Unconventional Oil and Gas Development

Advances in horizontal drilling and hydraulic fracturing technologies have ushered in an historic oil and natural gas boom in the United States. The laws in place to manage drilling and its impacts do not match the new realities of this production.

The Policy Initiative supports the development of smart policies that address the nature, scale, and intensity of today’s oil and natural gas production, and robust processes for deciding whether, where, and how to produce fossil fuels. We look for ways to improve industry oversight, and suggest how improved reporting and disclosure requirements can generate data to identify and mitigate health and environmental risks.

As described below, most our oil and gas work falls into three related areas: Reporting and Disclosure Requirements, Governing Uncertainty, and Risk-Informed Decision-making.

Reporting and Disclosure Requirements

Reporting and disclosure rules are important tools in a regulator’s toolkit, particularly when managing an emerging activity with poorly understood risks. Done well, reporting requirements can reveal problems and identify risk drivers.  Agencies and industry can use collected information to prioritize inspections, target training, and implement safety interventions. Disclosure enables the sharing of that information more broadly. But not all reporting is created equal. Poorly worded, vague, or overly burdensome rules will not yield positive results. Similarly, when information is not collected in a helpful format, or when regulators don’t have the capacity to review submissions, reporting becomes an empty paper exercise.

EPI has worked to improve reporting and disclosure in several areas:

Hydraulic Fracturing Chemicals: Since 2010, 28 states have begun to require disclosure of the chemicals used in hydraulic fracturing; of those, 23 direct disclosure through

Threats to Surface Waters: Spills and accidental releases of waste water, chemicals, and product may seem random. But spills data can reveal patterns that could suggest common-sense interventions.

Water Quality Testing and Monitoring: Water contamination complaints are complicated by a lack of water quality data pre-dating oil and gas development. EPI surveyed state efforts to collect baseline data and investigate water quality complaints, and teamed up with the Clinic on a best practices paper for states.

Governing Uncertainty

There is a lot we don’t know about unconventional production. EPI provides guidance and specific policy proposals to decision-makers as they work to make unconventional oil and natural gas production safer while learning more about the technology. For instance:

Smart Regulation Framework: EPI teamed up with Southwestern Energy’s Mark Boling to propose a CORE framework – Characterization of risk, Optimization of technology, Regulation, and Enforcement – for unconventional oil and natural gas development, to address data gaps and regulate uncertain risks.

Model Induced Seismicity Compensation Fund: Some production and disposal activities have been linked to earthquakes in the central United States. We can’t predict the next earthquake, and current insurance, regulatory, and liability regimes don’t adequately reduce the risk, or compensate harms following a seismic event. EPI discussed these uncertainties with stakeholders and proposed a Model Induced Seismicity Compensation Fund for states.

Risk-Informed Decision-making

The oil and natural gas sector is a challenging space to regulate. There are many actors, ranging in size and capacity, and millions of pieces of equipment spread over large geographic areas. Regulators have to prioritize rulemaking, compliance assistance, and enforcement. Regulators also must calibrate requirements to risk, while accounting for uncertainty. EPI supports regulators and other stakeholders as they work to manage risk in the industry. For example:

Aspen Institute: In 2016-2017, EPI participated in a multi-meeting Aspen Institute Dialogue Series on Shale Production and Governance. With generous support from the Sloan Foundation and the Mitchell Foundation, the inter-sector working group is forging recommendations for regulating in a contentious and uncertain context.

Enhancing Flow Line Regulation: EPI sits on a working group organized by STRONGER (State Review of Oil and Natural Gas Environmental Regulations) to develop guidelines for the regulation of produced water lines. These lines, which move waste water from wells to onsite storage facilities and disposal trucks, accounted for more than 20% of well spills in a recent study. Draft recommendations are available here.

Improving Risk Assessments: EPI offers expert input on state risk assessments and regulations.

Tackling the Methane Challenge: Natural gas emits less than half the carbon dioxide of coal to produce the same amount of electricity. But when natural gas – or methane – escapes to the atmosphere, those emissions undercut the relative climate benefits of natural gas. EPI helped design a framework for tackling the methane challenge, to reach the 40-45% reduction goals pledged by Canada, the United States, and Mexico in 2016 [forthcoming publication].