Another Perspective

By Chris Hamlet, Operations and Improvement Manager, ADIL

Thirty years ago, Chris Hamlet learned that self-regulation was an important part of working in the oil and gas industry. Today, the operations and improvement manager with independent energy consultancy ADIL (Asset Development and Improvement Ltd.), questions whether we have retained all the lessons we should have learned from past incidents.

For the first time in its history, the U.K. oil and gas industry has voluntarily released information to the public about hydrocarbon leaks on North Sea facilities. This is a major change for an industry that, until now, has not detailed the performance of individual operators.

Furthermore, through the cross-industry Step Change in Safety Initiative, the U.K. has set a self-imposed goal of cutting the 2010 level of hydrocarbon releases by 50% by 2013. This demonstrates the commitment of operators and suppliers to share best practices, ideas and techniques, and ultimately to learn from one another.

The “best” operators in terms of minimizing hydrocarbon releases are currently experiencing an average of less than one significant release a year. The industry average, however, is about five or six per year.  As each significant or major release has the potential to lead to a catastrophic event, even one a year is one too many.

Public inquiries from past major incidents such as the Piper Alpha disaster have led to a number of changes in both regulation and operating practices.  As a result, the North Sea offshore environment has undoubtedly become a safer place to work. However, many of the practices that contributed to these incidents still appear in the offshore workplace today. Why does our industry find it hard permanently to learn the lessons of the past?

A cursory glance at the rate of major industrial incidents would indicate that every three or four years, there is one that causes multiple loss of life and other harm. Since Piper Alpha (1988), oil and gas incidents have included Longford Gas Plant (1998), Petrobras P36 (2001), Mumbai High (2005), Texas City (2005), Montara (2009) and Deepwater Horizon (2010), among others. This would suggest that more needs to be done to keep the lessons of the past alive.

The fact that these more recent incidents did not take place in the North Sea provides no guarantee they could not happen in the future.

A common factor identified as a cause of these incidents was a steady reduction in safety levels, coupled with normalized deviation from good practice and procedures. Just because a hydrocarbon release does not ignite, it does not mean that it is safe. All it means is that its disaster potential has not been fully realized.

Many of the changes resulting from the public enquiries following major incidents have addressed both the consequence and likelihood of hydrocarbon leaks. While these factors have been addressed through increased governance and regulator scrutiny, the full benefits in terms of improved safety are not commensurate. Why?

There is an increasing awareness that, across the oil and gas industry, many procedures that have been put in place to prevent hydrocarbon leaks are not being followed consistently. Examples of these procedures include: the checking of isolations; the recognition of high and low pressure (HP/LP) interfaces; and the adherence to basic processes used to ensure pressure containment.

At times, isolation schemes are designed by supervisors with no one able to check them. This reduces the time supervisors have to monitor and maintain standards with the result being that basic steps are missed and vital checks bypassed. The potential consequences to both people and the industry as a whole are huge.

When I first went offshore 30 years ago, the role of the supervisor was to train, check and, where necessary, hold people to account. It took many weeks of supervision before I was allowed to work alone. I was expected to learn from any mistakes I made. Supervisors were appointed on their ability to coach and supervise, not just on length of service and technical skills. Anyone who was not prepared to, or could not maintain an appropriate standard of working practice, was re-assigned to a role with less consequence.

Many studies have been carried out on the impact of regulation. The Peltzman effect, for example, suggests that people tend to react to a safety regulation by increasing other risky aspects of their behavior. This has the result of offsetting some or all of the benefits of the regulation.

Increased regulation alone cannot realistically create a safe place to work if we then let slip the good practices that kept us safe before these new parameters came along. We cannot substitute good practice with processes and rules. Good practice must be maintained with regulation and procedures reinforcing it.

We also have to ask ourselves why good practice diminishes. There is a range of possible answers. Many of the younger crews on facilities were not born or were infants when Piper Alpha happened. That tragedy is resigned to a part of history, rather than something that could happen today.

Today’s Hollywood and the current rash of computer games would have us believe that humans have the ability to get up, brush themselves off and still function after a large explosion, car crash or fall from a 500-ft building. Have we become desensitized to the potential consequences of an incident?

Few of us intuitively understand risk. When we take an action and nothing bad happens, we tend to think of it as “safe.”  For low frequency events, this can lead to a consistent decline in operating standards. Whatever the causes of this decline, we have to be sure that those in charge are asking the right questions today.

Risk mitigation cannot be achieved through onshore training alone. It requires leaders that have confidence in the skills and standards of their workforce and the quality of their procedures. Furthermore, they have to be sure that people are following the processes put in place to mitigate risk.

If they are confident that things are being done right, they should also make sure that this confidence is justified. Do they seek an external perspective, or are they satisfied instead with a “Don’t Ask, Don’t Tell” policy?

