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[Add your own pictures here] Managing the Water Risks of Shale Gas Development Alan Krupnick Director, Center for Energy Economics and Policy
[Add your own pictures here]
Managing the Water Risks of Shale Gas
Development
Alan Krupnick
Director, Center for Energy Economics and Policy
About RFF
• A nonprofit and nonpartisan organization that conducts
independent research – rooted primarily in economics
and other social sciences – on environmental, energy,
natural resource and environmental health issues.
• Headquartered in Washington, DC.
• 30 Ph.D. environmental economists, 12 visiting and
nonresident scholars, 10 research assistants
• Website: http://www.rff.org
• Blog: http://common-resources.org
RFF Initiative: “Managing the Risks of Shale Gas Development”
• RFF’s Center for Energy Economics and Policy (CEEP)
• An independent, broad assessment of the key
environmental risks associated with the shale gas
development process.
Outline of Talk
• Risks as experts see them
• Risks as the public sees them
• Risks we estimate
• To surface water quality
• Chemicals in fracking fluid and produced water
• State Regulations on Water
Pathways to Dialogue: A Survey of Experts
• Researchers: A. Krupnick, H. Gordon, S. Olmstead.
• Survey-based analysis of 215 experts from:
1. Government agencies;
2. Industry;
3. Academia;
4. NGOs.
• Experts identified priority environmental risks from a catalogue of 264 risk pathways and 14 accident pathways.
Key findings from the expert survey
• High degree of consensus among
experts about specific risks to
mitigate.
• Consensus risks:
• Surface water (7)
• Groundwater (2)
• Air quality (2)
• Habitat disruption (1)
• Only two of the consensus risks
identified are unique to shale gas
development.
RFF survey suggests most “consensus” risks
are to water resources
Source: Krupnick, A. et al. 2013. Pathways to Dialogue: What the Experts Say About the
Environmental Risks of Shale Gas Development. Washington, DC: RFF.
www.rff.org/shaleexpertsurvey.
Attitudes and the Willingness to Pay for Reducing Shale Gas Risks
• Researchers: J. Siikamäki, A. Krupnick.
• Public survey of a random sample of
1,600 adults in PA and TX.
• Key questions:
1. How concerned is the public about
environmental and health risks?
2. How much do people value
reductions in such risks?
3. How does the type of information
that people receive affect their
perceptions of risk and willingness
to pay to mitigate risks?
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Degree of concern about the environmental consequences
of shale gas development (1=none, 7=extreme concern)
7%
11% 11% 10%
13%
15%
26%
8% 9%
12%
11%
13% 12%
15%
20%
8%
0%
5%
10%
15%
20%
25%
30%
1 2 3 4 5 6 7 No opinion
PA TX
10
Degree of support of shale gas development (1=not at all, 7=extremely supportive)
9%
6%
7%
11%
21%
18%
17%
10%
4% 4%
7%
12%
19%
21% 20%
12%
0%
5%
10%
15%
20%
25%
1 2 3 4 5 6 7 No opinion
PA TX
Findings from the public survey
Average Willingness to Pay for Risk
Reduction by TX and PA Respondents Changes in Attitudes by Respondents,
Post Information Treatments
The Effects of Shale Gas Development on Property Values
• Researchers: L. Muehlenbachs, E. Spiller (EDF), C.
Timmins (Duke)
• Analysis of residential property transactions from 2004
to 2009 in Washington County, PA at various distances
from drilling sites.
• Estimated the differential
effect of shale gas
development for
groundwater-dependent
properties relative to
those properties with
access to piped water.
Findings from property value study
• Homes that are close to a shale gas
well (< 2km) can have a 10 percent
positive impact on their values if they
have access to piped water.
• Property values of groundwater-
dependent homes decrease by 16
percent with proximity to shale wells.
Shale gas development impacts on surface water quality in PA
• Researchers: S. Olmstead, L.
Muehlenbachs, J. Shih, J. Chu, A.
