Senior Research Associate, Resources for the Future
The U.S. shale revolution is one of the most disruptive developments in oil and gas markets since the formation of OPEC in the 1960s. However, the process to recover oil and gas reserves from shale formations, hydraulic fracturing–better known as fracking–is a source of contentious debate in the United States. Proponents of fracking point to the transformation of the American energy industry and rebalancing of oil and gas trade flows, greater U.S. energy independence, and new revenues to the economy. On the other side, anti-frackers call into question fracking’s impact on the environment and public health.
To get a better understanding of these different views and to explore some of the latest research on these issues, host Jason Bordoff speaks with Daniel Raimi on Columbia Energy Exchange. Daniel is a senior research associate at Resources for the Future and a lecturer at the Ford School for Public Policy at the University of Michigan. He is also the author of CGEP’s latest Columbia University Press book, The Fracking Debate: The Risks, Benefits and Uncertainties of the Shale Revolution.
Among many topics Jason and Daniel discuss, several include: Environmental impacts of fracking on ground water and air pollution; Differences in state regulation of fracking; The link between fracking and seismic activity; The economic impacts of fracking; and the outlook for fracking around the world.
Jason Bordoff: Hello and welcome to the Columbia Energy Exchange at the Center on Global Energy Policy. I’m Jason Bordoff. Before we get started today, I have a favor to ask all of you, our listener, please take a moment to rate us on iTunes or your preferred podcast provider. Bill Loveless and I read every comment and your feedback helps us improve the show and of course we love your five star ratings. Now, on to todays show.
There are few words in Energy that inspire more polarized and extreme response than this one; fracking. For some it’s a dirty word, fracking is a practice that despoils the air and water or extends our hydrocarbon dependence. One prominent activist called fracking a form of “climate denial”, for others it’s a harmless technique and one that has been one of the strongest buttresses to the US economy, a source of geopolitical power, the driver of coal’s decline and delivering numerous other benefits. So, which is it?
That’s the subject of a new book from the Columbia University Press through the Center on Global Energy Policy books series; it’s called The Fracking Debate by Daniel Raimi. And it explains how fracking works; it explains what we know about it, what we don’t, it explains the nuances of fracking and how they shape government policy. It aims to be a dispassionate look at the evidence to date, written in as objective and balanced a way as I think you will find today on this controversial topic, and it’s also written in a very easily readable and very accessible way for a topic that can get somewhat complicated and technical.
Daniel I think has really done a great job with this book, it’s a valuable contribution to our understanding of whether you like it or not, one of the most consequential innovations and developments in the US energy sector in the last several decades. Daniel Raimi is a Senior Research Associate of resources for the future, he is a Lecture at the Ford School for Public Policy at University of Michigan and for listeners eager to read The Fracking Debate, the book is available now for purchase through Amazon, Columbia University Press and many other retailers.
And additionally we invite you to join us in New York City either live in person or through our webcast for the official launch of the book on January 17th, this will include a panel conversation between Daniel and many other experts. I will moderate the event, I hope you will join us; you can visit the Center on Global Energy Policy’s website for more information. Now onto todays show. Daniel Raimi, welcome to the Columbia Energy Exchange.
Daniel Raimi: Thanks, Jason. It’s great to be with you as a regular listener to the Energy Exchange; it’s an honor to be a guest.
Jason Bordoff: Well, it’s great to have you and it’s great to have this book in particular The Fracking Debate as part of the Center on Global Energy Policy book series. I think it’s a good example of what we hope our work does generally and this book does, I think it’s fair to say there are few issues in the energy world now that attract more emotional reaction than the word fracking.
But, it’s also one that sometimes people may not understand all the facts about and they’ll hear from some people that it’s saving the US economy and making us energy independent from other people that it’s destroying the environment and the planet. And, I think many people I often encounter sort of say is there something I can turn to that helps me understand what’s really going on here, and I take it that was the motivation for writing the book?
Daniel Raimi: Yeah. That’s right. So, I talk about this little bit in the introduction to the book, whenever I meet people for the first time or when they are learning about the work that I do and I say the word fracking, suddenly people’s ears prick up and their opinions often get quite strong. But, there are a lot of kind of fundamental issues that people simply don’t have great access to information on, it’s easy to get information from partisans on either side of the debate who make arguments like you say Jason that either this is the best thing that’s ever happened or it’s the worst thing that’s ever happened, the reality is it’s a mix of benefits and challenges. And, there are also still some uncertainties where there are issues that we don’t have all the facts yet and where we need additional research to kind of clarify the policy debate.
