Friday, December 28, 2012

Will Obama’s EPA pick pursue efforts to police fracking? Jackson’s replacement will signal country’s direction

Lisa Jackson’s recent resignation from President Obama’s cabinet leaves open a seat with substantial influence over the outcome of a rush to drill for unconventional sources of gas and oil unfolding across the lower 48 states.

Jackson was Obama’s top environmental policy maker. As head of the Environmental Protection Agency she oversaw, among many other things, the federal government’s efforts to assess environmental impacts of shale gas development. The focus is on fracking, the controversial process of injecting well bores with pressurized chemical solutions to fracture bedrock and stimulate the flow of gas and oil. It’s been a hot topic, rife with partisan special interests that, as with gun control and taxation, split the country among ideological lines. Obama was re-elected, partly on a platform that identified shale gas development as “a priority” in his plan to stimulate the economy and encourage energy independence. With that, he has to balance mounting pressure from an anti-fracking movement that has highlighted risks associated with unconventional methods to produce oil and gas, and renewed debate over fossil fuel dependence and issues of economic and ecological sustainability.

Under Jackson’s watch, the EPA came out on the losing end of several battles with an industry threatened by the prospects of federal oversight of its operations. Before I get into those, I offer this background: Fracking has been around for a generation to develop conventional gas reserves. With technological breakthroughs around the turn of this century, the practice was successfully applied to unconventional wells bored horizontally through shale formations. The newly accessible shale resources are large, typically spanning multiple states in regions throughout the country. With this the scope and intensity of on-shore drilling has expanded proportionately, along environmental and economic stakes, and the interest of federal regulators. To discourage EPA involvement, the Bush/Cheney administration crafted policy – known among critics as the Haliburton Loophole -- exempting fracking from the Safe Drinking Water Act that requires federal approval for injecting substances into the ground.

Now for a few examples of the EPA’s battles with industry under Jackson: Facing stiff resistance, the agency withdrew an administrative order last spring that alleged Range Resources Corp. had polluted water wells in a rural Texas county west of Fort Worth. Industry push back also compelled the agency to revisit its assessment that an aquifer in Pavilion, Wyoming was polluted by shale gas development. Early this month, ProPublica’s Abrahm Lustgarten reported that the surge in domestic drilling and an unrelated rush for uranium resulted in a spike in applications for exemptions to federal rules that protect aquifers from pollution, as well as political pressure for agency officials to stand down. Lustgarten reported:

"The energy policy in the U.S is keeping this [refusing exemption applications] from happening because right now nobody — nobody — wants to interfere with the development of oil and gas or uranium," said a senior EPA employee who declined to be identified because of the sensitivity of the subject. "The political pressure is huge not to slow that down."

Lustgarten’s report squares with what I have heard regarding the EPA’s response to pressure from the shale gas industry, which is looking for disposal points for large and growing volumes of liquid waste associated with drilling.

But Jackson’s tenure was not all bad for the environmental groups counting on the federal government for help, nor was it all good for the industry looking for freedom from regulations. With the help of Congress, the EPA was commissioned and funded in 2010 to conduct a review of fracking’s impact on groundwater. Last week the agency issued a progress report outlining the scope of the project, which will look at water withdrawals, chemical mixing, well injection, spills, and waste water disposal methods related to shale gas development. The final report, scheduled for release and peer review in 2014, may provide a blueprint for gauging long-term and cumulative impacts and provide a foundation for discussion about regulations.

The EPA has also made some progress in addressing concerns over air emissions. In April, the agency unveiled the first-ever regulations to reduce air pollution from shale gas operations, ranging from releases from excessive pressure vented from wells to emissions from compressors, oil storage tanks and other oil-and-gas sector equipment. In the face of industry resistance, the EPA altered the final regulations to allow the current practice of flaring until 2015 -- a key concession.

So how will Obama move forward as Jackson departs? At the moment, he is consumed by a battle with Tea Party Republican’s over taxes and the fiscal cliff. That same right-wing base in the House of Representatives can sink an EPA nomination that could foreshadow an effort to take on Big Oil. The buzz from Washington insiders suggests Obama’s short list includes these names:

Bob Perciasepe: Appointed by Obama in 2009 as EPA’s Deputy administrator, the number-two position behind Jackson. Perciasepe – a career civil servant -- is known as a pragmatist, adept manager, and government problem solver more than a boat rocker. For this reason, he would likely not face confirmation opposition, but he also would be an unlikely candidate to lead a charge to federally regulate fracking. Perciasepe was first appointed to the EPA by Bill Clinton, where he served as the nation’s top water official and later as the senior official responsible for air quality. Prior to being named to his current position by Obama, he was chief operating officer at the National Audubon Society.

Gina McCarthy: As head of the EPA’s Office of Air and Radiation, McCarthy is another agency leader with extensive practical experience dealing with Obama’s agenda. While she had little experience with drilling issues in her previous job as commissioner of the Connecticut Department of Environmental Protection (DEP), McCarthy is now well seasoned in the fracking fight after heading the department that established the first air regs for the industry. She is well respected in the White House, having overseen the development of landmark policy to update fuel efficiency standards of vehicles.

Christine Gregoire: As governor of Washington, Gregoire has pushed for policies to reduce coal dependency and supported the president’s vision of “clean energy,” which happens to include natural gas development. Washington has no drilling legacy to speak of and Gregoire has not had to deal with the practical aspects of managing shale gas development and the related conflicts. Her name has come up as a candidate for other cabinet positions, including Secretary of the Interior. Prior to serving as Washington’s governor, Gregoire served three terms as the state’s attorney general.

