Fracking: The Ultimate Scam Revealed

By touting natural gas as the clean-burning fossil fuel that is cheaper to use and helps reduce our dependence on foreign oil, the industry has nailed the PR trifecta: cheaper, cleaner and patriotic.

gas mask hydrofrackingOne of the great joys of writing, as in science, is the accidental discovery. To wit: penicillin. And while this entry hardly ranks near Alexander Fleming’s pharmaceutical breakthrough, it does relieve a particular itch that has been nagging my brain. For months I have been vexed by the discrepancy in pricing between crude oil and natural gas. (Wait, I know how tedious commodities can be but I promise you this column is worth sticking with.) Unable to settle on any fundamental market-based explanation, I placed the issue on the mental backburner. It was only when I decided to update a series of articles on the role of speculation in the commodities markets that I happened upon the most plausible solution to this puzzle.

First, a little context. Over the past couple of years New York State has been flirting with the idea of hydraulic fracturing, or “fracking.” The discovery of enormous pockets of natural gas in the Marcellus Shale formation that runs from West Virginia, Pennsylvania and New York to as far as Ohio, has led to a modern-day gold rush in the region, with Pennsylvania several years ahead of New York. While the gas has always been there, it wasn’t until the turn of the millennium when controversial chemical enhancements invented by Halliburton were added to a difficult horizontal drilling technique that accessing this gas became feasible.

Almost immediately, however, environmental concerns began to mount. Stories of contaminated groundwater, intense air pollution and, most recently, a ruptured fault line and mini-earthquake in Youngstown, Ohio, on Dec. 31, have begun leaking into public consciousness. Gasland, a documentary by Josh Fox, increasingly agitated environmental organizations, and high-profile activists such as actor Mark Ruffalo have helped fracking reach the tipping point in the media. Once seen as a panacea for rural land owners in depressed parts of the country, fracking has become a pariah in the environmental community, setting the stage for yet another battle between the oil and gas industry and environmentalists. Caught in the middle of the entire fiasco at the moment is Gov. Andrew Cuomo, who is cautiously moving toward legalizing fracking in New York, though his public reticence highlights how tenuous this decision truly is.

Early on, I came down firmly against fracking in New York, and the Long Island Press was in the vanguard of reporting on it downstate. So I’m on record quite clearly as to why I believe fracking to be a disaster for New York, or anywhere else for that matter. No need to rehash this position. Still, one piece of the broader issue was missing—until now.

Here’s the issue: Fracking is expensive. The prolonged low market price of natural gas is the most logical deterrent to increasing drilling because it barely pays to pull the gas out of the ground. Moreover, the U.S. Energy Information Administration projects that natural gas demand in the United States should rise only 11 percent over the next 25 years compared to a projected rise of more than 300 percent in China over the same period.

Here’s where the market rationale gets murky. Analysts point to increased demand for fossil fuel in developing economies as the primary reason behind the steady rise in oil prices. Goldman Sachs’ most recent forecast of Brent Crude Oil, commonly known as “sweet light crude,” is $120 a barrel for 2012, with most market analysts following suit. A weak dollar, the ongoing crisis and uncertainty in the Eurozone, a burgeoning conflict between the U.S. and Iran, and continued growth in China, India and Brazil are the oft-given reasons behind these prognostications.

Historically, natural gas and oil prices have generally moved in tandem, and with natural gas gaining momentum as the fossil fuel of choice, it only makes sense that they would continue their mirrored trajectory. Instead, the opposite has occurred. Crude oil remains stubbornly high and creeping ever higher while natural gas remains depressed.

A closer look reveals that the world has record stockpiles of both fuels, and has developed incredible potential for new sources such as the Marcellus Shale play or the tar sands in Canada. Then there are the yet-to-be-developed fields in Iraq that, according to the New York Times, are “expected to ramp up oil production faster than any other country in the next 25 years, with a capacity…more than traditional leaders like Saudi Arabia.” Or, if you prefer, the real reason we went to war in Iraq.

Excess supply, new discoveries, and sluggish demand—and yet only natural gas is acting appropriately in the markets. This behavior is undeniable proof that the invisible hand of speculation is at work, which naturally begs the question as to why traders would suppress the price of gas but not oil.

For this answer we must turn back the clock once again and revisit several acts in Congress over the past two decades that made it possible for banks to merge with investment banks and trade commodities without limits and without transparency. Much of this trading is done on the Intercontinental Exchange, a trading platform that was founded and owned by Morgan Stanley, Goldman Sachs and BP. When you understand that markets today are dominated by investment banks and oil companies, who are at times one in the same (Morgan Stanley’s direct holdings in oil companies, fossil fuel infrastructure and transportation companies make it one of the largest oil companies in America), it is possible to fully comprehend the psychology behind natural gas pricing. Oil companies and investment banks have the ability to move the market by forecasting prices and investing in their own products through opaque exchanges that they own, so no matter where prices are they are making money.

Now you’re ready for the secret behind the fracking con job.

As previously mentioned, domestic natural gas is difficult to procure. The process is devastating to human health and the environment, and the effects are irreversible. To gain momentum and influence public opinion, the oil and gas companies have launched an ingenious propaganda assault on America. By touting natural gas as the clean-burning fossil fuel that is cheaper to use and helps reduce our dependence on foreign oil, the industry has nailed the PR trifecta: cheaper, cleaner and patriotic. And with an earnest pitchman like T. Boone Pickens, who wouldn’t believe it?