Jason Bordoff: So, let’s walk through some of those issues, but first just sort of the back — what fracking is and the background of it, I think for a lot of people it’s only in the last few years that they have heard about it, but in fact its history goes quite a ways back further than that, so tell us that history and then why are we suddenly talking about it now.
Daniel Raimi: Sure. So, fracking is short for the term hydraulic fracturing which is a particular way of stimulating on oil or gas reservoir it involves pumping into predrilled well, typically millions of gallons of water mixed with quite a large amount of sand as well as some chemicals. Those chemicals are controversial and there is a discussion to have about that. But, if you look back to the beginning of the oil and gas industry, all the way back to the 1850s in Northern Pennsylvania, where some of the first commercial wells were drilled, they were actually individuals selling to the well operators explosives that they could lower down into the bottom of their well and detonate, typically nitro glycerin based explosives.
So, the idea of stimulating rock reservoirs deep underground to increase the production of oil and gas is nothing new. However, we’ve seen over the last 10 or 15 years, a real revolution in oil and gas technology in the United States and that’s because of the application of this particular type of well stimulation, hydraulic fracturing or fracking coupled with other technological advances like big advances in directional and horizontal drilling as well as better seismic imaging techniques, financial innovation in the oil and gas sector and a variety of other more incremental improvements that have allowed companies to access rock formations called shale or other type formations that they previously had not been able to access in an economical way. And so, the application of fracking in these other technologies to shale and other type rocks is the driver of enormous increases in United States natural gas as well as oil production.
Jason Bordoff: And again, as you – you hear many people on one side of this issue talk about horror stories related to fracking, on the other hand you often hear the industry say there has never been a known instance of water contamination from fracking for example and you point out that when people say the word fracking, they are talking about different things, so say more about that.
Daniel Raimi: Yeah. So, it can be challenging to spend too much time trying to define a word and what a word means, it can been a little boring if you go too deep into it, but I spent some time in the book talking about how advocates who are typically opposed to shale drilling will use the word fracking to encompass the entire oil and gas industry, so people may refer to fracking wells or fracking companies or fracking pipelines.
When fracking itself is a discreet activity that takes place in the context of oil and gas development more broadly, that’s important because for policymakers, if you are trying to develop good regulations about one particular aspect of the industry, you need to understand the context of each individual technology and fracking is just one of those technologies. When you look to the other side of the debate; pro industry advocates, they are typically more careful with their use of the word fracking, but not in all cases.
So, Jason you point out correctly that many people will say there have never been confirmed cases where hydraulic fracturing has contaminated water sources. That’s a debatable statement, because there are a couple cases, really just one or two out there where there may have been chemicals or other problems directly related to the hydraulic fracturing process. But, more generally, cases of pollution related to the oil and gas development are caused by other errors that can happen when you drill in cement or case on oil gas well. So, well fracking itself is typically not a major reason for pollution, other activities related to oil and gas development can cause real problems. And so, that’s what industry advocates mean when they say hydraulic fracturing has not been a confirmed case, there hasn’t been a confirmed case where hydraulic fracturing has contaminated ground water.
The last thing I will say about this is where it gets tricky is oil and gas industry advocates often, when they are talking about the benefits of the shale revolution and there have been substantial benefits, then they start to use the word fracking. So, when they talk about the benefits of the shale revolution, they might say fracking has led to this many jobs or fracking has led to this economic boost in a particular region, but then when you start talking about the risks, then the definition of fracking suddenly gets narrower, and that’s a real cause for confusion for people trying to understand this issue and something that I hope this book can help clarify.
Jason Bordoff: Yeah. That’s really helpful. So, it sounds like you are saying when you’re talking about the benefits, you are talking about overall the increase in oil and gas production that comes from the application of this technology, but if you have a narrow take on what the risks are and you are only referring to that particular piece of production activity that is the fracturing of the well, that may be technically accurate, but when people are trying to understand and it sounds like you are saying yes, but there are other risks, truck filled with frac fluid, may have an accident and spill or there may be emissions from some of the industrial activity on the ground or things like that.
And the people who raise those concerns are talking about that whole pool of activity, is that right?
Daniel Raimi: That’s right. And, one of the reason the book is called The Fracking Debate is because the debate is often – it takes place around this word fracking, but the subtitle of the book is the risk benefits and uncertainties of the shale revolution and the shale revolution is really the broader encompassing. And so I think it’s really important to distinguish between the discrete activity of hydraulic fracturing and the broader shale revolution and to just to kind of know what we’re talking about when we’re having this discussion.