Dan Esty: Esty is commissioner of the Connecticut Department of Energy and Environmental Protection, which was created in 2012 to bring together what had been DEP, the Department of Public Utilities Control (DPUC) and an energy policy group from the state’s Office of Policy and Management. The merger was intended to integrate energy and environmental policies with a sustainable economy. Prior to that, Esty was a professor of environmental law and policy at Yale University.

None of these candidates, as far as I can tell, would appear to have backgrounds that would threaten their confirmation chances. But given the political climate in Washington, who knows?

Friday, December 21, 2012

Promised Land something more than it’s fracked up to be Damon film entertaining, complex, but no China Syndrome

The forthcoming release of "Promised Land" -- Hollywood’s portrayal of the divisive shale gas drama unfolding in rural America -- is by all accounts producing high expectations among anti-frackers and anxiety among drilling supporters.

Directed by Gus Van Sant, the drama portrays the life-altering prospects of natural gas development in the fictional town of McKinley, Pennsylvania. Sound familiar? It does to me. I’ve been writing non-fiction accounts of the impact of gas development on Small Town USA for five four years, and so I was delighted to get an invitation from Focus Features to view a screening of "Promised Land" in Manhattan on Wednesday. The movie is set to open in certain New York City theaters next week and nationally in early January. It’s been hyped as an anti-fracking movie, and much of this hype originates with industry sources who have admittedly not seen the film but who are, judging by the trailer, bracing for a blockbuster-sized publicity headache.

I was eager to see how Hollywood’s rendition of the gas rush stands up against real life. I also wanted to understand how the movie might influence the discussion in a nation learning about shale gas and the risks and rewards of the controversial process that makes unconventional resource recovery possible – high volume hydraulic fracturing. After viewing the trailer myself, I expected to see a movie with sensational and vivid depictions of both fracking and its consequences. Upon seeing the movie, I was happy to see that "Promised Land" offers neither of these but something more complex. Yes, the movie portrays Global Energy, the company that is trying to lease land from McKinley residents, as an uncaring, exploitive and divisive force. But the story is more interested in exploring the dynamics of life in a small town within the context of these outside economic forces. The movie is not, despite what some hope and others fear, a case against shale gas development in general or fracking in particular.

The screenplay features a small town official who is corrupt, an energy company that is duplicitous and controlling, a sage high school teacher who advises the community to be cautious and do its homework, and an environmental activist and community organizer with questionable motives. It features plenty of other stakeholders in lesser roles, many of whom I find to be faithful archetypes of their counterparts in the real word, including a roguish and likeable gun shop owner eager to do whatever he can to encourage the economic growth of the town and support the efforts of Global Energy. The stars of the film, however, are two leasing agents. Steve Butler (Matt Damon) is a star rookie landman and all American country boy from Iowa. Butler is concerned about the decline of the family farm and, in his words, the “delusional self mythology” that modern day farming communities are economically self standing, when in fact, “without industry, there is nothing.” The supporting role is Sue Thomason (Frances McDormand), a wily industry veteran cast as Butler’s mentor, and a career mom who misses time away from her adolescent son. Both characters are driven by their own ambition and the bidding of their employer, Global Energy. Both have conviction, a work ethic, a sense of purpose, and good humor and charm – qualities that inspire empathy for characters that would be easy to script as simple villains.

Butler’s antagonist is Brian Noble (John Krasinksi), an environmentalist who, like the leasing agent duo, is an out-of-towner. He arrives on the scene with dire warnings about the ills of fracking as he begins organizing community efforts against the company. Both Noble and Butler are strangers vying for the loyalty of the residents in bars, pastures, and kitchens of McKinley. Each are bad-boys behaving in the Hollywood bad-boy kind of way (well suited to the actors’ strengths) that compels you to like them on a gut level even though your brain tells you maybe not to trust them. The emotional success of the film hinges on the Ying and Yang of their rivalry.

The plot follows the exploits of Butler and Thomason, with some predictable and not so predictable twist and with ample humor delivered through a nuanced screenplay, crisp acting and Van Sant’s keen eye. There is a sense of right and wrong that crystallizes as the film progresses, but the line between hero and villain is murky, with only a few exceptions.

The prominent theme is the outsider being pulled in beyond original intentions and the insider dealing with the influence of outside pressure. The insider story is personified partly through the character of Alice (Rosemarie DeWitt), a hometown girl and schoolteacher who serves as the romantic interest for Butler and possibly for Noble. For me, a scene when Butler passes through the white picket fence in Alice’s yard conjures the stylistically distant but thematically similar tale of The Music Man: Professor Harold Hill, the likeable shyster who attempts to sell the dream of a marching band to a local community along with non-existent uniforms and instruments, and the ensuing complications wrought by his involvement with the good-hearted local librarian. The theme is timeless and irresistible – hometown girl falling in love with the outside stranger – but I found that if the movie had a weak point dramatically, it was here, perhaps because it’s execution seemed more formulaic than the rest of the film.