Krupnick.
• PNAS, March 26, 2013, vol. 110 no. 13.
• Exploits spatial and temporal variation in
the proximity of shale gas wells, waste
treatment facilities, and surface water
quality monitors in PA to statistically
identify:
1. The impact of shale gas wells on
downstream Cl‒ and TSS concentrations;
2. The impact of shale gas waste treatment and
release to surface water on downstream Cl‒
and TSS concentrations.
Data: GIS database of surface water quality monitors, shale gas
wells, and wastewater treatment facilities in PA
Findings from surface water quality risk study
• No statistically significant impact of shale gas wells on downstream Cl‒ concentrations.
• A positive result here would have been consistent with systematic contamination problems from spills, etc.
• Release of treated shale gas waste to surface water by permitted wastewater treatment facilities increases downstream Cl‒ concentrations.
• Shale gas wells and well pads increase downstream
TSS concentrations.
• No statistically significant impact of shale gas waste
treatment on downstream TSS concentrations.
Chloride concentration impacts
TSS concentration impacts
Wastewater characteristics from Marcellus shale gas development in PA
• Researchers: J. Shih, S. Olmstead, J.
Chu, A. Krupnick, L. Muehlenbachs, J.
Saiers (Yale), S. Anisfeld (Yale).
• Statistically analyzes characteristics of
flowback, produced water, and drilling
fluid waste sent to wastewater treatment
facilities in PA, 2008-2011.
• Data Source: Form 26R, submitted to
PADEP by “residual waste” generators.
• 432 different analytes were identified in
the data, in the following categories: 1. General chemicals
2. Organics
3. Pesticides
4. Metals
5. Radioactive Materials
Comparison of metals in brine and fracking fluid waste
Findings from analysis of wastewater characteristics
• High chemical concentrations are observed pre-treatment.
• When Ba is detected (92% of samples), median concentration is > 40
times PA’s wastewater effluent standard and > 200 times the SDWA
maximum contaminant level.
• Concentrations of Cl‒, TDS, bromide, 228Ra and Sr in pre-treatment
wastewater are also far higher than either wastewater effluent standards
or drinking water standards.
• Wastewater composition is highly variable over the course of the
shale gas extraction process.
• A challenge for effective treatment and management.
• Form 26 filed once/year/waste type/generating location.
• Produced water has very different composition than flowback,
typically having higher Cl‒, TDS and 228Ra concentrations.
• Many constituents may be effectively removed by chemical waste
treatment facilities currently treating this waste (e.g., metals); others
may not (e.g., salts).
ASSESSING REGULATORY FRAMEWORKS
The state of state shale gas regulation
• Researchers: N. Richardson, M. Gottlieb, A. Krupnick,
H. Wiseman
• 25 regulatory elements common to shale gas
development across 31 states with current or potential
development.
300-
1,500
0.28
0.28
100
600
500
Water Management Plan required
Findings from state regulatory analysis
• High degree of heterogeneity among states in:
• Most elements regulated: NY, WV.
• Fewest elements regulated: CA, VA.
• The five states with the most gas wells regulate more
elements than the national average.
CONCLUSION
Some cross-cutting findings
• Important concerns regarding risks to rivers and streams.
• Many pathways identified in the expert survey.
• Public survey identifies willingness to pay to reduce risks.
• PNAS study: No systematic risk from spills and leaks.
• Treatment or safe disposal of wastewater is important.
• Public perceives high risks to groundwater.
• Evidence from public survey and property value study.
• Expert survey: Leaky casing and cementing important.
• Heterogeneity of state regulations and public attitudes.
Future research
• Deep dive and dialogue on the consensus risk pathways.
• New project funded by Alfred P. Sloan Foundation.
• Partnering with Environmental Defense Fund.
• Participation by industry, states, NGOs.
• Health and welfare effects of:
• Truck traffic (partnering with Geisinger Health Care).
• Pads, pipelines and roads on habitat fragmentation (advisory role
to The Nature Conservancy).