Jason Bordoff: So let’s talk about some of those discrete risks that come up and help us understand kind of where in the chain they may emerge and how real they are and how in some cases exaggerated you think they might be. So let me start and you kind of break the book down in this way, you ask about impacts on drinking water, on air quality, you kind of walk through the different issues on earthquakes, so let me start by asking you there are couple of buzz words beyond fracking is one of them and other is Dimock tell our listeners what Dimock is and why it’s important.
Daniel Raimi: Yeah, so Dimock is a rural township in north eastern Pennsylvania and Susquehanna County and Dimock is one of the first places that I visited when I was doing research related to how localities are affected by oil and gas development, this is sort of separate research project that allowed me to travel to every major oil and gas producing region of the country and collect some of the stories that I tell in the book. So I travel to Dimock. Dimock is a place where there have been a number of cases where methane migration also known as stray gas from improperly cased natural gas wells have affected people’s ground water supplies. Primarily along this one road in Dimock Carter Road it’s a small dirt road and there are some houses along the road and you see lots of signs along that road that say ban fracking or other signs to that affect. And it’s clear that the individuals in — along this particular road have been negatively affected by errors in oil and gas development. Again not fracking per se but other elements of the well drilling and completion process and so these individuals have been negatively affected the Pennsylvania department of environment has made a number of determinations both in Dimock and in other parts of Pennsylvania where people’s ground water has been affected by problems with oil and gas development.
Jason Bordoff: And when you say water has been affected, I mean that could take different forms, so one of the ways you talk about you – you just mentioned stray gas is methane gets into the water supply, how does that happen – is that about fracking itself is that about another piece of the chain, well cementing and casing. And then what are the consequences for public health of that?
Daniel Raimi: Right, so it is typically related to well cementing and casing. So when you drill an oil and gas well there are a variety of layers of steel and cement that are put into place to essentially keep all the stuff inside the well, inside and keep the stuff on the outside of the well on the outside, but if there are problems with the cement or problems with the steel casing then methane which is essentially natural gas can travel through the oil and gas well as a conduit and get into people’s water supplies.
Jason Bordoff: And just to be clear that what you just said is true whether your well is fracked or whether it’s a conventional well that is not, is that right?
Daniel Raimi: That’s correct and in Pennsylvania if you look at these different cases of water supply incidence some of them are from wells that are drilled into shale and have been fracked and some of them are from older wells that are drilled vertically and are not fracked. So this is a problem that can happen with any oil and gas well. Now methane itself is not a contaminant, it’s not harmful to human health. However, if there’s enough methane in water then methane can accumulate and ignite and so if you’ve seen pictures of people lighting their water on fire in some cases not all cases, but in some cases that can be caused by stray gas or methane migration and that’s the result of problems with oil and gas well drilling and cementing technologies.
However not a direct result of fracking. The last thing about Dimock that I found particularly interesting is in Dimock along Carter Road you see these signs let’s say ban fracking, however when I spoke with the local elected officials in the township of Dimock they were actually upset that there wasn’t more drilling happening in the township. When these water wells were contaminated along Carter road the Pennsylvania department of environmental protection essentially put a moratorium on one particular company drilling within that area that meant that a lot of land donors that had previously leased their land and were expecting large checks in the form of royalties from natural gas production haven’t seen those checks, because the wells haven’t been drilled.
So while there are a number of people in Dimock who have been negatively affected by shale development they’re very opposed to shale development. There are lots of other people right there in the town who wanted to come back for the economic benefits that it can provide.
Jason Bordoff: Interesting. And help just with listeners understand what does the evidence show that how common this particular – we’ll come to other issues in a minute, but this particular issue of methane in the water resulting from oil and gas activity as this is kind of happening – is this common or is this a pretty rare thing?
Daniel Raimi: Yeah it’s pretty rare but it’s not – it’s not all that uncommon, so unfortunately data on this issue are not great, it’s hard to get really reliable data. Pennsylvania though does provide some pretty decent data and I talk about it in the book. If you look at towards the early days of shale development in say 2008, 2009 what we are finding is that somewhere around 1% of all the shale gas wells that were drilled were affecting water supplies in some ways, typically through this methane migration pathway. But if you look in later years of 2014, 2015 you start to see those instances of contamination go down substantially, such that in 2015 they were actually zero, new cases of methane migration from shale gas development in Pennsylvania.