The problem is none of the above is true. First, natural gas might burn cleaner than oil but the process to extract it is so harmful it doesn’t matter. And second, because the same companies who are in control of the product are in control of the pricing, once they sew up the drilling rights they can simply jack up the price. This leaves the final argument that is wrapped in the American flag and served with a side of apple pie: reducing dependence on foreign oil for the sake of the union.

For the truth, let’s check in with the rest of the world to see what they say. (This was the happy accident that prompted this column.)

According to India’s leading daily business newspaper, the Business Standard, “the increasing shale gas production in the U.S. has led to a surplus, likely to increase in the coming years. The U.S. is, therefore, eyeing export to countries like China, Japan, Korea and India… In the past, the U.S. has been an importer of gas.” The article goes on to quote A. K. Balyan, chief executive officer of Petronet LNG, India’s largest liquefied natural gas importer, who states, “With an increase in U.S. gas production, the gas receiving terminals need to be converted to exporting terminals.”

Ta-dah!

The average life of a fracking site is seven years. At best. The environmental and human health catastrophe is forever. All of the current talk of job creation and reducing dependence on oil is a sham. Our natural gas stockpiles are higher than ever and the demand for natural gas, by our own country’s admission, will remain basically flat until 2035. The oil and gas companies are planning to export gas from the Marcellus Shale region to the same developing economies we’re supposed to be competing against. How’s that for homeland security?

The real insult? American oil and gas companies are willing to risk the health and welfare of our own citizens by fracking on our land in order to export fuel they claim is more beneficial to the environment. Normally, our companies are busy screwing up other countries in pursuit of their natural resources for our own consumption. As if this isn’t bad enough, they are finally committing the cardinal sin of shitting where they eat.

Let’s do the right thing for once: Ban fracking now. There’s no other way.

JANUARY 11th – FINAL DAY FOR PUBLIC COMMENT ON DEC WEBSITE. CLICK HERE

Main Photo Image: Photograph from AP. April 22, 1970, the first Earth Day.
Long Island Press cover image. Original art by Jon Sasala
T. Boone Pickens
. AP Photo.

This article was published in the January 5th, 2012 edition of the Long Island Press.

Fracking in Canada

As furious debate over fracking continues in the United States… Canada struggles to balance the economic benefits drilling has brought with the reports of water contamination and air pollution that have accompanied them.

Oh, Canada’s Become a Home for Record Fracking

by Nicholas KusnetzProPublica, Dec. 28, 2011, 11:09 a.m.
Photo Credit: Associated Press

Early last year, deep in the forests of northern British Columbia, workers for Apache Corp. performed what the company proclaimed was the biggest hydraulic fracturing operation ever.

The project used 259 million gallons of water and 50,000 tons of sand to frack 16 gas wells side by side. It was “nearly four times larger than any project of its nature in North America,” Apache boasted.

The record didn’t stand for long. By the end of the year, Apache and its partner, Encana, topped it by half at a neighboring site.

As furious debate over fracking continues in the United States, it is instructive to look at how a similar gas boom is unfolding for our neighbor to the north.

To a large extent, the same themes have emerged as Canada struggles to balance the economic benefits drilling has brought with the reports of water contamination and air pollution that have accompanied them.

The Canadian boom has differed in one regard: The western provinces’ exuberant embrace of large-scale fracking offers a vision of what could happen elsewhere if governments clear away at least some of the regulatory hurdles to growth.

Even as some officials have questioned the wisdom of doing so, Alberta and British Columbia have dueled to draw investment by offering financial incentives and loosening rules. The result has been some of the most intensive drilling anywhere.

“There definitely is concern on the part of people living in northeast B.C. on the scale of developments, which are quite significant already and are only in their infancy,”said Ben Parfitt, an analyst with the Canadian Centre for Policy Alternatives, a research institute that promotes environmental sustainability. “We are seeing some of the largest fracking operations anywhere on earth.”

Canada’s eastern regions have proceeded more cautiously. In March, Quebec placed a moratorium on shale development [1] pending further study. Protesters have taken to the streets in New Brunswick [2] demanding the same.

Public opposition, coupled with low gas prices, has slowed drilling over the past year. Still, the Canadian Association of Petroleum Producers expects production from shale and other unconventional sources to more than triple in the next decade.

The industry’s aggressive plan for growth has drawn an ambivalent response from the nation’s top environmental officials.

In March, Canada’s deputy minister of the environment sent an internal memo warning that more work was needed to assess the risks from shale gas drilling [3]. The memo, obtained by an Ottawa-based newspaper and addressed to Environment Minister Peter Kent, said water use and contamination top a list of environmental concerns including air pollution, greenhouse gas emissions and the use of unknown toxic chemicals. Kent subsequently ordered two studies looking at the safety and environmental impacts of shale drilling.

Yet, in a written response to questions from ProPublica, the environment ministry affirmed its commitment to continued development.

“Our Government believes shale gas is an important strategic resource that could provide numerous economic benefits to Canada,” the ministry’s statement said. Gas is an important part of a clean energy future, the ministry added, saying that “a healthy environment and a strong economy go hand in hand.”

B.C., Alberta Lure Drillers

Canada’s current drilling boom dates to the late 1990s, when Encana began using fracking to extract gas from dense rock in northern British Columbia.