The most compelling scene for me captures the true-life essence of the story and exhibits the strength of the film. It takes place early, when Butler visits a farm and is somewhat surprised at how warmly he is received as an agent of the gas company, even as the farmer helps him remove a tag on the landman's new flannel shirt he purchased in his attempt to fit in. As they sit across the kitchen table, the farmer – a hardworking and earnest family man struggling to preserve his way of life against the flow of economic forces - clearly knows why Butler has come, and he implores Butler to say what he wants to hear. Butler, a little surprised at how easy this all is, obliges: “You could be a millionaire.” The farmer’s reaction is what I find compelling. No words, but only a look of humble sincerity and raw hope that I found heart rending. This was probably not intended to be one of the emotional highpoints, but I found the farmer’s hope and the landman’s willingness to indulge it to be poignant and accurate portrayal of the non-fiction story covered by myself and other journalists chronicling the early days of the gas rush in Pennsylvania.

That coverage resulted in Under the Surface, Fracking Fortunes and the Fate of the Marcellus Shale, and other non-fiction narratives of the Pennsylvania Gas Rush, including Seamus McGraw’s End of Country. The non-fiction versions of the story lack the Hollywood finish of "Promised Land", a finish that is achieved by a plot contrivance that is fundamental to the workings of the script. That contrivance, possible in the creatively boundless realm of fiction, will be a sure point of criticism or acclaim that the movie will garner from both biased and neutral critics. I can’t say much more without spoiling the move, but I will suggest that "Promised Land" shares a trait of "The Da Vinci Code" – director Ron Howard’s adaptation of the Dan Brown novel about the Catholic Church’s attempt to destroy evidence of Christ’s familial legacy. By this I mean both movies use a real world setting and circumstances as a foundation for a fictional premise that makes the specific story dramatic. Most – but not all -- viewers will be fine with this.

Prior to seeing "Promised Land", I did not expect to be comparing it to The Da Vinci
Code. But I did expect – based on reports and the previews – to compare it with "The China Syndrome" – the 1979 movie about a cover-up at a nuclear power plant. The movie, starring Jane Fonda, was released with the No-Nukes movement (of which Fonda was a part of) in full swing, and just prior to the Three Miles Island disaster. The movie, riding the wave of these events -- appeared to mark the beginning of the end of the U.S. nuclear industry.

Impacts of "The China Syndrome", dramatically and politically, were derived by the portrayal of impending disaster. By contrast, there are no disasters in the month-long period covered in the story of "Promised Land" – no industrial accidents, explosions, cancer clusters, or foul water. Because the movie explores the leasing rather than the development phase of a shale gas play, there is in fact no fracking, and only superficial treatment given to the process itself in a way that invites suspicion. The potential for fracking raises fears, but the practice ends up being irrelevant to the outcome of the film. There is little if any moralizing and no clear rallying point to galvanize public opinion among audiences.

If "Promised Land" makes a point, it’s that the industry employs questionable practices to gain control of the land, and residents have a duty to themselves and to their neighbors to be informed and engaged.

So how will audiences react to the movie? "Promised Land" is sure to provoke an outcry among the pro-drilling faithful. The industry seems to be preparing to go into full-on attack mode based on reaction to the trailer, but I doubt that will amount to much as there is little about the factual presentation in the movie to be challenged. In this regard, "Promised Land" is unlike Gasland, the 2010 documentary by Josh Fox that challenges the industry on tangible aspects of policy and science and consequentially became a natural target for rebuttal.

“Promised Land” will raise awareness of the types of issues landowners and communities face in attempting to manage or ban shale gas development. But I will be surprised if it moves the needle in the broader debate over the environmental and health impacts of fracking, any more than "The Da Vinci Code" spurred meaningful debate or influenced public opinion over the morality of the Catholic Church. For anti-drilling activists who are expecting a searing condemnation of shale gas development, "Promised Land" will fall short of expectations. But I also expect that it will be received with general favor by this group. Conversely, the movie is bound to draw fire from the faction of shale gas boosters who get cross when the industry is portrayed in anything other than a positive light. As for the movie's main market, mainstream audiences -- I suspect they will see it as a good story about small town values.

Monday, December 17, 2012

‘30-days of fracking regs’ deconstructs New York policy NY, Pa differ in assessing blame when things go wrong

For those reflecting on the prospects of shale gas development in New York State, Governor Andrew Cuomo and his staff have this holiday message for you:

See: High Volume Hydraulic Fracturing Proposed Regulations 6 NYCRR, Parts 52, 190, 550-556, 560, and 750.

Happy New Year!

Last week, a 30-day countdown began toward the Jan. 11 deadline for public-comment on New York’s draft regulations to oversee shale gas development. The timing of the process drew complaints from activists that the Cuomo administration is railroading the regs under cover of holiday bustle and without meaningful context. Still missing is a full accounting of environmental and health considerations in a document yet to be released in final form. This document, called the Supplemental Generic Environmental Impact Statement (SGEIS), is designed to provide the foundation on which the regulations are based.

The regulatory package in question is intended to provide rules to settle key questions. How close can a well bore be drilled to a water supply or dwelling, and how is accountability assessed when things go wrong?