Jason Bordoff: And so methane gas – stray gas getting into the water is one issue, another that you hear about are chemicals there are small amounts of chemicals that are in the frack fluid used, so I asked you that Dimock, let me ask you another word that comes up, Pavillion, tell us what Pavillion is and what it tells us about that issue?
Daniel Raimi: Yeah, so Pavillion is again a small rural town this time in Wyoming and they’ve had natural gas development around Pavillion in Wyoming for decades. However I believe it was the early 2000s several home owners in the area complained to the U.S. EPA that their water supply had been affected by this natural gas drilling in the area. And a variety of investigations have taken place into what happened in Pavillion, some by independent researchers and some by government agencies including the EPA as well as the Wyoming department of environment.
And these research projects have actually come up with slightly different findings, so it’s little hard to know exactly who’s right and who’s wrong, but the academic research on this topic suggest that hydraulic fracturing which was taking place at a very shallow depth may have actually connected with people’s water supply. So the chemicals used in fracking may have actually infiltrated people’s ground water in this one particular case. And that’s primarily because the fracking was happening at a very shallow depth, somewhere around 12000 feet down.
Now typically when fracking is used it’s used 3000, 4000 maybe even 10000 feet deep. So the likelihood of those chemicals infiltrating people’s water supplies are extremely low and we really haven’t seen any other cases of this around the country. But in this one case it seems possible that either through migration underground or possibly through spills at the surface, chemicals used in fracking have actually infiltrated these folks water supplies and it’s been very damaging for them.
Jason Bordoff: So there’s been a bunch of studies now on questions about water quality impacts on water supply including a big study by the EPA that went on for many years, so just kind of help our listeners understand what your understanding is of the evidence at this point?
Daniel Raimi: Yeah, so to kind of sum things up, I guess what I would say is that there are a number of risks from shale development that could affect people’s water, those are risks that doesn’t mean they’re necessarily going to happen, the actual number of cases around the country where people have been affected, again it’s hard to tease out but it does seem like it’s quite rare. The main risks that people might face is probably spills at the surface are the largest individual risk they are somewhat common just because people spill things, human error, vehicle accidents, flow back water ponds, overflowing or liners in those ponds being damaged so that chemicals or water may leach out from those ponds into ground water.
So those things do happen around the country, they are quite rare. Methane migration is also risk as we discussed, it’s also quite rare. So I guess the key point in this is that there are risks, they are out there, but they’re really pretty rare and often times when the damage does occur it’s a fixable problem.
Jason Bordoff: And you point out in the book that oil and gas drilling whether it’s shale or conventional even or just industrial activity generally, bears risks, it also brings benefits and so the role of regulation is to kind of weigh those off and figure out exactly what the right level of regulation should be. And in U.S. most regulation is done at the state level for oil and gas. What’s your sense about the – how adequate or inadequate state regulation is today?
Daniel Raimi: Yes the regulators at the state level are as you say that the primary regulators of this activity, that’s a debate that might be worth having, do you want state government to be the lead regulators on these issues or do you want the federal government leading? But setting that debate aside the state of play is that state regulators are doing most of the heavy lifting on these issues. And what you see is you see a real variety of regulatory schemes set up across the country.
And thinking about a state like Pennsylvania or a state like Texas or a state like North Dakota, there are reasons, there are good reasons why those states might have different regulatory schemes. For example in North Dakota it’s a relatively sparsely populated area. And so you might not have all the same concerns about say air emissions near well site as you do in Pennsylvania, where the landscape is more populated or around Fort Worth Texas, where there’s quite a lot of –there’s been a lot of Shale development over the years.
And so the local situations of each oil and gas play, I think really should inform the regulatory structure that gets put in place. Unfortunately measuring the effectiveness of regulations in different state is quite difficult, there been a number of studies that have kind of tried to do it, none to really to my satisfaction and so you kind of have to look on a case by case bases at each individual regulation to understand kind of what the best practices are. And I think overall if you had to look across the country to see some of the best practices, Colorado seems like one of the places where they really are trying very hard to rely on the best research to craft the regulations.
There’s still uncertainty within that research which leads to challenges about developing the perfect regulatory mechanisms, but I think Colorado is generally doing a pretty good job.
Jason Bordoff: And there was just a recent article and that you kind of see these headlines they pop up and they get a lot of attention and people don’t always look at, what’s actually beneath them, a headline about a new study finding low birth rates in areas near Fracking sites you talk a lot about evidence of will it make me sick about public health impacts and so tell us a little bit about what the evidence shows on that?