The second-largest gas driller in North America, Encana also started fracking shallow coal seams, or coalbed methane, in Alberta in the early 2000s, using nitrogen rather than water to free the gas. Coalbed methane drilling generally requires less fluid than fracking shale but occurs much closer to drinking water. In some cases, Encana and other companies have drilled wells directly into aquifers, injecting fracking fluids into groundwater suitable for drinking.

In the middle of the last decade, Encana and other operators started exploring northern British Columbia’s shale gas reserves. The formations were promising, holding at least 200 trillion cubic feet of gas, according to industry estimates.

But drillers faced formidable hurdles to get to it. Unlike the Barnett and Marcellus shales in the U.S., Canada’s best shale basins are far from most markets and existing infrastructure. Soggy ground slows drilling in the spring and summer, and the average high temperature hovers around zero degrees Fahrenheit in January.

To encourage development, British Columbia enacted a series of incentives, including reduced royalties for deep drilling and credits for building roads and pipelines in the remote regions.

These changes, combined with the area’s severe conditions, spurred companies to concentrate and scale up their operations in British Columbia in an effort to cut costs, industry experts say. The result: a string of record-breaking fracks.

In a written response to questions from ProPublica, Apache said this approach reduces surface disturbance. It also can heighten the risk of air and water pollution, said Bruce Kramer, an expert in oil and gas law with McGinnis, Lochridge and Kilgore, a Texas-based law firm.

In both western provinces, the regional authorities responsible for regulating drilling have passed rules to allow more intensive drilling.

In Alberta, drillers can now pack wells closer together and pump more water out of shallow coal seams to free gas more efficiently. British Columbia issued detailed regulations last year that limit where and when companies can drill and set rigorous environmental standards but also gave its Oil and Gas Commission the authority to exempt drillers from virtually all of these provisions.

The commission referred an inquiry from ProPublica to its parent organization, the Ministry of Energy and Mines. In written responses to questions, the Ministry said the new regulations adequately address environmental concerns over drilling activity in the province. Pointing to an upcoming health study and new rules that compel companies to disclose chemicals used in fracking, officials said they would continue to review and revise standards as necessary.

Still, the regulatory shifts have prompted environmental advocates in Alberta and British Columbia to question whether officials are prepared to cope with rising concerns about water use, contamination and unchecked development.

“We just don’t have a clue how big this issue is from a public policy perspective,”said Bob Simpson, a member of British Columbia’s legislative assembly and an outspoken critic. “We really don’t know what we’re doing.”

Jessica Ernst’s Water Problems

Over the last five years, there have been several prominent cases in which Alberta residents have said gas drilling contaminated their water.

There are no hard numbers. The government does not track such complaints. But in some instances, residents’ frustration has been exacerbated by their sense that regulators have not properly investigated their claims.

In 2005, Jessica Ernst noticed strange things happening to her water. The toilet fizzed. The faucets whistled. Black particles clogged her filter. Then she began getting rashes.

Ernst, a longtime environmental consultant for oil and gas companies, wondered whether the changes could be connected to drilling nearby. Encana had been drilling shallow coalbed methane wells near her home outside of Rosebud, about 50 miles northeast of Calgary.

She asked Alberta Environment and Water, the agency that oversees groundwater, to test her well. When the well was drilled in 1986, tests showed it had no methane [4]. The new tests, however, showed high levels of the gas, as well as a hydrocarbon called F2 and two other chemicals.

But in 2007, a government research agency concluded it was unlikely that drilling had affected her water [5]. The final report said the chemicals found were not typically used in coalbed methane drilling, and that one had probably come from a plastic tube used to test the water.

Ernst wasn’t satisfied with the province’s response, however. The government’s report concluded that the methane in her well might be occurring naturally because tests showed similar levels of gas in nearby wells. But the tests were conducted after Ernst noticed the changes in her water — she saw the results as an indication that the contamination might be more widespread.

The government’s report also ignored evidence provided by one of its own analysts, a professor of geochemistry at the University of Alberta. When Karlis Muehlenbachs analyzed the gas in Ernst’s well for Alberta Environment and Water, he found ethane, a gas often found with methane, with a chemical signature indicating that it had come from deep underground, below the depth of the well. Muehlenbachs told ProPublica that the ethane’s signature meant that it could not have been there naturally. He said he is convinced that it resulted from drilling.

As Ernst searched for answers to what happened to her water, she unearthed evidence of other problems related to drilling. She found an Alberta Environment and Water report that listed cases in which the fracking of shallow wells resulted in gas or fluid leaking [6] into nearby gas wells or spraying into the air. She also found government gas well records that said Encana had fracked into the aquifer that supplies her water well.

“The community was used as a test tube,”she said. “I was used as a test tube.”

Earlier this year, Ernst sued Encana, Alberta Environment and Water and the Alberta Energy Resources Conservation Board [7], which regulates drilling, alleging that Encana’s drilling was negligent and that the government agencies had covered up the company’s contamination and failed to enforce regulations.

Ernst, who is asking for about $33 million Canadian in damages and return of wrongful profits, has vowed she will not accept a settlement that includes a confidentiality agreement, as others have done.

“Somebody has to do this,”she said.

Alan Boras, a spokesman for Encana, said the company would not comment on the case.

The Energy Resources Conservation Board denied a request for an interview. In written responses to questions, spokesman Bob Curran said he could not comment on the specifics of Ernst’s case, but the agency is confident it has conducted itself appropriately.