The whole industry needs to take responsibility for its actions. Legislation and regulation is one part of the solution but they need to be supported by the appropriate skills, understanding and quality of work from those involved in operations to ensure people are as safe as possible. Only then, can we be certain that we have truly minimized risk.

Chris Hamlet discussed the “Role of Supervision” at the Oil & Gas U.K. Hydrocarbon Release Seminar on March 15 at the Aberdeen Exhibition and Conference Centre, Aberdeen, Scotland, U.K.

By Bruce Allen, Co-Founder, SOS California

Natural oil seeps take a toll on birds. Is that any way to protect our environment?

Just offshore Santa Barbara lie the world’s second-largest natural oil and gas seeps, and offshore oil production has been drying up these seeps for more than 50 years. Local residents have seen their beaches slowly becoming cleansed of seep oil.

The reduction in natural seepage pollution as a result of offshore oil drilling has been established by long-term UCSB studies. What many residents don’t realize is local natural oil seepage kills wildlife. Far more birds have died from these seeps than from all California offshore oil spills combined over the last 50 years.

Just last month, the Long Beach-based International Bird Rescue Research Center reported, “Natural Seep Oil Prompts Bird Rescue in California” with more than 50 birds oiled in January. In March 2011, the IBRRC headline was, “Natural Seep Oiled Birds Continue to Flood IBRRC.”

Santa Barbara Wildlife Care Network routinely sees dead seep-oiled birds. A local 2005 natural oil seepage event killed more birds than the 1969 oil spill in the Santa Barbara Channel.

Is offshore oil opposition really because we need to “protect the coastline?”

Santa Barbara offshore oil production has been cleaning up our beaches for decades. If offshore oil production would have stopped after the 1969 spill, Santa Barbara beaches would have far more seep oil and more birds dying from seepage pollution.

Offshore oil production has saved thousands of birds from premature seep-oil-coated deaths. Local wildlife will have fewer seep-oil deaths for thousands of years into the future because of offshore production.

In the span of Santa Barbara history, any short-term oil spill is lost in time compared to the permanent reductions in natural oil seepage. Claims that we need to stop offshore production to “protect the coastline” actually would result in maintaining more seep-oiled beaches and more unnecessary bird deaths. Who are the real environmentalists?

If you doubt California bird populations die in large numbers from natural seep oiling, just Google the news stories. The best thing that ever happened to Santa Barbara and California beaches is local offshore oil production. Our seep oil even reaches Northern California beaches with the winter currents and kills wildlife as far north as Monterey.

Most of the known Santa Barbara County offshore oil reserves still off-limits are overlain by active natural seeps. UCSB geology professor emeritus James Boles stated publicly that the largest offshore seeps remain off-limits and that producing them would reduce further seepage pollution. One of the largest sources of air pollution in Santa Barbara County is natural offshore gas seepage. Reducing these seeps would result in permanent improvements in air quality.

Protecting the local environment should be about saving wildlife and improving air and water quality. It seems that some people believe it’s more important to oppose offshore oil as a symbolic gesture than to admit offshore oil production has reduced oil seepage pollution and saved the lives of countless birds.

Even the effects of the 1969 spill disappeared within months. A 1971 UCSB biological sciences study concluded local fisheries returned to normal within four months of the spill. Compare that to having cleaner beaches, cleaner air quality and fewer premature bird deaths for thousands of years.

Our tourism has only benefited from offshore oil production. When I played on Santa Barbara beaches in the 1960s, I always had seep oil on my feet. Now our beaches are cleaner. Tourists like beaches with less seep oil. Scaring people about the potential of another oil spill when the effects disappear quickly isn’t good public policy.

Expanded offshore production could generate more than $400 million per year in new Santa Barbara County royalty revenues, give us the best-funded schools in the country, and make the county pension system solvent. Instead, local politicians just want to raise your taxes.

Editor’s Note: Bruce Allen is co-founder of SOS California (Stop Oil Seeps), a Santa Barbara-based nonprofit organization devoted to public education on offshore oil and gas, environmental and renewable energy issues. He is the author of Reaching the Solar Tipping Point.

Provided by Volvo Trucks

Liquefied natural gas (LNG) is a viable lower-carbon alternative to diesel for heavy-duty, long-haul trucks, but the necessary infrastructure for it in Europe is lacking.

Volvo Trucks is involved in efforts to establish “blue corridors” with strategically placed filling stations to make the fuel more widely available.

The transport industry accounts for around 25% of Europe’s total, carbon-dioxide emissions, so competitive alternatives to diesel are sorely needed. Natural gas is one such alternative.