Daniel Raimi: Yeah so the evidence in this area is really still pretty nascent I would say so, so unfortunately it’s hard to get really good answers on the health risks of Shale development, what we do know is that Shale development involves a substantial number of pieces of heavy equipment. So drilling rig, land clears or craters hydraulic fracturing pumps, trucks moving into the area to deliver sand or chemicals or water or to haul away oil that’s produced from the site. And each of those pieces of industrial equipment emits air emissions. And those air emissions could include volatile or organic compounds; they could include other, other emissions that are potentially damaging to people’s health.
The challenge really comes to the fore when you try to extrapolate those emissions and understand exactly how they’re affecting people. So there’s a bunch of studies out there that look at the air emissions themselves. And then there is some studies out there that try to look at how people are affected and unfortunately those studies to date has not actually measured the emissions at the site and then directly connected them to the people living nearby. Instead what we have are a variety of studies that take proximity to the well site as a proxy for exposure.
So if you live within one kilometer say of a well Site or if you live within one mile of a Well Site, researchers might look at your health outcomes relative to other people who live farther away, that’s where the, the evidence really stands right now and some of those studies, some of which have been quite well done, some of which have not been as well done, show that there –it looks like there are probably some risks from living in close proximity to Shale development. However we don’t know the exact pathway of those risks, so it could be air emissions, it could actually be stress and other –just go ahead Jason.
Jason Bordoff: Just so I understand when you say living in close proximity Shale development, this is similar or different from risks when you live near industrial activity generally and you talked about, we talked early about, what is the actual active hydraulic fracturing and all the other, you mentioned this is VOC, this is air emissions from the trucks and everything else on the surface, is that –it sounds like that’s where it is, is that different or worse for Shale or is it just there’s so many trucks I mean these frac sites, sometimes have hundreds of trucks pulling up. Does that make it different in some way?
Daniel Raimi: So I guess I would say there, there are couple important differences between Shale development and maybe living near other industrial facilities. First is that Shale development typically takes places over a period of weeks or maybe months, whereas if you live next to a highway or near an oil refinery you know that highway and that refinery those are running 24/7 and so there is a longer time of exposure if you’re living closer to those other industrial activities. But in principle the issues are the same, the types of air emissions that you might worry about are the same particularly from trucks.
However there are a couple issues that are unique to Shale development that might raise causes for concern, one is this issue of emissions during flow back, so after well is fractured, water and gas and sometimes oils is flowing back to the surface, and if those air emissions are not appropriately captured and dealt with, at the well site then they can cause additional risk to people living nearby that are separate and apart from those risks of living near any other type of industrial facility?
The – just one more point on that, there are actually technologies that governments have mandated in some cases also that companies have adopted voluntarily to limit those emissions, this is called green completions, where emissions during flow back are limited substantially. And that’s one of the steps that operators and regulators can take to substantially reduce those risks.
Jason Bordoff: And that’s something companies have been doing sometimes voluntarily and but also regulations have come into effect requiring in right? And the other thing you hear a lot about our earthquakes especially in Oklahoma, just help people understand that doesn’t sound good, help people understand what they should — how they should understand that issue?
Daniel Raimi: Yeah so, so I was travelling in Northern Oklahoma where many of these earthquakes have been concentrated and I was in a court house, a county court house looking through sort of dusty government records and, and I was talking to the County Clerk who told me that, the county court house an inspector came by recently and found that there might be some problems with the foundation, resulting from these earthquakes, that court house was built in 1800s and was not designed to deal with earthquakes.
So this has been a big issue as you say particularly in Oklahoma and the — what’s happening here is that the fracking itself the injection of water, sand and chemicals into Shale has mostly not been the main cause of these earthquakes. There are couple instances around the country where fracking itself, is probably the cause of the quakes, but the bigger issue in Oklahoma and across all Shale place really has to do with managing oil and gas waste water. So when you pump a lot of water down, a lot of that water comes back up and you have to deal with that water somehow.
But in addition all oil and gas place produce some water, so along with natural gas or along with oil that comes up from deep underground you have water that’s been embedded in those formations for millions of years and often has high levels of salt and other contaminants that are problematic. So you don’t want to put this water, back into the ecosystem, what you typically so with it is you inject it into these things called disposal wells or underground injection control wells that are regulated by the ETA.