• Water use and re-use (Susquehanna River Basin
Commission permits; modeling - RFF).
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Increased water scarcity (cont.)
• Water scarcity can become a limiting factor for fuel
production and competing activities
• Map of water shortages and population growth:
Source: U.S. Department of Energy (2006)
A preview of future research
• One additional well drilled per month raises the frequency of accidents involving a heavy truck by 2%.
• One additional well drilled in a county increases the number of accidents involving a fatality by 0.6%.
• Controls for changes in county characteristics and state-level trends in accidents over time.
For more information:
http://www.rff.org/centers/energy_economics_and_policy/Pages/default.aspx
Wait, wait…don’t tell me…
Pakistan’s Tarbela Dam is the world’s second-largest, in terms of “volume
of structure.” What is the world’s largest?
• Syncrude Canada Ltd.’s Tailings Dam, impounding the “Mildred Lake
Settling Basin, which stores waste from Athabasca oil sands operations in
Alberta, Canada.
Source: wikipedia.org
Round 2…
Does unconventional fossil fuel development use more water, less, or
about the same per unit of energy produced when compared with
conventional fossil fuels?
• It depends, but shale gas looks pretty good.
Source: Kuwayama, Y. et al. 2013. Water Resources and Unconventional Fossil Fuel
Development: Linking Physical Impacts to Social Costs. Working Paper, Resources for the Future,
Washington, DC.
Round 3…
Pennsylvania in 2013 has about 7,000 unconventional gas wells in its
portion of the Marcellus Shale. How many wells are expected by 2030?
• 60,000 (TNC’s “medium development scenario”)
• 200,000 “economic” at $4/mcf gas.
Source: Johnson, Nels, et al. 2010. Pennsylvania Energy Impacts Assessment
Report 1: Marcellus Shale Natural Gas and Wind. The Nature Conservancy.
One way to think about the issue
Some risks to water resources from developing these resources may be
“new”, poorly understood.
But most are run-of-the-mill externalities from industrial activity, with the
potential to occur on a really, really large scale, in some new places.
• Wastewater treatment and disposal
• Large-scale water withdrawals
• Stormwater runoff
The “big” ($) externalities are probably in the latter category.
An example: PA water quality impacts
from shale gas development
Source: Olmstead et al. 2013. Shale gas development impacts on surface water quality in
Pennsylvania. Proc. Nat. Acad. Sci. 110: 4962-4967.
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Externalities affecting water quantity
• Water required to stimulate the resource
• Hydraulic fracturing for shale gas and tight oil
• Water required to separate fuel from the deposit
• Bitumen from oil sands
• Retorting of oil shale
• Water for processing
• Bitumen requires upgrading (removal of
impurities, addition of hydrogen)
• Kerogen in oil shale must undergo
thermochemical decomposition
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Externalities affecting water quantity (cont.)
• Groundwater depletion
• Some extraction technologies rely more on
groundwater (e.g. SAGD for oil sands)
• For surface mining techniques, groundwater may
need to be pumped out of pits
• Large amounts of energy may be required for
extraction and processing; production of this energy
may require water
• Coal-bed methane wells can produce large amounts
of water
• Other uses: Cooling of equipment, dust control,
reclamation activities
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Increased water scarcity
• Ranges and averages of water intensity estimates in the
water-energy nexus literature:
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Increased water scarcity (cont.)