Anti-fracking activist Sandra Steingraber has offered to help those finding it difficult to squeeze in this extra fracking homework amid the holiday rush. She has produced “30-days of fracking regs,” an exercise she described as a “fun-yet-deadly-serious approach to commenting” on New York’s policy prior to the Jan. 11 deadline. Steingraber – an author and ecology professor at Ithaca College – uses this Advent-calendar approach in an attempt to demystifying issues such as set-backs, well construction specifications, spacing requirements, and abandonment policy. As an example, I have opened Steingraber’s Dec. 13th advent box: NYCRR Subchapter B, Part 560, Operations Associated with High-Volume Hydraulic Fracturing, Section 560.4, Setbacks. In the interest of balancing Steingraber’s informed but one-sided analysis, I have also asked experts in the pro-fracking camp to comment. In this post, Terry Engelder, a geologist at Penn State University who specializes in shale formations, provides a counterweight.

Here is Steingraber’s Dec. 13th assessment:

Today, day 2 of the regs comment calendar, falls in the second week of Advent. In the Christian calendar, Advent is a season of waiting, alertness, and reflection on the myriad injustices of the Roman occupation. In that spirit, and continuing yesterday's focus on setbacks, let's reflect on the proposed allowable distances between fracking wells and our drinking water. Take a close look at Section 560.4(a)(1 and 3-5):

Section 560, subdivision 560.4 -- Setbacks

(a) No well pad or portion of a well pad may be located:
(1) within 500 feet from a residential water well, domestic supply spring or water well or spring used as a water supply for livestock or crops;
(2) within 500 feet from an inhabited dwelling or place of assembly;
(3) within a primary aquifer and a 500-foot buffer from the boundary of a primary aquifer
(4) within a 100-year floodplain; and
(5) within 2,000 feet of any public water supply municipal or otherwise, or the boundaries of any public water supply reservoir, natural lake or man-made impoundment (except engineered impoundments constructed for fresh water storage associated with fracturing operations).

Primary aquifers are underground pools of water that supply drinking water to major municipalities. There are 18 of them in our state. Principal aquifers, by contrast, provide drinking water to smaller communities and to families with private wells. Note that setback protections for principal aquifers do not exist at all. Thus, people living in large municipalities are afforded more protection than citizens in rural communities. Also, setbacks apply only to the well pads on the surface, not to the underground wellbores: horizontal drilling underneath both kinds of aquifers is allowed. Drilling under lakes and rivers is also allowed. No consideration is given to natural faults in the bedrock, which can act as pathways for the migration of methane and other chemicals.

One peer-reviewed study found elevated levels of methane in drinking water wells that were located up to a kilometer away from a gas well. The regs do not require monitoring wells. (Mandated for other industries, a monitoring well is used to obtain samples of groundwater to periodically test for the presence of pollutants.) Thus, New Yorkers who rely on groundwater - and there are nearly five million of us - would only know we have a problem when we develop rashes after showering or discover that our tap water is flammable. In essence, under these regulations, the kitchen faucets of homeowners would serve as monitoring wells for the gas industry. And last: as recent weather patterns show us, the 100-year-floods that define 100-year floodplains are now arriving with much greater frequency than once per century.
Engelder offers a response to the question of setbacks in the context of Pennsylvania laws developed with recommendations by an advisory committee set up by Governor Tom Corbett:

The Commission recognized that there will always be some inherent risk to gas drilling regardless of the setback distance. Because setbacks are arbitrary, the Commission felt that a greatly expanded radius of liability was appropriate when it came to exploitation of Marcellus gas. [‘Radius of liability’ is the area within a given distance of a gas well where drillers must accept accountability for problems unless they can prove otherwise.]

Engelder explained that Corbett’ administration passed laws that increased the minimum setback from a private water well from 200 feet to 500 feet, and from a public water supply (water well, surface water intake or reservoir) to 1,000 feet, unless waived in writing by the water works administrator. Moreover, the laws also expanded an operator’s “presumed liability” for water pollution to within 2,500 feet of a gas well. Previously, the distance was 1,000 feet. In other words, when water wells suddenly go bad within 2,500 feet of an oil and gas drilling or fracking operation, the burden falls to operators to prove that drilling did not cause the problem, rather than to the homeowner to prove that drillers did it. The time frame for “presumed liability” on drilling companies was increased from 6 months to 12 months of completion or alteration of the well. He expains:

Even in rural portions of Pennsylvania, the Commission recognized that increasing setback distances beyond, say, 500 feet could potentially limit resource recovery. Because the true risk can never be known ahead of time, any setback distance is arbitrary. So, rather than greatly limit or even stop resource recovery because of some perceived risk, the Commission greatly expanded the explicit presumption of liability.

Now, the State presumes operator liability if anything goes wrong with, for example, private water wells within an area that covers the better fraction of a square mile centered on a well pad. Assuming that the full development of the Marcellus requires about one well pad per square mile, this means that presumed liability may extend over virtually all surface area under which the Marcellus is to be extracted in Pennsylvania. In other words, the Commission resolved the contentious issue of expanding setbacks because of some perceived risk in favor of placing the onus of liability on industry through an expanded radius of presumed liability should something unpredictable happen that adversely affected public health and safety.

The Commission recognized that problems were greatest in the top 500-1000 feet penetrated by the vertical portion of Marcellus well. This is the zone of fresh drinking water. The Commission also recognized the geological factors reduced the risk from horizontal portions of wells to near zero, with the exception of encountering abandoned wells. Because the risk of encountering abandoned wells is not zero, the operators are developing protocols for dealing with this situation in a way that assures public safety. The expanded radius of presumed liability covers situations in which unknown, abandoned wells are caused to flow by stimulation of horizontal wells.

