The natural gas industry wants to have its cake and eat it, too — after cooking it with some shale gas, of course. Guest bloggers Richard W. Caperton Policy Analyst at CAP, and Tom Kenworthy, a Senior Fellow, has the story of the industry latest effort to bypass safeguards for the controversial drilling technique known as “hydraulic fracturing.”
According to E&E Daily (subs. req’d.)
The latest draft of the climate and energy bill being written by Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) reportedly includes language saying U.S. EPA would not regulate the oil and gas drilling technique.
Hopefully, this is just wishful thinking by gas companies, rather than a proposal that’s actually in the comprehensive, bipartisan clean energy and global warming legislation under development by the three senators.
The EPA should have the ability to protect people from all potential sources of drinking water contamination, including hydraulic fracturing (also known as “fracking”). Recognizing the potential threat to water supplies, the EPA announced last week it will undertake a major study of the process to see if it poses dangers to public health and safety.
In the fracking process, a solution of water, sand and chemicals is injected into underground rock formations. This cracks the rock, releasing natural gas that wasn’t previously recoverable. Unfortunately, as CAP’s Tom Kenworthy recently explained, there’s a risk that the chemicals in fracking fluids will pollute nearby drinking water sources. This is especially important in light of today’s news report (subscription req’d.) that a gas drilling company has violated an agreement with the government and injected diesel fuel near drinking water aquifers. “One of the world’s largest oilfield services companies continued to tell U.S. EPA it was complying with an agreement barring the injection of diesel fuel near drinking-water aquifers, documents show, after admitting to Congress that it had violated the pact,” according to the report.
If the industry succeeds in getting a fracking exemption in Senate energy and climate legislation, it would expand special treatment for hydraulic fracturing that started with the Energy Policy Act of 2005 that exempted the process from EPA regulation under the Safe Drinking Water Act. Allegedly, the draft proposal would also protect the oil and gas industry from having to publicly disclose the chemicals they use, which removes neighbors’ right to know about the risk posed by adjacent drilling.
While fracking is a decades old practice, huge new discoveries of shale gas in the U.S. mean that the drilling technique is increasingly widespread. New horizontal drilling technologies, using fracking, have opened up giant reserves of gas from the West to the mid-Atlantic states. This “gas gale” has opened up new possibilities for replacing old, polluting coal-fired electric plants with cleaner and less polluting plants fired by natural gas. In the years ahead, greater demand will mean more gas production, and more fracking. often in states that have relatively little experience in ensuring that a drilling boom is done responsibly.
If fracking is exempted from EPA regulation, the risk of drinking water contamination will remain. By definition, this pollution is an externality – an extra cost of production, except society rather than gas producers bear this cost. The whole theory of a new clean energy economy is that the externalities of fossil fuel production and combustion – carbon pollution — should be included in energy prices. Indeed, this is exactly why natural gas would benefit from a price on carbon pollution: incorporating the cost of carbon dioxide emissions into power costs will raise the price of power from coal, making natural gas electricity cost-competitive.
It’s hypocritical for the natural gas industry to propose that other industries have their externalities priced, while the externalities from fracking go unpriced.
Environmental safeguards are an essential component of energy development, and no industry should receive blanket exemptions. This applies to both renewable and fossil fuel industries. For instance, solar power developers in California’s Mojave Desert have to contend with delicate endangered species habitats. Instead of simply saying that the Endangered Species Act doesn’t apply to solar developers, the right approach is to find locations that avoid critical habitats. Similarly, the right approach for fracking is not to say that the Safe Drinking Water Act doesn’t apply to natural gas production, but to make sure that natural gas drilling doesn’t contaminate water supplies and to require energy companies to disclose the chemicals they use so that if contamination does occur public health officials can respond appropriately.
Of course, some companies have billions of dollars riding on avoiding federal standards for fracking, most notably Exxon Mobil and natural gas company XTO. Exxon has offered to buy XTO and its natural gas reserves for an astounding $31 billion, but a clause deep in the contract gives Exxon the right to back out of the deal if the federal government makes fracking “illegal or commercially impracticable.”
Should Congress create different rules for the natural gas industry just so this merger can go through? Is it reasonable for the natural gas industry to benefit from unpriced externalities? If Congress exempts fracking from additional EPA safeguards, they will clearly be saying, “Yes,” to both of those questions. Senators Kerry, Graham and Lieberman must not issue a blank check to natural gas producers who would prefer to keep their chemicals secret while society bears the cost of their use.