Admittedly, it is also a fossil fuel, but it offers many environmental advantages over diesel — and it’s cheaper too. But when liquid biogas (LBG) becomes more widely available, the carbon footprint of the vehicles using it will be reduced by up to 70%.

“We are confident that liquefied methane will come to be used as a fuel throughout the world. It is a clear trend in meeting energy needs and we are part of this”, said Lennart Pilskog, director of public affairs at Volvo Trucks.

Volvo Trucks, which is a member of the Natural & Bio-Gas Vehicle Association (NGVA Europe), was the first — and is still the only manufacturer in Europe — with a methane-diesel system.

Manuel Lage, general manager of NGVA Europe, noted that the technology for driving on LNG is proven, and that there exists a will among haulage firm owners and gas suppliers to push the issue forwards.

“When it comes to long-haul transport with heavy vehicles, no other alternatives can match LNG at present,” he emphasized. “We feel it is the perfect solution for long-distance transport needs.”

In many European cities, there is an expanding infrastructure for compressed gas — including biogas made from waste products — on a local level. But it is not possible to run heavy, long-haul operations on compressed gas because the tanks are heavy and take up too much space. In liquid form, however, gas has a lower volume, making it more suitable for long-haul operations.

In order to run long-haul transport on LNG throughout Europe, a filling station infrastructure must first be established. And so the idea of blue corridors came about, offering a network of LNG refueling stations for heavy vehicles.

Establishing such an infrastructure will not be simple, because gas suppliers, vehicle manufacturers, haulage firms and various political/administrative organizations at both regional and national levels have to have a say, and extensive coordination will be needed.

“The challenge is that this has to be coordinated between various parties,” explained Pilskog, adding that Volvo has been active in the Swedish BiMe Trucks demo project, which is similar to the blue corridor project, but on a smaller scale.

“Right now the focus is on locating large customers that are willing to test and build up specific routes. Interest among smaller customers will grow when they see that it works and when they appreciate the economic benefits. But this will take a few years,” he continued.

There are already a number of LNG filling stations in Europe, so the work of establishing blue corridors is already underway. Using these stations as a starting point, it is possible to identify a number of potential corridors suitable for development.

“If you take a map and mark the sites of the existing filling stations, you can easily draw various possible transport routes and then identify whether a filling station is missing on any of these routes,” said Lage. In order to boost that process, the EU Commission is currently setting up an €8 million project for a large-scale trial of LNG corridors.

“I hope we’ll have around 200 trucks driving in these blue corridors to demonstrate that LNG is a well-functioning alternative for long-haul transport in Europe,” stated Lage. “This is no pipe-dream — all the necessary technology is already available. The market is ready for the commercialization of LNG.”

NGVA Europe is an interest group for companies working with natural-gas-powered vehicles. It promotes good relations with European and international institutions, and works on a variety of issues relating to vehicle gas. It has more than 140 members. The Volvo Truck Corp. joined in 2011.

In spring 2011, Volvo Trucks launched Volvo FM MethaneDiesel, which is powered by up to 75% liquefied methane gas (either LNG or LBG). Volvo is the first manufacturer in Europe to present this energy-efficient technology for using gas in a diesel engine.

When the truck runs on LNG, carbon dioxide emissions drop by up to 10% compared with diesel. With LBG in the tank, the reduction is up to 70%.

By Lindsay Young, Managing Director, Offshore Solutions BV

More than 10 million crew transfers take place each year in the offshore oil and gas sector by helicopter, vessel, or crane and basket. This is a high-cost activity for those operating in the industry. Escalating costs mean that operators and service companies need to come up with new ways of working to improve business economics.

People are the most important asset to any installation, crucial in achieving best working practices. However, a number of factors can impact upon how effectively their time is used. Traditionally, this has included bedding limitations, shuttling inefficiencies and weather conditions, among other aspects.

As market leader in heave-compensated marine access systems, Offshore Solutions provides clients with the Offshore Access System (OAS), a 21-m (69-ft), hydraulically operated, telescopic gangway with a unique 24/7 connection and operating capability.

By installing an OAS onboard a suitable DPII (dynamic positioning, Grade 2) vessel, which also has excellent station-keeping capabilities, workers can be transferred to and from installations with ease with several able to be serviced by one vessel. This can significantly increase available man-hours, facilitating a recognizable improvement to hands-on tool time, which, in turn, can significantly reduce costs and the time it takes to complete a given project.

Safety is the primary concern when transferring personnel and hence Offshore Solutions’ system connects to the offshore structure, and then the heave compensation is disengaged. Unlike other systems on the market, the safe transfer of personnel is not dependent on active systems.