Carrie Sancartier, a spokeswoman for Alberta Environment and Water, would not comment on Ernst’s allegations because of the lawsuit but said there have been no confirmed cases of gas drilling contaminating water wells in the province.

Muehlenbachs, whose work has been used in several government investigations, said that is “simply false.” He said he’s analyzed thousands of cases of gas leaking up well bores and knows of at least a dozen cases of water contamination.

Alberta has introduced several measures to safeguard water from shallow drilling. In 2006, it established a buffer zone between shallow gas wells and water wells [8] and required drillers to test nearby water wells before drilling into an aquifer [9].

Nevertheless, last January, as part of a review of drilling regulations, the Energy Resources Conservation Board [10] said shallow fracking poses a risk to groundwater.

Is ‘Communication’ a Risk?

There have been no reports of groundwater contamination related to new drilling in British Columbia.

Increasingly, however, there are reports of something called “communication” — events in which a fracture travels through the ground and connects two gas wells.

Ken Paulson, chief engineer at the province’s Oil and Gas Commission, said these events do not pose a contamination risk. Other experts say their principal impact is to undermine production.

But opponents of expanded shale drilling say instances of communication show that drillers lack a full understanding of what happens when wells are fracked closer together, increasing the risk of contamination. Anthony Ingraffea, an engineering professor at Cornell University, said that if a fracture hit a natural fault, it could allow contaminants to enter aquifers.

Communication has occurred in the U.S. as well: Regulators in Texas, Oklahoma, Michigan and Pennsylvania reported such events to Canadian officials as part of the Energy Resources Conservation Board’s regulatory review [10].

Documents provided to ProPublica show that energy companies have reported 25 cases of communication in British Columbia [11] since 2009. Companies are not required to report such events, so the list isn’t comprehensive, Paulson said.

In May 2010, the province’s Oil and Gas Commission issued a warning when a drilling company inadvertently shot sand from one fracking job into another well [12] being drilled more than 2,000 feet away.

The advisory said the operator contained the resulting jump in pressure within the well but warned of a “potential safety hazard.” When communication occurs, Paulson said, the biggest concern is that an operator could lose control of a well and cause a blowout.

Concerns Over Water Consumption

As the debate over communication continues, Parfitt and other Canadian environmentalists have raised more immediate concerns about water use. Fracking requires lots of water — on their biggest reported fracking job, Apache and Encana used an average of 28 million gallons of water per well.

While the oil and gas industry says it is responsible for 1 percent or less of British Columbia’s overall water use, environmental advocates say that may not reflect the full extent of the industry’s consumption or long-term needs.

Drillers use both surface and groundwater. Access to surface water is regulated by two agencies that issue long-term licenses or year-long permits. Overwhelmingly, energy companies have chosen to obtain permits, which require less regulatory review.

Most groundwater withdrawals aren’t regulated at all. Drillers need permits to sink water wells, but there are no limits on the amount of water that can be taken from them. They can also purchase water from other well owners, so there’s no way to track overall use.

“How much water is actually being used and, more importantly, how much water is projected to be used over next the 10 to 15 years? Because of the scattershot approach of regulation, this isn’t something we can actually answer right now,”said Matt Horne, acting director of the climate change program at the Pembina Institute, an environmental think tank that published a report on the gas industry’s water use.

Last year, in a report focusing on province-wide groundwater oversight, British Columbia’s auditor general [13] said the province was not adequately protecting aquifers from overuse and potential contamination. Agencies lacked the basic data necessary to assess the risks, such as the number and extent of the province’s aquifers, the report said.

The Ministry of Energy and Mines, in a written response to questions, said the province is taking several steps to improve oversight of water use, including a research project studying aquifers. The agency said it can review large groundwater withdrawal projects and that pending changes to the province’s water law would regulate withdrawals.

Drillers themselves are also moving to address water concerns. Encana and Apache have started using saline water not suitable for drinking or irrigation in some of their projects. Alan Boras, the Encana spokesman, said the company uses non-potable water almost exclusively in its main operating area in the Horn River Basin, where the largest frack jobs were reported.

Environmentalists say they welcome the effort, but caution that these projects are tiny compared to the industry’s overall water use.

Governments, Industry Get Cozy

Public backlash to fracking has become such a concern for drillers and provincial governments in western Canada that last year they launched a joint effort to counter it.

In December 2010, the governments of British Columbia, Alberta and Saskatchewan signed a memorandum of understanding laying out a plan [14] to share information and develop standards for hydraulic fracturing and water use. The provinces invited only one non-governmental entity to participate in the project: the Canadian Association of Petroleum Producers.

The memo, which was leaked in August and published by the Alberta Federation of Labour, a union group, said the provinces and petroleum producers would work together to develop “key messages” on shale drilling to persuade the public not to fear fracking.

“The project will help to demonstrate that shale gas extraction is viable, safe and environmentally sustainable,” the memo said.

The memo blamed environmental groups for spreading misleading information and stirring opposition to drilling.

“Environmental Non-Government organizations (ENGOs) are supporting a ill-informed [sic] campaign on hydraulic fracturing and water related issues in British Columbia and in other jurisdictions,” it said. “This is expected to grow as shale gas development expands into Alberta and Saskatchewan.”

In a separate memo [14], Alberta Environment and Water reported that the Canadian Association of Petroleum Producers had approached the province to work on a joint public relations campaign.

Ultimately, no campaign materialized.