Tied to the issue of presumed liability is baseline testing. That is, testing to assess ground water conditions before, during, and after drilling. Shifting the burden of proof onto operators in Pennsylvania encourages them to thoroughly document water quality data throughout the process as a defense against claims.

The New York regulations do not by default hold gas drillers responsible for problems within set distances to wells. But they would require baseline testing of aquifers within 1,000 feet. If there are no private water wells within 1,000 feet, they require baseline testing up to 2,000 feet. The thinking here is that data sets collected under the state’s protocol will provide proof of guilt or innocence of charges of water pollution.

The regulations regarding set backs and testing involve just a few pages of a regulatory process that takes up volumes in New York alone. They deal with questions about air pollution, public land use, record keeping protocol, spacing, waste management, disclosure requirements, and many other issues. I have asked other stakeholders to highlight points that they see as critical, and I hope to return to the issue in future posts.

In the meantime, Happy Holidays, and happy reading.

Tuesday, December 11, 2012

Federal report gives thumbs up to shale gas exports Scenarios would help investors, hurt wage earners

Exporting the country’s shale gas reserves would drive up prices and drive down wages, according to a report commissioned by the U.S. Department of Energy. Yet drawbacks would be more than offset from gains to economic stakeholders in the natural gas extraction and exporting industries, the report concludes.

The report by NERA Economic Consulting was forwarded last week to Christopher Smith, Deputy Assistant Secretary of the Department of Energy. It shows that policy to encourage exportation of domestic energy reserves, thought by some to be a political non-starter, is being weighed by an administration that has identified on-shore drilling as a priority to stimulate energy independence.

With 20 different plays, the collection of shale gas reserves in the lower-48 United States is thought to be among the largest in the world. President Obama’s support of shale gas development comes despite opposition from some environmental organizations and grass roots campaigns that argue drilling poses risks to public health and the environment while channeling resources away from sustainable energy development.

Wrapped up in the exporting question is a debate over the merits of high volume hydraulic fracturing, a controversial practice to fracture bedrock and release gas by injecting well bores with pressurized chemical solutions. In 2005, the Bush/Cheney administration encouraged shale gas development by making fracking exempt from the Safe Drinking Water Act. That exemption -- known to critics as the Haliburton Loophole -- came in addition to exemptions from hazardous waste laws enacted by Congress in both the Carter and Reagan years. The report issued last week is a sign that, despite a growing anti-fracking movement lead by progressives, the Obama administration could be thinking less about repealing exemptions and more about stimulating demand for the country’s shale gas.

The risks and merits of shale gas development are the subject of a polarizing national debate, including unresolved prospects of the Marcellus and Utica shale’s underlying parts of New York state. While fracking has lead to an onshore drilling boom in Texas, Pennsylvania, Louisiana, Ohio, Colorado, Arkansas, West Virginia and other places, New York, has held off on permitting shale wells as it reexamines policy in light of concerns about impacts on environment and public health. While governor Andrew Cuomo’s administration is shooting for a deadline in late February to finalize regulations, it is awaiting analysis from an independent panel of health experts, and Cuomo has left the door open to shelving the process.

To make it suitable for exporting in tankers, gas is converted into liquid (Liquid Natural Gas or LNG). The idea of exporting domestic supplies to lucrative overseas markets in Europe and Asia is sure to spur more controversy. As prices drop domestically with increased supply, companies have proposed more than a dozen projects to build coastal exporting facilities. These include a $6 billion liquefied natural gas export terminal, already approved, at Sempra Energy’s existing import terminal at Hackberry in southwestern Louisiana, with permits for other projects pending. Gas exports would stimulate more shale gas development by easing a market glut and raising prices. Higher prices, in turn, provide incentive for more exploration, development and infrastructure build out. Critics warn that unconventional extraction methods have outpaced science and regulations to understand and mitigate the costs, even without the catalytic affect of exports.

“Exporting means more fracking, and there are a lot of regulations that need to be developed before this is even close to safe,” said Craig Segall, an attorney for the Sierra Club. “You haven’t done an analysis of the cost to the public and the environment. This is a huge one and you have to think about it.”

Jim Smith, a spokesman for Independent Oil & Gas Association of New York, said the agency would not be inclined to support policy that raises costs to manufacturers, which are a mainstay of the agency’s membership. “We have to look carefully at both sides of the equation,” he said.

Nationally, any gas exporting policy is sure to meet resistance from the manufacturing sector. Gas and its derivatives are used as both fuel and feedstock for domestically produced goods ranging from textiles to fertilizer to packaging. Domestic petro-chemical manufacturers, including DOW Jones and the Koch Industries, have already successfully lobbied against proposed federal subsidies to use natural gas to fuel vehicles because, the argument goes, increased demand would raise prices and hurt manufacturing.

Yet operators and investors can fetch much higher prices in overseas markets due to global demand. The winners and losers under exporting scenarios break down accordingly, with the winners being the natural gas industry and those who invest in it, and the losers being manufacturing, transportation, service, and agriculture sectors.

Under exporting scenarios, according to the NERA report:

“Wage income decreases in all industrial sectors except for the natural gas sector. Services and manufacturing sectors see the largest change in wage income in 2015 as these are sectors that are highly labor intensive.” The report explains that “the overall effect on the economy depends on the degree to which the economy adjusts by fuel switching, introducing new technologies, or mitigating costs by compensating parties disproportionately impacted.”