The standard OAS connection is by means of a simple landing platform clamped to a leg of the jacket; however Offshore Solutions has developed an “Elephant’s Foot,” friction-interface connection designed to land on existing grating with sufficient structural integrity. This maintains a robust connection without the need for a bespoke landing platform.

The marine vessel on which the OAS is installed is often used as accommodation by the crew. This provides additional bed capacity. By having the platform personnel living onboard the vessel, rather than shuttling them to and from an installation, 10½ hours a day can be made available out of a 12-hour shift, compared to the 6½ hours typical of a normal operational day.

Operating under proper shift patterns as a result of this measure allows personnel to work with minimal disruption, facilitating a gain of around 70% more available man-hours. The provision of additional workspace is an added benefit of employing a vessel with OAS combination.

The OAS also enables oil and gas companies to perform multiple functions from the vessel; whether utilizing the vessel as a dive support boat or for ROV work, or even for materials storage.

A motion reference unit in the OAS’ active hydraulic system allows the gangway to operate in sea states of up to 3.0-m (10 ft) significant wave height, while an independent power source allows the OAS to remain operational in the event of a power failure on the vessel.

As personnel transfer continues to come under scrutiny in the oil and gas industry, the safe and efficient transfer of crews is vital. And at a time where increased productivity and cost reduction is also of prime importance to the continued success of the sector, innovative solutions such as the OAS have never been more important.

A clip of the OAS in action is available.

The Energy Institute of the University of Texas at Austin

The public debate over hydraulic fracturing in shale gas production has been marked by fears that the process will contaminate groundwater. Concerns also have been raised that underground methane releases are contaminating water wells.

Though little scientific evidence exists to support such claims, policymakers in some areas have banned the practice, and others have imposed moratoriums on shale gas development until additional research is conducted.

In a study by the Energy Institute at the University of Texas at Austin, a research team focused on reports of groundwater contamination and other environmental impacts of shale gas exploration and production in states within the Barnett, Marcellus and Haynesville shales.

According to the researchers, hydraulic fracturing of shale formations to extract natural gas has not direct connection to reports of groundwater contamination.

Faculty members from the University of Texas campus participated in the research, which the Energy Institute funded.  The Environmental Defense Fund also assisted in developing the scope of work and methodology for the study.  The complete report, “Separating Fact From Fiction In Shale Gas Development,” is available.

The report identifies regulations related to shale gas development and evaluates individual states’ capacity to enforce existing regulations.  It addition, researchers analyzed public perceptions of hydraulic fracturing, as derived from popular media, scientific literature and online surveys.

University researchers found no evidence of aquifer contamination from hydraulic fracturing chemicals in the subsurface by fracturing operations and observed no leakage from hydraulic fracturing at depth.

The researchers also concluded that many reports of contamination can be traced to aboveground spills or other mishandling of wastewater produced from shale gas drilling, rather than from hydraulic fracturing per se.

Charles “Chip” Groat, an Energy Institute associate director and project leader, emphasized that these problems are not unique to hydraulic fracturing.

Many reports of groundwater contamination occur in conventional oil and gas operations (e.g., failure of well-bore casing and cementing).  Methane found in water wells within some shale gas areas (e.g., Marcellus) can most likely be traced to natural sources, and likely was present before the onset of shale gas operations.

Although some states have been proactive in overseeing shale gas development, most regulations were written before the widespread use of hydraulic fracturing.

Media coverage of hydraulic fracturing is decidedly negative, and few news reports mention scientific research related to the practice.

Blowouts — uncontrolled fluid releases during construction or operation — are a rare occurrence, but subsurface blowouts appear to be under-reported.

The lack of baseline studies in areas of shale gas development makes it difficult to evaluate the long-term, cumulative effects and risks associated with hydraulic fracturing.

The Energy Institute has two other initiatives related to the use of hydraulic fracturing in shale gas development.

The first project, which will commence in April, is a detailed case study focusing on claims of groundwater contamination in North Texas’ Barnett shale.

The research will entail and examination of various aspects of shale gas development, including site preparation, drilling, production, and handling and disposal of flow-back water.

Researchers will also identify and document activities unrelated to shale gas development that have resulted in water contamination.  It will also assess the quantity of fresh groundwater used in shale gas development and evaluate ways to reduce the amount.

A second project, which is currently under development, would include a field and laboratory investigation of whether hydrological connectivity exists between water in the units above and below the shale unit being fractured as a result of the fracturing process.

As envisioned, the project calls for university researchers to conduct field sampling of hydraulic fracturing fluid, flow-back water, produced water and water from aquifers and other geologic units within the Barnett shale.

By Barbara Pike

He stood at times, the calm center to a swirling storm. At times, standing next to a whiteboard quietly explaining drilling to a couple of interested residents. At other times, he was surrounded by angry, anti-hydraulic-fracturing citizens, who were neither interested in listening nor wanting facts. Tom Alexander is SWN Resources Canada’s point man in New Brunswick.