Janet Annesley, a spokeswoman for the Canadian Association of Petroleum Producers, said the group hadn’t wanted to join forces on PR but was just informing the province of plans to publish voluntary standards for shale gas drilling.

Still, critics saw the memo as proof of an overly cozy relationship between the government and the industry.

Bart Johnson, a spokesman for Alberta’s Energy Minister, said the petroleum producers had suggested a joint PR initiative but dropped the request. Such a collaboration, however, would not have been inappropriate, he said. The government works with industry groups all the time, he said, citing a campaign with education groups against bullying in schools.

“Oil and gas is huge in Alberta. It fuels our economy. Indeed it fuels the economy of Canada,” Johnson said. “Any suggestion that we shouldn’t meet with that industry is ridiculous.”

 

ProPublica: EPA Confirms Fracking Linked to Contamination

The agency’s findings could be a turning point in the heated national debate about whether contamination from fracking is happening, and are likely to shape how the country regulates and develops natural gas resources in the Marcellus Shale and across the Eastern Appalachian states.

Feds Link Water Contamination to Fracking for the First Time

by Abrahm Lustgarten and Nicholas KusnetzProPublica, Dec. 8, 2011, 8:18 p.m.

In a first, federal environment officials today scientifically linked underground water pollution with hydraulic fracturing, concluding that contaminants found in central Wyoming were likely caused by the gas drilling process.

The findings by the Environmental Protection Agency come partway through a separate national study by the agency to determine whether fracking presents a risk to water resources.

In the 121-page draft report released today, EPA officials said that the contamination near the town of Pavillion, Wyo., had most likely seeped up from gas wells and contained at least 10 compounds [1] known to be used in frack fluids.

“The presence of synthetic compounds such as glycol ethers … and the assortment of other organic components is explained as the result of direct mixing of hydraulic fracturing fluids with ground water in the Pavillion gas field,” the draft report states. “Alternative explanations were carefully considered.”

The agency’s findings could be a turning point in the heated national debate about whether contamination from fracking is happening, and are likely to shape how the country regulates and develops natural gas resources in the Marcellus Shale and across the Eastern Appalachian states.

Some of the findings in the report also directly contradict longstanding arguments by the drilling industry for why the fracking process is safe: that hydrologic pressure would naturally force fluids down, not up; that deep geologic layers provide a watertight barrier preventing the movement of chemicals towards the surface; and that the problems with the cement and steel barriers around gas wells aren’t connected to fracking.

Environmental advocates greeted today’s report with a sense of vindication and seized the opportunity to argue for stronger federal regulation of fracking.

“No one can accurately say that there is ‘no risk’ where fracking is concerned,” wrote Amy Mall, a senior policy analyst at the Natural Resources Defense Council, on her blog. “This draft report makes obvious that there are many factors at play, any one of which can go wrong. Much stronger rules are needed to ensure that well construction standards are stronger and reduce threats to drinking water.”

A spokesman for EnCana, the gas company that owns the Pavillion wells, did not immediately respond to a request for comment. In an email exchange after the EPA released preliminary water test data two weeks ago [2], the spokesman, Doug Hock, denied that the company’s actions were to blame for the pollution and suggested it was naturally caused.

“Nothing EPA presented suggests anything has changed since August of last year– the science remains inconclusive in terms of data, impact, and source,” Hock wrote. “It is also important to recognize the importance of hydrology and geology with regard to the sampling results in the Pavillion Field. The field consists of gas-bearing zones in the near subsurface, poor general water quality parameters and discontinuous water-bearing zones.”

The EPA’s findings immediately triggered what is sure to become a heated political debate as members of Congress consider afresh proposals to regulate fracking. After a phone call with EPA chief Lisa Jackson this morning, Sen. James Inhofe, R-Okla., told a Senate panel that he found the agency’s report on the Pavillion-area contamination “offensive.” Inhofe’s office had challenged the EPA’s investigation in Wyoming last year, accusing the agency of bias.

Residents began complaining of fouled water near Pavillion in the mid-1990s, and the problems appeared to get worse around 2004. Several residents complained that their well water turned brown shortly after gas wells were fracked nearby [3], and, for a time, gas companies operating in the area supplied replacement drinking water to residents.

Beginning in 2008, the EPA took water samples from resident’s drinking water wells, finding hydrocarbons and traces of contaminants that seemed like they could be related to fracking [4]. In 2010, another round of sampling confirmed the contamination, and the EPA, along with federal health officials, cautioned residents not to drink their water and to ventilate their homes [5] when they bathed because the methane in the water could cause an explosion.

To confirm their findings, EPA investigators drilled two water monitoring wells to 1,000 feet. The agency released data from these test wells in November that confirmed high levels of carcinogenic chemicals [2] such as benzene, and a chemical compound called 2 Butoxyethanol, which is known to be used in fracking.

Still, the EPA had not drawn conclusions based on the tests and took pains to separate its groundwater investigation in Wyoming from the national controversy around hydraulic fracturing. Agriculture, drilling, and old pollution from waste pits left by the oil and gas industry were all considered possible causes of the contamination.

In the report released today, the EPA said that pollution from 33 abandoned oil and gas waste pits – which are the subject of a separate cleanup program – are indeed responsible for some degree of shallow groundwater pollution in the area. Those pits may be the source of contamination affecting at least 42 private water wells in Pavillion. But the pits could not be blamed for contamination detected in the water monitoring wells 1,000 feet underground.