The most viable “fuel-switching” scenario is this: Plants that might otherwise burn gas would likely be more inclined to burn coal as gas prices rise. Critics argue that could leave the U.S. with both the environmental consequences of air and water pollution (including methane emissions) from unconventional shale gas development, plus CO2 and mercury pollution associated with burning coal.

Updated Dec. 12 Jannette Barth, an economist, consultant and shale gas industry critic, issued a critique today charging that the DOE study did not account for hidden costs -- ranging from increased demands on municipal resources to environmental degradation -- on local communities to produce gas. Barth argues that gas exports will benefit shareholders in gas extraction companies who tend to be affluent. “Only 54% of Americans own stock of any kind, retirement savings or otherwise. Clearly, not all of the 54% own natural gas stock.” Most who do “likely hold tiny numbers of shares in mutual funds.” Additionally, according to Barth’s assessment, many shareholders in the U.S. domestic shale gas play are from outsides the U.S.

What other reports and considerations are relevant to the discussion? What do you think?

Friday, December 7, 2012

Anti-fracking celebs bring road show to Albany tonight Concert film summons folk tradition to politics

Dear Governor Cuomo”, a film by Jon Bowermaster documenting the celebrity-lead anti-fracking protest movement in New York state, will debut in Albany tonight, with a screening at the Linda Theater at 7:30 p.m. The film is part of a broader event featuring singer/songwriter Natalie Merchant, Bowermaster, and others who will join a panel discussion with Alan Chartock, journalist, publisher, and CEO of WAMC public radio. 

What impact will this event and the broader efforts of the anti-fracking movement have on New York State fracking policy? In search of answers, I decided to write to the governor myself:

Dear Governor Cuomo:

Do you like Natalie Merchant, The Horse Flies, Joan Osborne, and Mark Ruffalo? Just curious, but your taste in music and film is beside the point. I’m guessing that you, an astute politician, are aware that these and other celebrities who call New York State home have marshaled an impassioned collection of talent and creative energy to urge you to ban hydraulic fracturing and leave the carbon reserves locked in bedrock below the state alone.  You also probably know that the latest centerpiece of this effort is the film “Dear Governor Cuomo”, produced exclusively to get your attention or, perhaps more accurately, to apply popular pressure to leverage the anti-fracking cause.

Members of this delegation will be in Albany tonight to inspire fans with a potent mix of music and visuals condemning shale gas development as a reckless and exploitive endeavor that comes at the expense of public health and the environment.  Albany is one of many stops. After debuting the film at the Woodstock Film Festival in October, director Jon Bowermaster brought his show on the road. He is accompanied by Natalie Merchant and a network of performers, speakers, and scholars who are recruiting and rallying fans to take up the anti-fracking cause in cities throughout New York, New Jersey, Maryland, Pennsylvania and California.   

I have interviewed many of these activists. My impression is that they are ready to sustain their efforts against fracking by showcasing events in New York state and Pennsylvania, the border of which has become the front line of the national conflict over the merits and risks of shale gas development. The musician/activists are following a tradition that has successfully channeled reform through the pull of popular music in generations past: Woody and Arlo Guthrie… Sam Cooke… Pete Seeger...  Graham Nash… Jane Fonda…. The list goes on and on, of course. Celebrities seeking to influence policy ranging from Civil Rights to the Vietnam War to the Labor Movement, to nuclear power regulation have long used the allure of art to shape both social consciousness and conscience.

Your father can relate personal memories of some principal standard bearers of this tradition, I’m sure. Speaking of that, Bowermaster’s film features a clip of Pete Seeger who recalls your father’s legacy and directs some pointed thoughts about fracking your way. You must have seen that …?

My primary question, though, is how much will all this influence the outcome of energy policy in New York state.  You are both the state’s figurehead and most influential administrator, and it starts with your policy directives, which are still incomplete as far as anybody can tell, although its hard to know without a more public accounting of where things stand. How much leverage can the celebrities and the popular opinion they reflect and influence apply to your decision to ban or embrace fracking (which, if we are to believe statements from your administration, is still pending)? How much will your decision be influenced by efforts of the Independent Oil and Gas Association of New York State and other industry groups and landowner coalitions who champion shale gas development as economic salvation and independence?

Please don’t say that it all depends on science. People are beginning to see through that. Science is being summoned by both sides with little consensus and resolution likely in the near or distant future. So you will be left to make your decision in the realm of politics, with an imperfect and incomplete body of science as your guide. The issues and ethics in play are global, of course. The world is needy for energy – especially wood and coal-burning third world countries trying to clutch freedoms and living standards that we have enjoyed in this country for generations, accompanied and enabled by the indiscriminate burning of carbon.  You lead one of the most energy hungry states in the world sitting over one of the largest carbon reserves. So all eyes are on you for leadership, not just within New York state, but around the world.

Are you still weighing this issue? The price of gas has been low, and the next gubernatorial election has been distant. But you’re now facing a pivotal point.  If you allow permitting before the next election, are you ready to deal with the political repercussions from a sustained movement these activists have promised to lead? Are you ready to accept the prospects of a legacy outlasting the life of the reserve? Will you close exemptions that allow the industry to dispose of waste without a full accounting of its hazards?

If you ban it, will you be able to deliver an energy plan that overcomes the inertia preventing renewable energy and conservation from flourishing? Or will you default to policy tied to coal or nuclear sources, or continue with a disproportionate dependence on unhealthy energy sources from outside of the state and even the country?