In Rogersville recently, he again faced hostility and anger as he repeatedly explained the processes involved in onshore oil and gas exploration. Over and over again, he went through the procedures, the approvals, the very mechanics of drilling a well. He explained the casing, the cementing, and, yes, hydraulic fracturing. He was a portrait of patience and expertise.

During a recent month, SWN held a number of open houses around New Brunswick to provide information about its exploration plans in the province. The company has invested heavily on the belief there is substantial natural gas in shale formations.

The first sessions were calm, but in Rexton, a small, but very vocal group held a protest outside and were disruptive inside. Many of those same people showed up later in Rogersville. Most stayed outside waving placards and taping signs to an adjacent building. A few meandered in and out, stirring up the group outside and milling about inside. Every once in a while, they took on the SWN team as they patiently tried to answer questions and correct misinformation.

It’s a tough battle because the most vocal opponents are among the most misinformed. Their strident pronouncements are taken as gospel no matter how erroneous. (As an example, one of the leaders continued shouting that the SWN permits were not legal or binding because they were signed by an acting minister of natural resources.)

For those who sincerely wanted to listen, who wanted to attend to learn, it could be an intimidating environment. Not only did they have to ignore the placard waving people outside, but they had to endure the anger that at times that erupted inside the Legion Hall.

There are many facets to this opposition. There is a mistrust of oil and gas companies. There is the misinformation spread by the mockumentary Gasland. And very importantly, there is widespread ignorance of the basics of oil and gas geology, exploration and development.

That’s where we all need to become more involved and more engaged. There is little any of us can do to quiet the strident fanatics screaming in our faces that onshore oil and gas, or hydraulic fracturing is the ruin of our region. However, we can do more to talk about the basics of the oil and gas industry and provide Oil and Gas 101 tidbits whenever possible.

Engage your family, neighbors and community in a discussion and talk about the basics. Direct them to websites that provide information about hydrocarbon formations and graphics about drilling.

Some people do listen. It was interesting to see the expression on some faces change, or their stance relax as the SWN experts provided details and also showed people how far below their water table a well is drilled, and showed the size of the casings or the cementing process.

Those who actually listened did begin to understand that a well drilled to a depth of two kilometers or more below the Earth’s surface is a significant distance below their drinking water. They were more informed about the numerous permits that are needed and the continual monitoring that is required of any exploration well.

It was an exhausting day for the SWN team after more than four hours of talking, listening and explaining. But it wasn’t over. After breaking down the displays, putting the Legion Hall back in order, it was realized about a dozen or so of the anti-fracturing protestors were still outside, and they were harassing one of the government officials who had been helping with the open house. We waited for the Royal Canadian Mounted Police before leaving the building to drive away.

And that may well be the final facet of this opposition, the brute intimidation. It’s an unnerving experience when you’re not a local, let alone when it’s your neighbor.

Teams like Tom Alexander’s at SWN can’t do it alone.  We all need to help carry the load and continue the education.

By Barry Russell, President and Chief Executive Officer, Independent Petroleum Association of America

President Barack Obama was absolutely right about one thing he underscored in his recent State of the Union address, “Nowhere is the promise of innovation greater than in American-made energy.”

The United States is endowed with abundant oil and natural gas reserves. It also possesses the innovative technologies and work force necessary to safely develop our homegrown energy and use it to create more American jobs and strengthen national security. Unfortunately, on these critical issues, the Obama administration’s actions speak louder than the president’s words.

And while the president has recently had somewhat of an awakening regarding the benefits tied to U.S. oil and natural gas, albeit rhetorically, it cannot be lost on the American people that this administration’s energy policies have destroyed jobs, weakened our security and stifled production.

President Obama speaks of developing America’s natural gas resources “…without putting the health and safety of our citizens at risk.” America has been safely developing its natural gas resources for a century through sound state and federal regulatory programs.

But, in 2011, nine — yes, nine — separate federal agencies looked to implement new regulations and procedures to delay, if not altogether halt, U.S. oil and natural gas production. These efforts range from multiple agencies proposing new federal hydraulic fracturing regulations to threatening to list lizards and prairie chickens as endangered in natural gas producing states to the Interior Department trying to reinvent regulations that have been faithfully managed by the existing state-federal system.

Federalizing oil and natural gas regulation will not result in tangible safe development benefits. But, needless to say, such misguided actions could paralyze production across the country.

Today, the American people directly benefit from expanded shale gas development. In fact, a senior economist at the U.S. Federal Reserve recently stated that American consumers could save as much as $16.5 billion on electricity bills throughout 2012 as more U.S. natural gas is responsibly produced.