That contamination, the agency concluded, had to have been caused by fracking.

The EPA’s findings in Wyoming are specific to the region’s geology; the Pavillion-area gas wells were fracked at shallower depths than many of the wells in the Marcellus shale and elsewhere.

Investigators tested the cement and casing of the gas wells and found what they described as “sporadic bonding” of the cement in areas immediately above where fracking took place. The cement barrier meant to protect the well bore and isolate the chemicals in their intended zone had been weakened and separated from the well, the EPA concluded.

The report also found that hydrologic pressure in the Pavillion area had pushed fluids from deeper geologic layers towards the surface. Those layers were not sufficient to provide a reliable barrier to contaminants moving upward, the report says.

Throughout its investigation in Wyoming, The EPA was hamstrung by a lack of disclosure about exactly what chemicals had been used to frack the wells near Pavillion. EnCana declined to give federal officials a detailed breakdown of every compound used underground. The agency relied instead on more general information supplied by the company to protect workers’ health.

Hock would not say whether EnCana had used 2 BE, one of the first chemicals identified in Pavillion and known to be used in fracking, at its wells in Pavillion. But he was dismissive of its importance in the EPA’s findings. “There was a single detection of 2-BE among all the samples collected in the deep monitoring wells. It was found in one sample by only one of three labs,” he wrote in his reply to ProPublica two weeks ago. “Inconsistency in detection and non-repeatability shouldn’t be construed as fact.”

The EPA’s draft report will undergo a public review and peer review process, and is expected to be finalized by spring.

 

Gambling with Andrew Cuomo

Few New Yorkers will shed tears for our indigenous brethren who will once again find themselves on the losing end of a political battle. After all, breaking treaties with Indians is a time-honored tradition in the United States. We’re awesome at that.

New York State Gov. Cuomo of the Andrew persuasion continues to ride high in the opinion polls, and for good reason. His approach thus far has been pitch perfect, even tackling controversial issues such as gay marriage with remarkable finesse. Cautiously and quietly the governor has moved a fairly progressive agenda forward in the first year of his administration. Now, on the eve of his sophomore year in office, he is martialing his political capital to begin making fiscal moves that will test his popularity and his political resolve.

Cuomo has targeted two key areas that should sustain his reputation as a strong fiscal manager and reform-minded executive: his regional economic development initiatives and his income tax modifications to provide a marginal break for the middle class while imposing a slight increase to the state’s highest earners. How he proceeds on the issue of hydraulic fracturing (fracking) upstate in the Marcellus Shale region could have a lasting effect on his record.
If fracking is allowed to proceed in the state, Cuomo risks alienating liberal democrats and environmentalists but the money generated from drilling operations may prove too tempting for the new governor to pass up. But as dicey as this issue is for Cuomo, there is another revenue-generating idea on his agenda with potential negative consequences upstate that will barely impact his approval ratings.

Up for consideration in his plan is the creation of private Class III gaming facilities throughout the state. Establishing more full-fledged casinos in New York may invite criticism from New Jersey and Connecticut as well as anti-gambling advocates, but it will undoubtedly pass the legislature’s scrutiny within the 2013 time frame delineated by the Cuomo administration. It entails passing muster in two consecutive sessions followed by a public referendum; but once approved, the state would then be allowed to issue licenses to private operators. In a statement Cuomo said, “Through this plan, we can promote job creation and recapture revenue that is currently being lost to other states.”
Fair enough, but why so many hurdles just to allow private casinos? We already have Off Track Betting, the lottery and Indian casin…. Ooooohhhh! Right. Those pesky agreements with the Indian tribes. The reason this move requires so many political machinations is that Class III gaming licenses were intended to be in the exclusive purview of recognized Indian tribes in the state. Contracts, by the way, which have been extremely lucrative for the state as well. The constitutional amendment and subsequent referendum are political-speak for “how government breaks treaties with Indians.”

The reason New York tribes have enjoyed any success in the gaming industry is because they have possessed the ability to construct and operate casinos on reservation territories without competition from private, off-reservation interests. It’s this exclusivity that has enabled tribes to succeed in spite of their remote locales. Introducing casinos into more urban areas will be a boon for the state and a disaster for the tribes. Ironically, this decision could also have the unintended consequence of further decimating employment in isolated upstate regions, many of which rely on direct and ancillary income and jobs created as a result of tribal gaming facilities.

Nevertheless, few New Yorkers will shed tears for our indigenous brethren who will once again find themselves on the losing end of a political battle. After all, breaking treaties with Indians is a time-honored tradition in the United States. We’re awesome at that. This latest move will have come as no surprise to tribal leaders who no doubt anticipated the inevitable demise of their rights before the ink was dry on the agreements. What I find so poignant about this turn of events is the timing and the characters involved as the target date of 2013 will be exactly 20 years after Andrew’s father, then-Gov. Mario Cuomo, granted New York’s tribes the sole authority to operate Class III facilities.

This multi-generational twist–the old “the father giveth and the son taketh away”–is a great angle but not without precedent. In fact, our most recent national holiday provides the perfect historical illustration of intergenerational power struggles.