What happened in Oklahoma is that, an enormous volume of this produced water as it’s called was injected into some of these disposal wells and those disposal wells, they build up pressure in the formations where they’re injecting this produced water, such that the water actually flowed out from the formations where they were supposed to be held and flowed down into what’s called the basement rock. The basement rock is where earthquakes typically occur and in a couple places in Oklahoma, those basement rocks had preexisting faults.
And so the addition of all this new water deep underground altered the pressure in the basement rocks and has allowed them to slip to the extent that in 2014, Oklahoma had more than 900 earthquakes of magnitude 3.0 or greater. And Oklahoma has taken some positive steps to reduce these problems but it’s not likely to go away overnight.
Jason Bordoff: It has in the data it looks like it has gotten, it gotten much worse and then it got better so you’ve said some of these problems maybe most of these problems are solvable, what’s the –how do you solve this problem, does it mean you, you don’t, you don’t inject but what do you do with the waste water?
Daniel Raimi: Yeah so there are couple ways to kind of manage this problem I wouldn’t think that it’s really solvable, even in the context or even over the time scale of a couple of years, if you look at other cases around the country of what’s called induced seismicity or human caused earthquakes, there’s a prominent one North of Denver that is not related to oil and gas but these quakes, once they started they basically went on for five or six years, even after all the new injection of fluids was stopped. And so this is not a problem that’s going to go away overnight. But what you can do to try to manage the problem and reduce it is first you can gather data, by deploying –excuse me by deploying arrays of the seismic monitors to kind of get a sense of where the pressure are building and where the risks are greatest.
So, that if you get a sense that there’s a problem developing in one particular area near one particular one well then you can shut that well down and reduce your risk. A second step that operators are taking for a variety of reason some economic and some reputational is that they are recycling more at this waste water. So, they are reusing in other hydraulic fracturing treatments and that reduces the amount that you have to inject underground. So, that reduces the risks of earth quakes as well and then the last step you can take is just kind of reducing the volumes of waste water that can be disposed of within two particular rock formations.
So, there’s one formation in Oklahoma called the Arbuckle. That’s where a lot of the waste water has been going and that looks like it’s kind of the cause of the problem. So, Oklahoma regulators have been reducing the amount of water that companies can pump into the Arbuckle, and it seems like that’s having some positive results.
Jason Bordoff: So, it’s sounds like your saying that if you – if you do things the right way there shouldn’t be problems, if there are problems in some cases you can take – take different measures maybe with some greater cause, but you can take actions to mitigate them, that is – is a role for over site and regulation for government to make sure things are being done that way, but one thing I hear a lot is people say there’s a thing called Halliburton loophole and tell people, what that is and then they say and that means Shale is not regulated. So – help our listeners understand to what extent Shale is – or is not regulated at the federal or state level.
Daniel Raimi: All right so, pretty much all the topics we have been talking about so far, this issue of water contamination, this issue of health impacts, the issue of earth quakes, those are primarily regulated by state regulators. The federal government really doesn’t play a big role in – in regulating any of those issues with the possible exception of air emissions near well sites , the Obama administration Jason as I imagine you know well, did look to reduce some of those air emissions through rules issues under the clean air act. But the issue of the Halliburton loophole comes up in the context of the 2005 energy policy act, there was enacted under the George W. Bush administration.
In that law hydraulic fracturing chemicals were exempted from the need to acquire a permit. So, basically what that means is that companies didn’t have to go to the EPA to get permission to inject chemicals used in hydraulic fracturing. That doesn’t affect what’s – what happens at the state level – state regulator still may require those types of permits and in many cases they do. But the really interesting thing about the Halliburton loophole is that it actually didn’t change anything.
So, before 2005 companies did not have to get permits from the EPA to do hydraulic fracturing. After 2005 they did not have to get permits from the EPA to do hydraulic fracturing. And so, well Halliburton loophole may have forestalled some regulations that could have been implemented in the future. It didn’t really change anything on the ground and I think it’s – it’s really an over blown issue.
Jason Bordoff: And that’s helpful and somewhere – I want to – several things to continue on but we’re running out of time, but one — I want – we’ve talked about the risks so, I’m want to talk also about what you see as some of the benefits one that people point to and we’ve written about this at the energy center is the extent to which cheap natural gas has caused the displacement of coal and it’s been the primary driver, I think the evidence shows tell me if you agree of the decline in US carbon emissions, but there’s also this concern about methane emissions associated with gas, that maybe it’s actually not a benefit or even worse than coal. So, help our listeners understand that issue?