Much of the shale revolution’s success — tens of thousands of new private-sector jobs, lower energy costs, millions in tax revenue — has been made not because of this administration’s policies, but in spite of them. Why? This production, overwhelmingly, is occurring on private land.

As the president noted in his address, “American oil production is the highest that it’s been in eight years.” I am proud to say this is true.

Here again, oil production increases are coming from private land development. In 2010, oil production on federal land decreased by 13%. In the same year, federal lands saw the fewest number of onshore leases since 1984. The impressive growth in U.S. oil production — overwhelmingly on private land — is because of America’s oil producers, not heavy-handed Washington regulations.

And while the Interior Department slow-walked access to government-owned oil, the onshore production of oil on private lands created tens of thousands of jobs and much-needed tax revenues in states like North Dakota. Last November, North Dakota alone surpassed OPEC member nation Ecuador in oil production — a boost in production from 2.0 million barrels in 2002 to 16 million barrels in 2011.

As for production of America’s abundant, job-creating oil and natural gas resources offshore, the administration’s soaring rhetoric is fundamentally misaligned with the cold, hard facts. We hear the president announcing that his administration will open 75% of our potential offshore oil and gas resources for exploration, but we know he is referring to leasing that has been scheduled for years in the same areas that have been producing for a half century.

Recall the president’s visit to Brazil, where he stated that he wants the United States “to be one of [Brazil's] best customers” for oil produced off its shores. That’s better than getting oil from Iran and Venezuela, for sure, but why shouldn’t American oil and natural gas, and other sources, serve as the foundation for our nation’s energy policy?

The unnecessary de facto moratorium on offshore drilling that this administration reflexively put in place remains a key impediment for struggling communities along the Gulf Coast whose livelihoods have been upended as a result. And while offshore permits are beginning to once again move, though at glacially slow rates, it’s important to recognize that just 2% of our offshore areas are leased for development — not the implied 75% in the president’s speech.

America’s independent oil and natural gas producers remain focused on responsibly leveraging our nation’s resources in a way that protects our environment and realizes broad-based economic and security benefits.
President Obama’s newfound embrace of America’s vast oil and natural gas potential is encouraging. We hope his words signal a change in the direction of his administration.

This commentary is available from the Independent Petroleum Association of America.

By: Mark Brownstein, Energy Program Chief Counsel, Environmental Defense Fund

Around the country, states are taking a serious look at the regulations to manage shale gas development.  New York has the potential to be a leader among these states.

The Environmental Defense Fund (EDF) believes that strong regulations and aggressive enforcement is critical to protecting public health and the environment from high-volume hydraulic fracturing and other hydrocarbon extraction activities in New York state.

To that end, we have submitted detailed comments on the New York State Department of Environmental Conservation’s (NYSDEC) proposed rules and permitting conditions for hydraulic fracturing. The NYSDEC can put New York at the forefront of safe and clean shale gas development by implementing our suggestions in several critical areas.

Chemical Disclosure

Full public disclosure is rapidly becoming the industry norm across the country, but the proposed NYSDEC disclosure rules for chemicals used in the hydraulic fracturing process only cover chemicals with material safety data sheets (MSDS), thus failing to capture perhaps half or more of the chemicals used.

This is especially problematic because MSDS only explore hazards in occupational settings and do not consider implications for public health or the environment.

Further, the proposed rule only requires disclosure of additive products proposed to be used in hydraulic fracturing, as opposed to the chemicals actually used during the hydraulic fracturing process.

EDF feels strongly that operators should disclose all hydraulic fracturing chemicals used on a well-by-well basis, posted on a searchable, publically accessible website.

Well Construction

Properly constructed, tested and maintained wells are critical to protecting New York’s precious groundwater and surface-water aquifers from contamination by drilling fluid, wastewater and natural gas seepage.

The proposed well construction regulations and permitting conditions need improvement to meet industry best practice standards. Furthermore, some of the proposed rules represent potential safety hazards for well pad workers.

A model regulatory framework EDF has helped develop could be used to greatly improve NYSDEC’s proposed well construction regulations.

GHG Emissions/Methane Leakage

EDF is a leading advocate of strict standards on limiting methane emissions from natural gas production. Methane is a pernicious greenhouse gas, many more times more powerful than carbon dioxide.

To reduce the peak warming and improve air quality, it is critical to minimize the amount of methane vented or flared at the production site or leaked during storage and transmission.

We strongly urge the NYSDEC to impose specific green completion and other emission-reducing requirements on operators, and to formulate hard emissions targets that provide incentives for operators to reduce methane leakage even further.

Wastewater

Hydraulic fracturing produces huge volumes of potentially toxic and radioactive wastewater. New York recognizes this problem but does not seriously address the lack of capacity for processing or safely storing hydraulic fracturing waste materials within the state.

