Panelists see informed regs as key to unconventional production

From: Oil & Gas Journal

By Nick Snow

Development of the necessary data to reach informed regulatory decisions is the next critical unconventional production issue to be addressed, panelists said in a Feb. 14 forum co-sponsored by General Electric Co. and the Center for Strategic and International Studies.

“This is a completely unexpected revolution,” said John M. Deutch, Institute Professor in the Massachusetts Institute of Technology Chemistry Department, and chairman of the US Energy Secretary’s Energy Advisory Board Shale Gas Production Subcommittee.

“In 2006, little was understood about its potential,” Deutch said. “Today, it’s providing jobs, lowering prices, and reducing our reliance on imports. The one dark cloud out there is the lack of attention to environmental effects.”

The three key questions involve air quality, water quality, and community impacts, he said. The public is concerned about how federal and state regulators deal with water management issues.

“Measurement, disclosure, and continuous improvement will give the public confidence that issues will be addressed,” he said. “Companies are learning from experience and improving their operations. But the kinds of measurements and disclosures we need aren’t happening quickly enough to reassure the public.”

There is no question that domestic unconventional gas supplies are leading to coal-fired power plants being retired, said Mark Brownstein, chief counsel for the energy program at the Environmental Defense Fund. The public recognizes this benefit, but the jury is still out on whether shale resources can be produced safely, he said.

Strong regulation critical

It’s more than simply a matter of development impact concerns in areas which have not had much oil and gas experience, Brownstein said. “Communities in Texas, Arkansas, and Colorado also are raising questions,” he said. “The problems can be managed, but strong regulation is critical. We also need stronger management of workers in the field, which many companies haven’t had to address before.”

Gas has less of a greenhouse gas impact than coal, but even small leaks can undo its benefits, said Brownstein. “We must make sure we’re not wasting any of this product at the wellhead, during transmission, or with distribution, or we’ll squander any GHG emission benefits we might gain,” he said.

EDF has begun conversations with producers to get access to their sites to begin collecting measurements.

Jeffrey A. Fisher, senior vice-president of production at Chesapeake Energy Corp., said that methane emissions matter but may not be as significant as some researchers say. “We may not know how much gas is leaving the system, but we know how much is not,” he said. “It’s obvious we don’t want to lose any of our product.”

Rapid production declines which may be an issue in some wells become less important because declines stabilize after 2-3 years, he continued. “Certain shale plays also have high rock quality,” Fisher said. “We’re very excited about some of our Marcellus shale holdings.”

Producers recognize that it’s essential to communicate with government officials and residents, he said. “The biggest thing we can do is work together,” Fisher said. “We can plan. We can improve roads. We can abate noise.”

Heiner Markhoff, president of GE’s water and process technologies division, said water treatment will involve either mobile or stationary facilities as the situation warrants, and address flowback as well as above-ground handling. “We’ll have to look at how infrastructure is built because it will be different in each area,” he said.

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