Daniel Raimi: Yeah so, that a great question and you frame it well and I agree that the displacement of coal by low cost natural gas is the leading cause of reduced CO2 emissions in the United States. I think they’re kind of three pieces to think about — when you think about the climate impacts of Shale gas, first is the one that you just mentioned. Natural gas displacing coal, but natural gas also has caused challenges to other electricity producers particularly nuclear, who are struggling under a low electricity price environment brought about by natural gas.
So, to the extent that natural gas displaces coal that’s a win for the climate, to the extent the natural helps shutter, excising US nuclear plants, that’s probably a challenge for the climate and that might lead to increase CO2 emissions. The second issue, that you mentioned Jason is methane emission. So, methane as we noted earlier is essentially natural gas, but if methane is emitted without being burned either from a natural gas well or a pipeline or any other facility, then it has a much more powerful effect on climate change than carbon dioxide does. And so, there’s been a lot of research over the last five years or so, about the extent of these methane emissions and there’s been a lot of uncertainly around that topic.
Some studies have found very high emissions, other are found relatively low emissions. When you look at the full body of research which is what I do in the book, I think we find pretty clearly that methane emissions are on the lower side of the spectrum that they are not negating the climate benefits of natural gases displacement of coal, that said there is room for improvement and there’s room to reduce methane emissions further and I think that would be a positive step in terms of climate change.
Jason Bordoff: Well just and just help people understand what – what’s the sort of break event so to speak or the leakage rate that makes it better or worse than coal and what is the evidence actually show.
Daniel Raimi: Yeah so, this stuff – is complicating and you kind of have to think about it on multiple time scales, because methane breaks down more quickly in the atmosphere than carbon dioxide. So, its climate impact actually changes over time relative to CO2, methane emissions are measured over a 20 year time scale would have to be about 4% in order for natural gas to be a loser relative to coal over this 20 year time scale. If you look over the longer term and I think there are a number of good arguments why looking over the longer term is maybe a more useful metric when we think about climate change.
Methane emissions from natural gas systems would have to be about 7% or 8% or higher to be loser relative to coal in the context of climate. When we look at the full body of evidence that’s out there, there are some studies that find certain producing regions might have methane emissions of higher than that 8% figure. The large majority of them show that emissions are far lower and if you look at the studies it kind of try to aggregate up all the research that’s been out there. What we find is that it looks like methane emissions are somewhere in the neighborhood of 2%. So, well below the levels that would be necessary for natural gas to be a loser relative to coal for climate change.
Jason Bordoff: And then the other thing just to remind people of is that I think certainly when we started talking about Shale wide spread roughly a decade ago, was in the context to natural gas now, it’s as much or more in the context to oil production and so, that kind of has a whole different set of calculations from an economic stand point and energy security and import stand point and in environmental stand point.
Daniel Raimi: Yeah, that’s right and that’s really the third piece of the puzzle that I was alluding to earlier, when we talk about natural gas and when we talk about oil the Shale revolution is really reduced energy prices across the energy system both in the US and internationally and to the extent that – that people use more energy when it’s cheaper which we know they do that’s a challenge for the climate and so if you aggregate all these three elements up, there have been a few studies that have looked at them, and what they generally find is that over a long period of time, these three factors – these three factors interact and we find that over the next 20 or 30 years cheap natural gas, as well as this increased supply of oil probably means that the Shale revolution is roughly a net zero benefit or cost in terms of CO2 emissions.
But what cheap natural gas does do is it actually provides a window of opportunity for climate policy, because we have cheap natural gas its ability to displace coal could be brought about through smart climate policies that’s something that the clean power plan was sort of design to do. And so, that type of policy design really means that the Shale revolution could be a big win for climate. But only if the right policies were in place.
Jason Bordoff: And then in terms of the energy security and the economic issues obviously it’s lead a sharp reduction in imports, people can have their own views about what that means and how big a deal that is, but then also economic you sometimes see people and industry with huge numbers about the economic benefits and the job creation and some others that dismiss that so, did you look at the economic benefits?
Daniel Raimi: Yeah, so there are a variety of economic benefits from shale development first coming in form of these lower energy prices which we were just taking about. There also a probably 100s of studies out there looking at the local and regional economic impacts of shale development and some of them particularly the ones that have been trumpeted by industry find these really enormous impacts. Billions and billions of dollars in particular regions and 100s of 1000s or millions of jobs created from the Shale revolution.