The pilgrims in Plymouth who survived the harsh winters of the early 1600s in their new home did so through the kindness and assistance of the Wampanoag tribe headed by the great sachem Massasoit. The friendship that blossomed between Massasoit and one of the original settlers, Edward Winslow, endured for the remainder of both men’s lives and is the stuff of legend. In fact, it’s through Winslow’s journal that we have one of only two accounts of what would come to be known as Thanksgiving. In his entry he states: “Amongst other recreations, we exercised our arms, many of the Indians coming amongst us, and among the rest their greatest king Massasoit, with some ninety men, whom for three days we entertained and feasted.”

Fifty years later, both Winslow and Massasoit were gone. The great Sachem’s son, Metacom–also referred to as King Philip by the settlers–was threatened and cajoled by the increasingly hostile colonists. In 1675 war broke out between the Wampanoag, led by Philip, and the settlers. A year later the colonists feasted and celebrated once again, this time by toasting their victory over the Indians in what is now known as King Philip’s War.
According to historian Jill Lepore, “the final day of Thanksgiving, of the war, is the day Philip’s head is marched into Plymouth. This decapitated head on a pole in the center of town is cause for a great celebration.” Philip’s severed head remained atop a stake outside of Plymouth colony for 20 years while his 9-year-old son was imprisoned and then sold into slavery. The governor of Plymouth, who is widely credited as having killed Philip’s brother and drawing Metacom himself into war, was none other than Edward Winslow’s son, Josiah.

The son of Massasoit’s most trusted friend and ally murdered both of his sons. Rather Shakespearian, wouldn’t you say? Such is life in Indian Country. So while Andrew Cuomo’s actions are certainly more tempered and less violent, he earns low marks for originality. At least Josiah Winslow had the decency to wait until his father had passed away before he unraveled the good intentions set forth by his elders.

What New Yorkers Should Know About Hydrofracking

You can’t put the Earth back the way it was. Can’t cure the cancer these companies left behind. Can’t put the pieces of rock back together.

Hydrofracking Operation in PennsylvaniaA seat at the table. This was the going price for tacit support of hydraulic fracturing, “hydrofracking” as it is commonly known (or simply “fracking”), from the New York League of Conservation Voters (NYLCV) and several other state environmental groups. I resigned my personal seat at the table on the Long Island board of the NYLCV after it took such a pusillanimous stance on what will prove to be one of the worst environmental and shortsighted economic blunders in New York’s history.

Late last week, Gov. Andrew Cuomo appointed a blue ribbon panel to advise the Department of Environmental Conservation (DEC) on the regulations and rollout of hydrofracking upstate, effectively ending the moratorium on natural gas shale exploration. Hydrofracking means breaking through shale to extract natural gas trapped in pockets deep beneath the ground, a process that has deservedly come under increased scrutiny recently for countless reasons. But first, a little context.

Hydraulic Fracturing History. Natural gas is a cleaner-burning fossil fuel than oil, and something the United States has in abundance. Increasing access to natural gas is compelling as our dependence upon fossil fuels continues to grow while our tolerance for protecting oil interests around the globe steadily wanes. And since the combination of renewable energy, conservation efforts and efficiency standards have yet to keep pace with our insatiable appetite for energy consumption, any solution with environmental advantages, no matter how marginal, is persuasive.

Fracking has been around for more than a century as a means of pressurizing the drilling process of oil and gas wells. It’s referred to as “Enhanced Oil Recovery”, a process required for the most difficult of drilling scenarios, where oil and/or gas are trapped within rock formations. Essentially, once a well is drilled, a mixture of water, sand and a small amount of chemicals are pumped down the well at extremely high pressure; the mixture bores through the shale to release the gas into the well while the sand and chemical combination help prop open the fracture in the formation. Back on the surface, the gas is separated from the extraction fluids.

It’s important to understand that the pressurization itself is one of the reasons that the declines in the rate of shale production are steeper than from primary and secondary drilling methods. Removing fossil fuels from the ground is a difficult and delicate process that ranges from relatively pristine oil fields that can be easily drilled and pumped to the most extreme cases that require hydraulic fracturing through dense rock formations. The need to maintain intense levels of pressure in the drilling environment—as opposed to tapping an easily accessible reservoir under the desert—means that more can go wrong along the way. These areas reach what is known as “production total decline” faster than other plays—or drilling sites— because the pockets are spread out through the shale formation and difficult to access, and pressurization is hard to maintain over time. In fact, shale gas was considered too difficult to tackle until Halliburton established a new horizontal drilling protocol in the late 1940s that revolutionized the industry; even still, it wasn’t until the technology was enhanced by the chemical mixture in the 1990s that fracking began to catch fire, renewing the natural gas rush primarily in Texas, New Mexico and Wyoming. 

 Where we are today. There is no question that decreasing our dependence on foreign oil is popular and necessary. The question is whether this is the right method of extraction, particularly in a populous place such as New York. The answer is definitively “no.” And the reasons aren’t strictly environmental, though the pernicious effects of fracking on human health and the environment are certainly enough to arrive at this conclusion independently. Advocates of fracking have argued that the proper regulation of the process and the protection of the watershed are enough to satisfy environmental concerns and that the economic benefits of fracking the Marcellus Shale, which runs from Tennessee through New York, are considerable, particularly in hard-hit areas upstate. But taken individually, every argument in favor of fracking falls down under scrutiny. So, let’s get to it.

Environment. Fracking is both an art and a science. This is the most complicated of drilling endeavors. Because of the precarious nature of this technology, it is nearly impossible to contain the spread of contaminants involved in the process; likewise, it is impossible to contain the spread of methane gas once it is released from the shale. Fracking cannot and does not extract 100 percent of the natural gas from the rock, leaving a small quantity behind that can infiltrate surrounding areas. Moreover, the process itself requires millions of gallons of water that eventually return to the surface  contaminated by the chemical mix. In no instance, has there been a system robust enough to thoroughly remediate the return flow from a gas well.