These are big questions, and hard to answer with generic statements issued through the various offices of public affairs within your administration, which has become your primary vehicle for communicating fracking matters these days. But I guess we will find out soon enough.


Tom Wilber

Tuesday, December 4, 2012

Reading the regs: missing pieces confound NY gas policy Some happier than others with signals from Albany

With a keystone policy document still under wraps, stakeholders are having a hard time assessing merits and drawbacks of New York’s fracking regulations issued in draft form last week.

The missing piece is a compilation of environmental and health considerations that will be a primary tool for issuing permits under Gov. Andrew Cuomo’s administration. Those considerations are the focus of a 1,500-plus page document called the Generic Supplemental Environmental Impact Statement (SGEIS), which has been a work in progress since 2008. The document addresses health and environmental impacts of developing the Marcellus and Utica shale reserves as determined by the Department of Environmental Conservation and the Department of Health, and offers a plan to manage them. In response to concerns by activist late last year, the DEC commissioned an independent panel of health experts to review the DEC’s work in the SGEIS. With that review pending, the Cuomo administration has said it is still leaving the door open to shelve the entire process.

After two drafts, the final SGEIS is expected to be made public within a three month deadline the state now faces to finalize its regulatory package. The deadline to get rules in place, originally Nov. 29, was extended after the DEC issued a draft of the regulations last week, minus the pivotal environmental and health reviews in the SGEIS. In the meantime, as fracking critics continue to pore over the draft regulations issued last week, they are finding little to like. Industry proponents, on the other hand, see encouraging signs.

Anti-frackers lodged complaints regarding form, content and timing of the draft regulations, which they see as a reflection of haphazardness common to the entire process. A collection of elected officials, public health advocates, and environmental activists gathered in Albany Monday to call for transparency in developing policy. In particular, the group is concerned over the lack of explanation regarding how the state is assessing health risks. Joined by assemblywoman Barbara Lifton, Binghamton Mayor Matt Ryan, and ecologist and anti-fracking activist Sandra Steingraber, they called on Gov. Andrew Cuomo to make public the scope of the health review and schedule a public comment period and hearing to air testimony specifically dealing with health-related concerns.

In talking with representatives of some of the agencies in a position to legally challenge the DEC’s regulatory approach, I found this salient charge: The process is characterized by confusion, lack of transparency, and inaccessibility, and critics cite as a prime example the release of the regulations before the health and environmental assessment. While fracking opponents gathered for the Albany press conference, Deborah Goldberg, an attorney for EarthJustice, studied the draft regulations in her office in New York City. (Note Goldberg's first name has been corrected from the original version of this post.) She found problems from the start with organizational flaws that make the technically dense documents inscrutable. Because changes are not redlined, reviewers have to flip back and forth between existing regulations developed decades ago for conventional gas development, early drafts of proposed amendments for shale gas, and the current documents. Moreover, the changes could not be considered in context of the broader health and environmental reviews that remain unfinished. This has made the process unnecessarily cumbersome for professional and citizen reviewers who face a 30-day deadline to comment.

“It’s extremely unhelpful to issue these to the public with no references or context and with a compressed public comment period over the holidays,” Goldberg said. “You would think you would make this as easy as possible, but they’re asking us to critique the regs without key components made public, and rushing the entire process.”

The regulations deal with the how of shale gas development, from spacing units to containment measures to setbacks. They inform, for example, that pads and discharges are not allowed within 500 feet of a primary aquifer or within 2000 feet of primary municipal water supplies. But they don’t address the qualitative issues – purportedly addressed in the SGEIS -- that have been at the center of the fracking debate. What will the cumulative impacts be? What rights do local governments have? How can this affect public health” And who will bare the cost of enforcement?

Some representatives of environmental agencies told me they were disappointed that the new regs apparently did little to sanction environmental safeguards expressed by DEC staff members during meetings earlier this year. The safeguards include green completion -- a process to minimize pressurized releases of methane and other pollution by banning development of wells before infrastructure is in place to capture, contain and transport gas; and wells to monitor ground water conditions around gas operations. It was unclear whether these types of safeguards would be detailed in the SGEIS and stipulated under permitting conditions.

“It’s bizarre that we are being asked to comment on something without seeing the compendium of its meaning,” said Roger Downs, executive director of the Atlantic Chapter of the Sierra Club.

Not everybody was unhappy about the regs, however. Drilling proponents were encouraged that the DEC met the deadline to allow the process to move forward rather than expire. Gas drilling proponents have pointed to the four-and-a-half year review process, with multiple comment periods and hearings reflected in previous drafts of the SGEIS, as a sufficient effort to publically air concerns and develop policy. Proponents feel that, by meeting the deadline last week, the agency continues a good faith effort to allow the review to proceed.

“They kept the regulations alive, which was a surprise,” said Tom West, an industry lawyer. “It’s a light at the end of the tunnel. It’s good to see we are nearing the end.” West added that drilling proponents had reservations of a different sort. Specifically, he found rules that ban drilling in watersheds that feed New York City, Syracuse and other major aquifers to be too restrictive. “It raises questions about access to the resource,” he said.

If regulations are completed in three months, West estimated that it may take a half a year or more after that for permits to work their way through the new regulatory system.

Assuming the other pieces fall in place before the 90-day extension for the draft regs expires, and assuming the governor then gives a green light to permitting, there are several wild cards that cannot be accounted for, including possible legislative initiatives and legal challenges that could still delay or derail the process.

