012 Alan Krupnick Director, Center for Energy Economics and Policy Resources for the Future, Washington, DC

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  • Peer Review Comments

    Alan Krupnick

    Director, Center for Energy Economics and Policy

    Resources for the Future

    Washington, DC

    Berlin, March 6, 2012

  • The Opportunity

    The sustainable development of shale gas is a major

    issue for the world.

    Local, state and national costs and benefits are

    important.

    We need smart and cost-effective regulation. Do we

    already have it?

    A dearth of data and research helps keep

    controversies alive.

  • Gas price for given rate of return

    Production rate

    Conventional gas

    plays

    U.S shale

    gas plays

    Costs versus production

  • Key Issues for Public Policy Resource Base: Enough gas for 100 years vs.

    Two U.S. government agencies: 84 tcf vs. 410 tcfin Marcellus

    Price: Stable and low (too low?) vs. BAU

    Global warming: Strong vs. flimsy bridge to a low carbon future

    Energy Security: an answer vs. BAU

    Environmental risk: Tempest in a teapot vs. fracking bans (25% of Marcellus in New York)

  • Risks of shale gas development

    Aubrey McClendon interview

    with Forbes:

    F: Its clear that as long as

    wells are cased and

    cemented properly, fracking

    is safe, right?

    M: 100%!

  • German Risk Study

    Stakeholder input and review

    Technical Study

    Recommendations

  • Expert Survey: Is there a sweet spot of consensus?

  • Technical Issues Need overarching framework: Whats in,

    whats out (risk matrices for impact pathways)

  • Flowback/produced water storage/disposal

    Well production and operation

    Shutting-in, plugging and abandonment

    Workovers

    Vertical drilling

    Site development and drilling preparation

    Horizontal drilling

    Fracturing and completion

    Upstream and downstream activities

    The shale gas development process has been broken down into nine steps, which will be used to identify sources of burdens and impacts.

    12345

    6789

    Activity Categories

  • Drilling equipment operation at surface Drilling of wellbore underground Casing Cementing On-road vehicle activity Off-road vehicle activity Use of surface water and groundwater Venting of methane Flaring of methane Storage of drilling fluids at surface Use of recycled drilling fluids Disposal of drilling fluids Accidental releases from wellbore (e.g.

    blowouts) Disposal of drill solids, cuttings

    This drilling technique bores a single well shaft vertically into the desired formation. Sources of burdens include:

    Vertical drilling

    Site development and drilling preparation1

    2

    Specific Activities for Vertical Drilling

    Flowback/produced water storage/disposal

    Well production and operation

    Shutting-in, plugging and abandonment

    Workovers

    Horizontal drilling

    Fracturing and completion

    Upstream and downstream activities

    3456789

  • The activities create burdens, such as air pollutants, drilling fluids, and noise, which have impacts that people care about.

    Air pollutants

    Drilling fluids & cuttings

    Saline water intrusion

    Habitat & community disruptions

    Produced water constituents

    Fracturing fluids

    ?Other

    11

    Condenser & dehydration additives

    Flowback constituents

  • Human health impactsMorbidityMortality

    Market impactsAgriculture

    TourismWater-using industries

    Other

    Ecosystem impactsBiodiversity loss

    Endangered speciesOther species population change

    Climate change impacts

    Quality of life impactsRecreationAestheticsTime loss

    Other

    Groundwater

    Surface water

    Soil quality

    Air quality

    Habitat disruption

    Community disruption

    Occupational hazard

    Intermediate impacts are to the air, water, soil, etc. in which the burdens first reside.

    Final impacts are the ultimate damage to the environment, human health, etc.

    These burdens have intermediate and

    final impacts

  • Example of Impact Pathways

    On-road vehicle activity

    Air quality

    Community disruption

    Conventional air pollutants and

    CO2

    Noise pollution

    Road congestion

    Morbidity

    Climate change impacts

    Aesthetics

    Time loss

    Activities BurdensIntermediate

    Impacts Final Impacts

  • Technical Issues (2) Lack of data extrapolation and modeling vs. Statistical

    analysis of data

    What additional risks are posed by fracking? Hydraulic fracturing, horizontal drilling vs. All elements

    that are different than conventional drilling vs. Something in between

    Gaps Conventional air pollution and health

    At scale: Community impacts (road damage, propertyvalues, visual pollution, congestion)

    Entire water cycle?

  • Problems and poor cementing are common and lead to gas migration and sustained casing pressure

    From Schlumberger, Oilfield review

  • Stream water Water tanker trucks Surface storage at gas-well site

    flowback water

    Flowback treatment

    brineDeep-wellInjection

    Frac-Water: From Cradle to Grave

    Add: sand, biocides,scale inhibitors,acids, surfactants

  • Technical Issues (3) Methods

    Worst case vs other moments of risk distribution

    Heterogeneity of geology, hydrology, company

    behavior; baseline regulations (care about residual

    risks, not ``engineering risks``)

  • Casing and Cementing Depth

  • For the study: To what end? Policy locus: who has/should have authority?

    Policy design:

    Optimal fracking mixtures

    Performance-based vs. Command and control

    Big issues: Who owns the mineral rights; whocontrols company payments and how are theyassessed?

    Comparison with other forms of energy