Countless examples have been offered to the public and to state and national environmental agencies of the dangers of fracking, whether they are contaminated drinking wells, methane gas explosions or known-carcinogens found in areas near drilling operations that could only have come from the pressurized mixture being shot through these wells. Despite the growth of cancer clusters near the drilling wells or the evidence of homeowners living in fracking areas being able to set their tap water on fire, New York believes that it has the secret regulatory sauce to control the hazardous effects of fracking. Okay, so let’s look at the regulatory environment.

Regulation. The only reason fracking chemicals have remained proprietary is then-Vice President Dick Cheney’s insistence that the 2005 federal energy bill exclude the Environmental Protection Agency from hydrofracking regulation that would normally have come under the purview of the Safe Water Drinking Act. Cheney allowed his former employer, Halliburton, to do an end-run around the regulations the moment the public started linking environmental contaminants to the new chemicals used in fracking. His actions alone should alert any nose-breathing person to the inherent danger in this process. Instead, we have new “mandatory regulations” from the EPA, which are not yet the law of the land, that require full disclosure of these chemicals. Good luck. If the government had any ability to enforce this requirement, it would already be law. Yet, when Sen. Robert Casey [D-Pa.] introduced a bill (S.1215 Fracturing Responsibility and Awareness of Chemicals Act) in 2009, it died unceremoniously in committee. He attempted again in March of this year to revive the bill (S.587), and it too is sitting in committee where it will also undoubtedly meet its maker.

New York believes that it can keep hundreds of wells in check through the auspices of the state’s Department of Environmental Conservation (DEC). Although Gov. Cuomo’s 2011 budget didn’t hack away at the DEC staff, the resource-strapped agency is incapable of policing leaks below gas stations, let alone monitoring wells throughout New York. The idea that the DEC will have the manpower to regulate these operations is a joke, and everyone knows it. The only logical conclusion here is that the economic benefits of infrastructure spending and job creation are so great that the state is willing to take the gamble. 

Economy. The thought of residents in a small, working-class town upstate coming off government assistance and getting back to work, putting food on the table and earning an honest wage is the kind of post-recession Norman Rockwell imagery the oil and gas industry would like us all to believe. The economic reality of gas drilling of the fracking persuasion is a little different than this ‘Wish You Were Here’ postcard from a bygone era. First of all, the drillers are too smart to buy property anymore. Instead they offer attractive drilling rights in the form of leases to landowners who are indeed paid handsomely for access to their land. Once the rights are sewn up, employment grows. But not necessarily the kind of employment illustrated above. Experienced drillers and machinists come from far and wide to exploit the new territory because they are already trained in this field of expertise. Suddenly, restaurants are packed, car dealers are moving inventory, and supermarkets and drugstores are filled with new faces in the community. I’m not suggesting this is a phantom recovery, because it’s not. These are important economic steps, but not if they are fleeting. The problem lies in the short productive life of the wells being drilled, which ends up curtailing the peripheral employment created during the height of production.

When American think of oil and gas operations, they think of enduring periods of wealth typically associated with the gulf states or Arab nations that went from rags to riches seemingly overnight, awash in the endless supply of crude. Unfortunately, the reality of natural gas stands in stark contrast to this vision. Gary S. Swindell, a well-known petroleum engineering consultant, conducted and published a study in 1999 on the 30-year performance of Texas natural gas wells, some of the highest yielding gas wells in the nation. His conclusion: “There have been substantial changes in the decline profiles of wells drilled in Texas over the last 30 years. This study indicates that for new Texas gas wells, the decline rates in the early years are now on the order of 50 percent per year.” Swindell updated the study in 2005, noting the rate of decline is closer now to 60 percent per year.

What does all of this mean? It means that the easy stuff is gone. Every year we have to look for deeper, more difficult plays, and the only reason the oil companies keep gobbling these operations up is because the market price is so artificially high due to market speculation. If we were in a normal commodities pricing environment, none of these areas would be considered because there wouldn’t be a shale play in America that would make financial sense.

Even the U.S. Energy Information Administration cites that “the average gas well half-life has dropped for all major production regions and for the lower 48 States. Second, the regional gas well production half-lives have converged to a value of between 23 and 25 months.” Translation: At best, the average production life of a natural gas well is four years.

 Four years. After that, they’ll be gone. The customers in the restaurants, supermarkets and auto dealers will have moved on to the next play. That’s called a bubble. But when this bubble pops, there’s no going back. You can’t put the Earth back the way it was. Can’t cure the cancer these companies left behind. Can’t put the pieces of rock back together. When the wells are sucked dry, so too is the local economy when the drillers head for the proverbial hills and leave the land owners high and dry with polluted and devalued properties. This is a zero-sum game, and for some reason, with all of the information and resources available to us, we’re still willing to take a “seat at the table” instead of dismissing the practice entirely.  

Personally, I refuse to vie for a seat at the devil’s table to drink hemlock and swallow my pride. The NYLCV and others are committed to advising the official hydraulic fracturing policy as though it’s a policy worthy of consideration, or worse, a fait accompli. It is neither. We still have a choice. The only question is whether we have the courage to make the right one.