Current technology does not allow for safe, cost-effective filtration of hydraulic fracturing wastewater at treatment centers for re-introduction into the water system, and should be banned.

Insofar as it appears that the final disposition of the bulk of the wastewater produced in New York will be trucked out of state to deep injection wells, the proposed regulations and permitting conditions must grapple with this expensive and perhaps unsustainable practice.

Finally, since wastewater recycling will likely be the dominant treatment option undertaken by shale gas operators in New York, this practice needs to be more thoughtfully and transparently regulated.

Phase-In

Finally, even with the best rules on the books, it will take time to hire and train the necessary staff to implement and enforce the rules properly.  New York is essentially building a regulatory program from scratch.

EDF believes the NYSDEC should learn how to walk before it can run.  Our suggestion is that New York phase in the regulatory program region by region.  In this way, the state can be sure that the pace of drilling activity will not outpace its ability to adequately administer the regulations.

So, too, this phase-in approach will allow the state to acquire valuable experience in step-wise fashion. The key is not doing it quickly, but doing it correctly.

These and other adjustments to the proposed rules and permitting conditions are necessary to protect public health and the environment in New York. Shale gas extraction can be made safe through strong regulations and aggressive enforcement to protect communities. EDF is committed to working with the NYSDEC on these issues to produce the most responsible hydraulic fracturing regulatory framework in the nation.

EDF’s full comments on New York’s hydraulic fracturing regulations are available.

By Radisav Vidic, University of Pittsburgh, Professor and Chairman of the Department of Civil and Environmental Engineering

Killing two birds with one stone. It’s a concept that businesses, institutions, and individuals use on regular basis -– especially if they’re looking to save money or time. In particular, it’s an idea that could greatly benefit a growing energy industry in Pennsylvania: gas extraction from Marcellus Shale.

Shale gas extraction uses millions of gallons of water every year. That water is then enriched in chemicals that are used to assist in the hydraulic fracturing or “fracing” process (e.g., friction reducers, scale inhibitors, biocides) or added through dissolution of the shale itself (e.g., salts, organics). That polluted water is trucked to and from various locations, using an exorbitant amount of gasoline and opening up the possibility of spillage on the roadways.

Meanwhile, the state of Pennsylvania has a decades-old problem of abandoned coal mine drainage (AMD). Nineteen million dollars is spent annually on abandoned mine reclamation (according to the Department of Environmental Protection). That water is one of the biggest environmental problems for state rivers.

The solution? Let’s see if we can use AMD that is widely available throughout the Marcellus region to solve and prevent pollution simultaneously.

For several years, I’ve been studying how drillers could use mine drainage water for fracing. This method would keep toxic drainage away from water supplies and stop drillers from burning through gasoline and crushing roads while hauling water to well sites. Not only would it reduce the traffic and opportunities for spilling, but it would also help clean up some of the legacy issues left by the coal industry.

On the upside, many companies are interested in the idea. However, most companies aren’t willing to take the risk.  The problem is really the regulatory requirements and liability issues behind the switch. Companies are used to doing things a certain way and have been doing so forever. The companies often take the approach: if it works now, why fix it? Understandably so, change is never easy.

However, with the resolution of technical and regulatory issues, the benefits this would bring would be immeasurable. Many of these mine waters can be used right now without any problems. Yes, there are technical issues that need to be resolved for some mine waters. But, those are solvable. Those issues are nothing compared to the trucking of water that’s happening in the industry.

The goal is to make mine water usable with minimal treatment: the only way it could become a cheap, widely available source for the shale gas industry. It just makes sense to figure out how to do this logically and help get rid of – and prevent – pollution in Pennsylvania.

By C. Paul Davis, Senior Vice President, Titan Oil Recovery Inc.

There is a term that is being used quite frequently in today’s oil industry called “unconventional oil.”  The term is used more often these days and has become a common topic of Dr. Daniel Yergin, chairman of IHS-CERA.

Yergin is the well known and respected author of his new book, The Quest (2011).  He is also the Pulitzer Prize author of another best seller, The Prize (1991).  Both of these books are great reads and both provide a wonderfully detailed history of the oil industry from the very beginning up to today. I have read both books and I recommend them highly.

“Conventional oil” is essentially the oil that is found, recovered and used by most of the world since the very first oil well was drilled by Colonel Edwin Drake in Titusville, PA, in 1859, some 153 years ago.

Since that day in 1859, an estimated 1.5 trillion barrels of conventional oil have already been produced globally and most oil experts agree that, at least, another 1.0 trillion barrels or so of conventional oil still remains to be recovered.