Saturday, December 1, 2012

Cuomo buys more time for New York fracking decision DEC: draft regs do not signal commitment to shale gas

It’s been another frenzied week on the fracking front in Albany – with much sound and fury signifying nothing.

Or not?

Another deadline came and went amid confusion and contention about the timing and protocol of issuing draft regulations for shale gas development in New York. To clear things up, Governor Andrew Cuomo’s administration issued a statement Friday saying everything is still up in the air.

We learned, after the administration filed draft regs to avoid a deadline that would have derailed the epic policy process, that the Governor is still undecided. The draft regulations over which officials at state Department of Environmental Conservation have toiled for the past year are not a reflection of the governor’s intentions to embrace or reject shale gas.

“If DEC decides that hydraulic fracturing cannot be safely done in New York, these regulations will not have any practical effect and the process will not go forward,” read the statement from DEC spokeswoman Emily DeSantis. “If DEC decides that the process can be done safely, these regulations would be adjusted in accordance with the health and safety requirements and issues addressed in the Supplemental Generic Environmental Impact Statement.”

The statement came two days after the administration kept alive the prospect of shale gas development by quietly issuing the pending regulations – still a work in progress -- to meet a Nov. 29th administrative deadline. Failure to meet the deadline would mean the rulemaking process would expire. That would be a relief to fracking opponents, because it would send the administration back to the drawing board and re-open the process to the contentious public hearings that have built momentum for a well organized and motivated anti-fracking movement. The movement has gone nationwide, and New York occupies center stage. For that same reason, missing the deadline would have been a blow to fracking proponents – including groups of landowners eager to lease their land, backed by conservative business interests and the industry’s advertising and lobbying muscle. (Proponents see high volume hydraulic fracturing – a process to extract natural gas from bedrock by injecting large volumes of pressured chemical solution -- as vital to economic development and energy independence. Opponents see it as environmental ruin and building dependence on fossil fuels.)

Nobody knew right up to and following the final hour of the deadline what course Cuomo’s DEC would take, and when the hour came and went, not everybody was even sure whether the state had filed the regs because no official notice was given. While there was no attempt by the governor’s office to defuse the matter, I know from sources close to this that their was a frenzied push by DEC staff to meet the deadline even as representatives from influential environmental groups made last ditch calls to urge them to hold off, at least until the agency could receive analysis of a panel of independent health experts commissioned to review DEC’s policy.

So why didn’t the DEC issue a statement to clear things up in advance of all this rather than switch to damage control amid protest that followed?

An obvious read of the situation is that meeting the deadline represents a step toward rather than a step away from shale gas development. Why would the agency be sweating the details over thousands pages of dense policy – flawed in the eyes of some and sound in the eyes of others and certain to meet legal challenges from many angles -- if officials were ready to shelve the entire regulatory project that has been under fire for more than four years?

The answer is that Cuomo himself -- two years away from a gubernatorial election and/or possibly four years away from a presidential bid -- is buying as much time as he can while attempting to manage the political forces at work that will influence his career and shale gas development in particular. Regardless of the outcome, he will have to answer two critical political constituencies. Well-healed and internationally renown environmental groups such as the National Resources Defense Council (among others) and Big Oil and the business lobby. Both of these institutional forces are backed by impassioned grass roots bases. Adding to the complications: Cuomo cannot yet gauge Legislative positions, as control of the Senate remains undecided.

The action of the last week tells us, if anything, that Cuomo is taking the fracking conundrum day-by-day if not hour-by-hour. The decision to meet the deadline by issuing a draft of the regs sends a signal to industry supporters that the administration is moving forward in good faith to get policy in place that would allow shale gas development. The statement that came retroactively to explain the decision was clearly intended to calm an uprising with the anti-fracking movement by suggesting that the administration has not passed the point of no return.

Here is the entire statement from the DEC:

The New York State Department of Environmental Conservation DEC has filed a Notice of Continuation with the Department of State to extend the rulemaking process by 90 days in order to give New York State Commissioner of Health, Dr. Nirav Shah, time to complete his review of the draft Supplemental Generic Environmental Impact Statement. This extension is necessary, in part, because Commissioner Martens requested and Dr. Shah agreed to provide an additional review, in consultation with outside experts, of whether DEC has adequately addressed potential impacts to public health. This filing with the Department of State merely extends the rulemaking period to enable Dr. Shah to complete his review and DEC time to take into account the results of Dr. Shah’s review and continue to consider the potential impacts of high-volume hydraulic fracturing.

In order to receive the needed extension, DEC was required by law to refile the draft regulations along with responses to public comments received during the public comment period, and preliminary revisions, responsive to those comments. The refiled rule does not reflect current DEC policy with respect to whether or not hydraulic fracturing can be done safely in New York. That determination will be based on the findings of the environmental impact statement and Dr. Shah’s public health review of that document.

DEC will not take any final action or make any decision regarding hydraulic fracturing until after Dr. Shah’s health review is completed and DEC, through the environmental impact statement, is satisfied that this activity can be done safely in New York State.

If DEC decides that hydraulic fracturing cannot be safely done in New York, these regulations will not have any practical effect and the process will not go forward. If DEC decides that the process can be done safely, these regulations would be adjusted in accordance with the health and safety requirements and issues addressed in the Supplemental Generic Environmental Impact Statement.