Some of those studies use modeling techniques that are a little imprecise and probably over estimate those economic and employment benefits, the more careful studies that are out there do find substantial economic benefits for the regions that are experiencing shale development. But they tend to be more modest than those kind of trumpeted by industry. And the other point that’s important to keep in mind is the volatility of the oil and industry because of the volatility of oil and gas prices.
So, for communities that have been or have become, more reliant on oil and gas sector for their economic development. They’re looking at challenges related to that volatility, so while there might be a really great boost in the near term, the long term implications are less clear.
Jason Bordoff: So, when you just sum it up for people, when you look at all the potential benefits, you look at all the risks, that you looked at really carefully, I mean, what’s your – if you had to in the so called elevator ride quickly capture for someone, how they should understand this, what would you say?
Daniel Raimi: So, I would look at it, on two different geographical scales. I think for the United States as a whole, it’s seems to me that the shale revolution has brought about far more benefits then it has risks and challenges. For local communities however dealing with this issue, I think the question is more complex. If you are living next to a shale well and you’re expose to these air emissions, then the shale revolution may not be a benefit for you, for your neighbors, same thing is true of water contamination. So, at the local scale, we have winners and losers and I think that’s really well reflected in some of the research that’s out there, that finds that people living near oil and gas production sites, actually have more complex views about the industry, than people who live further away, who’s opinions are often just kind of shape by simple party affiliation.
Jason Bordoff: So you mentioned the national level, the local level and so just in our last minute, can you tell me about the international level, do you see shale happening in a wide spread way in other countries and are they prepared for that?
Daniel Raimi: Yeah, so there are a variety of governments around the world who are very interested in capitalizing on these technologies that have been developed to the United States. They have the rocks, they have the resource particular in places like China, in Argentina, in several other countries in Europe, but there are variety of challenges to developing those resources, one other – the United States has unique oil and gas industry and culture, it’s very entrepreneurial, you have 100s of different operators out there, competing and developing technologies that’s not true, in most other countries.
Other countries also have different systems of mineral rights ownership. So this might turn technical, but in the United States you have an incentive for people to drill underneath your land, because you will typically receive royalties and benefits from that drilling. But in other countries, the government is the owner of those minerals under the land and so, oil and gas development coming into your town, if you live in Argentina, might not offer you the same benefits, that it would if you’re living out in West Texas. And so, that’s one of the reasons, why you see, sort of more reluctance from communities around the world, when shale development is as sort of proposed.
Jason Bordoff: I said that was last question, but I lied I just want to ask you one more. You spend a lot of time talking people in industry and shale communities, you’ll spend a lot of time talking to activist who are opposed to shale development and we’ve had a – tried to have a very fact based conversation, to sort of understand where the evidence is, what the risks are, what the benefits are. What did you learn about ways in which we might be able to have a more constructive fact based national dialogue, so that we can figure out how to mitigate risks that are real and what the solutions might be to those, but also to the extent which those can be and some of the benefits you talked about could be realized?
Daniel Raimi: Yeah so, this issue as you say is has become really polarized and I think the most constructive thing that we can do, is ask partisans on either side of the debate, to just kind of open up a little bit and accept that this is a complicated issue. Right so, if you’re an industry advocate, I think it’s – it would be really constructive to accept the notion that they are real risks, associated with oil and gas development the ones we’ve been talking about today, and the ones that I talk about in the book. And try to find ways to reduce those risks, rather than pretend that they don’t exist at all, which is what some people do.
On the other side of the argument those who are opposed to Shale development, I think it’s worth trying to understand the real benefits that this industry has brought to dozens and 100s of communities around the United States. As well as the broader climate change and air quality benefits that we see, from increase deployment of natural gas, and so I guess what I would ask partisans on the either side of the debate to do is just try to open up a little bit to the other side of the argument and understand that they’re good facts, supporting the notion that these issues are not black and white.
Jason Bordoff: Well, I appreciate that and that’s this is an issue that is as you as said very emotional some people see this as a blessing or a curse and I think having a resource that tries to look at in unbiased way, and present some facts and evidence, by what we know and what’s – what are the real risks here, what are the benefits and how to evaluate those is a helpful contribution. So, we’re at the Center on Global Energy Policy in our book series Columbia University Press, we’re delighted that this book would come out as part of that book series and congratulations to you on the new book. And thanks for joining us today, on Columbia Energy Exchange.
Daniel Raimi: Thanks Jason it’s been a pleasure.
Jason Bordoff: Thanks to all of you for listening until next time, I’m Jason Bordoff.
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