Since the global average of approximately 35% of the original oil discovered is normally recovered using industry standard primary and secondary oil recovery processes, this leaves about 65% of the remaining oil, or an estimated 6.0 to 7.0 trillion barrels of oil trapped. This oil is considered basically unrecoverable using the typical and widely accepted and applied primary and secondary oil field processes.

However, for many decades, various enhanced oil recovery (EOR) processes have been used successfully to recover a portion of the remaining 65% of the trapped oil. Some of these EOR processes include: 1) gas injection (CO2, natural gas and nitrogen); 2) chemical injection (polymers, surfactants and alkaline solutions); and 3) thermal methods (cyclic steam injection, steam flooding, in-situ combustion and hot water floods).

These three methods routinely recover approximately another 10% (although this can be significantly higher in some circumstances) of the original-oil-in-place, still leaving about 55% of the remaining oil trapped and unrecoverable.

Over the past 80 years, there have been a lot of time, effort, and money spent by many people, universities, and companies trying to invent a new MEOR technology that works and can recover an additional meaningful percentage (up to 10%) of the remaining 55% of trapped oil at an affordable cost.

Having spent more than 10 years and over $30 million developing, testing, and successfully commercializing its own proprietary microbial enhanced oil recovery (MEOR) technology called the Titan Process®, Titan Oil Recovery is one of these companies.

Based on nearly four years (July 2007 to December 2010) of applying its technology to over 16 oil fields with over 100 safe well treatments achieving a 83% success rate, Titan believes another 10% recovery of oil at less than $10 a barrel is definitely possible because the cost per recovered barrel has actually been as low as $6.  A copy of Titan’s application report is available on request.

Yergin’s new direction away from the peak oil debate is a rather interesting development.  His new position is that if we add the total amount of oil that can be recovered from new emerging oil sources, like oil sands (or tar sands) and oil shale where an immense amount of oil can potentially be found and processed that the world will have at least 15 trillion barrels of recoverable oil remaining and not the 1.0 trillion barrels that many experts have come to believe.

For sure, 15 trillion barrels of oil would last the world a very long time.

Some people are actually saying that the United States, in time, has the opportunity to become energy independent and also, in time to again become the largest producer of oil in the world based on unconventional oil (and gas).  Wow!

If this proves to be doable and affordable, then maybe, just maybe he might be right.  Let’s all hope that he is right.

When one thinks about oil shale, one usually thinks about the United States, Estonia, China, Brazil, Germany, Israel and Russia.  Here the oil is held in very low permeability shale — essentially eliminating any natural flow of oil.  However, the United States holds the greatest promise for additional oil from various shale formations.  The Bakken, Pierre shale, Niobrara, Marcellus and Eagle Ford are some of the largest known resources.  Initial global estimates for oil shale range from 2.8 to 3.3 trillion barrels of oil.

New technologies are at the forefront oil shale production – things like multi-stage fracing (using water, sand, and proprietary fluids) and horizontal drilling to release oil trapped in the shale are relatively new developments that appear to hold great promise–if they can be applied safely.

However, these new technological solutions face some serious challenges and concerns since they are not well understood by the general public, the media, and often even the regulators.

Some of the challenges that unconventional oil will have to address and solve to realize Yergin’s new perceived world of oil in the U.S. and the world, include:

• The cost to produce a barrel of oil.  All of the new processes (equipment, services, facilities and raw materials) tend to be very costly (multi-billions of dollars in total) to implement and the ultimate cost to produce a barrel of oil is also very high.  Costs can range to over $70 a barrel in some circumstances.
• The amount of water required for many of the processes (such as fracing) is quite high and very expensive unless water can be reclaimed and reused.
• The energy retuned on energy invested (EROEI) is indeed a real challenge.  If it costs and takes more energy to produce than the energy that is derived, why do it?
• Pollution of the atmosphere, lakes and streams is critical. So, pollution and environmental damage must be eliminated, mitigated, or adequately remediated — all high cost factors.
• Disposing of the waste generated during the two processes (oil sands and oil shale) is a major task and can add significant cost.
• The impact of environmental destruction is potentially enormous.    The companies involved are legally required to return the land to its former condition. This sounds like a very difficult, costly, and almost impossible challenge.
• The damage to wildlife inhabiting the land where many of these processes are performed is a major concern to environmentalists and people who live there, and rightfully so.

I for one would like unconventional oil to become what Yergin envisions for the future. Let’s hope he is right.  For now, I suggest that we concentrate on recovering a significant portion of the 6.0 to 7.0 trillion barrels of trapped conventional oil safely and at an affordable cost.

EOR is a part of the solution to the world’s energy needs and we need to pursue technology that is affordable, safe, and available today.

So for now, recovering oil energy from conventional sources still continues to be the number one challenge of the 21st Century.