• The social cost of water use for unconventional fossil
fuel development is an opportunity cost
• Value of diversion for irrigation, industrial, or
municipal use
• Value of water left instream for recreation or
provision of ecosystem services
• Values of alternative uses can be estimated from
prices or using non-market valuation methods
• Need to estimate value of benefits from
unconventional fuels and compare them to updated
estimates of opportunity cost
• Example from existing literature: Marginal value
of water for downstream fishing > marginal value
of irrigation water in 51 of 67 river basins
MOTIVATION
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Shale gas: Largest source of growth in U.S. natural gas production
Outline
MOTIVATION
IDENTIFYING THE RISKS
1. Pathways to Dialogue: A Survey of Experts
2. Attitudes and the Willingness to Pay for Reducing Shale Gas Risks
3. Social Costs of Impacts on Water from Shale Gas Production
INVESTIGATING THE RISKS
1. Shale Gas Development Impacts on Surface Water Quality in PA
2. Wastewater Characteristics from Marcellus Shale Gas
Development in PA
3. The Effects of Shale Gas Development on Property Values
ASSESSING REGULATORY FRAMEWORKS
1. The State of State Shale Gas Regulation
CONCLUSION
Social costs of impacts on water from shale gas production
• Researchers: Y. Kuwayama, S. Olmstead, A. Krupnick.
• Comprehensive overview of existing literature on:
1. Water resource impacts of unconventional fossil fuel production;
2. Social costs of impacts on water quantity and quality.
• Covers over 65 academic journal articles and 62 reports from
government, think tanks, and environmental organizations.
• Identifies links between physical externalities and social
costs.
• Compares social costs to those from conventional fossil fuel
production.
Social costs identified by existing literature
• Increased water scarcity: Social cost of water use for
unconventional fossil fuel development is an opportunity cost.
1. Value of diversion for irrigation, industrial, or municipal use;
2. Value of water left instream for recreation or provision of
ecosystem services.
• Contamination of drinking water: Economic net benefits of
safe drinking water are demonstrably very large, especially
when damages involve human morbidity or mortality.
• Damages to agriculture, livestock, and companion animals.
• Recreational use values: Hunting, fishing, viewing.
• Non-use values: Existence of wildlife, aquatic ecosystems.
• Indirect costs: Seismic risks, truck traffic/accidents.
Data: GIS database of surface water quality monitors, shale gas
wells, and wastewater treatment facilities in PA
Data: GIS database of surface water quality monitors, shale gas
wells, and wastewater treatment facilities in PA
Data: GIS database of surface water quality monitors, shale gas
wells, and wastewater treatment facilities in PA
Environmental risks of shale gas development
Water use by Marcellus gas wells
According to the SRBC:
• Gas industry removes 2 million gallons per day from the Susquehanna.
• About 18 million gallons per minute flow from the Susquehanna to
Chesapeake Bay.
At a basin scale, timing and location are more important than amounts of
withdrawals.
Environmental concerns:
• Species habitats (esp. wild trout)
• Adjacent wetlands
• Scenic rivers
• Already impaired waters
Spatial heterogeneity of water resource impacts
Map: Headwaters and small streams (Source: TNC)
Map: Shale gas well locations (Source: Olmstead et al.)
Spatial heterogeneity of water resource impacts
Map: Trout streams (Source: SRBC)
Map: Shale gas well locations (Source: Olmstead et al.)
Inter-temporal heterogeneity of water
resource impacts
Graph: Hydrograph of the Susquehanna River at Harrisburg, PA (USGS).
Water Quantity Permitting Project
Collect data from withdrawal applications and permits from Susquehanna
River Basin Commission.
• Requested and approved withdrawal rates
• User characteristics
• Environmental screenings
• Passby flow determination
Characterize the spatial and inter-temporal heterogeneity in potential
impacts to streams from water withdrawals.
Objective: Identify and characterize streams and river segments that are
potentially at risk, at particular times of the year.
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Potential technological improvements
• Reuse and recycling of produced water and flowback
• Greater reuse/recycling Less water required
initially and less contaminated water that must be
treated or disposed of
• For shale gas, estimates of the percentage of
fracturing fluid volume that is flowed back ranges
from 10% to 80%
• New extraction technologies (e.g. VAPEX and THAI
for oil sands, LPG for shale gas)
• Technology to use saline groundwater instead of
freshwater
• Investments in water storage infrastructure
(impoundments, aquifer storage and recovery)
IDENTIFYING THE RISKS
