Business Government and Society Policy, Research Paper Example

Business Government and Society Policy – Hydraulic Fracture Drilling in the Catskills

On April 23, 2010, the New York Department of Environmental Conservation (DEC) announced plans to draft stringent regulations for natural gas wells before issuing any new drilling permits in the Catskill watershed area.  This announcement followed months of heated debated, public hearings and protests regarding the practice of hydraulic fracture drilling commonly used in the natural gas industry.  While recognizing the need for ongoing efforts to meet the nation’s energy needs, the DEC wants to minimize the potential environmental impacts of drilling on the region’s water supply.

Description of the Problem

The controversy over this issue involves the use of hydraulic fracture drilling, commonly referred to as “fracking.” Understanding the public policy issues relating to this controversy requires a basic understanding of the fracking process.  The natural gas reserves in New York are located within a subterranean stratum known as the Marcellus Shale region.  According to Navarro (2010), this region is believed to be one of the largest natural gas fields in the world.

Because this layer of shale is fairly impervious, it is difficult to get the natural gas to rise through it to the surface.  The fracking process involves drilling into the rock and using a high-pressure solution of water mixed with chemicals to “fracture” the rock into smaller pieces.  Another mixture of water, chemicals and sand is then pumped into these fractures to help stabilize the stratum while creating porous avenues for the gas to escape.

The potential environmental impact being questioned in New York is the nature of so called “frac-fluid” and the impact it might have on the State’s water reserves.  “Frac-fluid” contains a variety of chemicals.  These chemicals vary from company to company and their specific identities and proportionality within the mixture are often proprietary.  The Environmental Protection Agency (EPA) does not regulate “frac-fluid” although it does ban the use of some specific additives.

The American Petroleum Institute (API, 2010) contends that “ 99.5% of the fluids used in hydraulic fracturing are a combination of freshwater and compounds” and cites a 2004 EPA report stating “…EPA did not find confirmed evidence that drinking water wells have been contaminated by hydraulic fracturing fluid injection.”

On the other hand, a Denver newspaper published an article describing a local healthcare worker’s encounter with ZetaFlow, a hydraulic fracturing compound (Hanel, 2008).  After having briefly inhaled vapors from a patient involved in a ZetaFlow spill, the worker experienced heart, lung and liver failure along with kidney damage.  The material Safety Data Sheet for ZetaFlow advised people handling the chemical “…to wear goggles and chemical-resistant clothing and boots.”  The manufacturer was contacted for more details but claimed that the compound’s composition was proprietary and could not be disclosed.

The disparity between drilling companies’ EPA-supported claims that “frac-fluid” is safe, and incidents like the one in a Denver hospital have raised a level of public and political debate about the use of these chemicals.

Stakeholders

At the heart of this controversy is the protection and preservation of the Catskills watershed area which is part of the New York City watershed.  According to the Catskills Center (2010), the New York City watershed is the largest unfiltered fresh water supply in the country, supplying over one billion gallons of water per day.  This water supply serves the entire needs of New York City as well as those of many surrounding municipalities.  In total, this watershed provides for about half of the entire water needs of the New York State, thus the most obvious stakeholders in the drilling controversy are nearly 10 million New Yorkers.

This group of stakeholders would be the most affected by the potential environmental hazards resulting from fracking operations in their state.  Notwithstanding claims of safety by oil and gas companies, accidents do happen.  Consider for example, the April 20, 2010 explosion of an off-shore drilling rig in the Gulf of Mexico and the resulting oil slick threatening the Gulf coast.  An “accident” involving the dissemination of potentially hazardous “frac-fluid” into the New York City watershed could devastate the water supply in that area.

Other stakeholders include not only the gas and oil companies with nearly sixty pending drilling permits, but millions of consumers across the nation.  A report issued by the US Geological Survey (USGS, 2002), estimated the Appalachian Basin Province (which extends into New York) contains an estimated 70 trillion cubic feet of undiscovered natural gas, making it one of the nation’s largest potential natural gas reserves.  The exploitation of these reserves could result in lowering, or at least maintaining energy costs for individuals and companies across the country.

The final significant group of stakeholders includes the residents of New York and the surrounding states.  Notwithstanding the potential environmental impact to the region’s water supply, hydraulic fracture drilling produces another hazard in the form of air pollution.  The process is heavily dependent on large tanker trucks hauling away large quantities of contaminated water.  In her NY Times article, Bhanoo (2009) asserted that drilling operations within the watershed’s boundaries “could result in up to 600,000 trips by truck per year.”

Public Policy Solution

The controversy over fracking is not limited to New York.  Because of the 2004 EPA report claiming that hydraulic fracturing posed no risk to drinking water, many states and local governments have been left to regulate (or not) the process independently.  Incidents like the healthcare worker in Denver have precipitated strong public responses to this drilling practice.  New York is just the “tip of the iceberg.”

Because of the public outcry, the EPA has recently decided to revisit the issue and launch a new study.  In an article about the topic, Lustgarten (2010) quotes an EPA spokesperson as having said: “The use of hydraulic fracturing has significantly increased well beyond the scope of the 2004 study” and “This study is the agency’s response to public concern about this practice and Congressional request.”

The article contends that the 2004 study was initiated to “justify legislation exempting hydraulic fracturing from oversight under the Safe Drinking Water Act” (Lustgarten, 2010).  This exemption was commonly called the “Halliburton loophole” and has allowed drilling companies to continue using proprietary (secret) formulas for “frac-fluid” without regulation.

Commonly known as the Clean Water Act (CWA), the Federal Water Pollution Control Act Amendments of 1972 set standards designed to both preserve and improve the nation’s water supply.  One of the goals articulated in the CWA was to have “zero discharge” of pollutants into the country’s water supply by 1985 (Waterencyclopedia, 2010).  The CWA included provisions for the construction of treatment plants and studies to determine sources of pollution.

The most significant goal of the CWA was to write and enforce regulations regarding the introduction of pollutants into waterways by companies.  The United States had a longstanding history of allowing companies to simply “dump” unwanted or residual manufacturing chemicals into rivers and streams.  The CWA was enacted to stop these practices through regulation and fines.

In 2005, Vice President Dick Cheney worked with congress to introduce an exemption for Hydraulic Fracturing into the 2005 Energy Policy Act.  This exemption prevented the EPA from regulating the practice of hydraulic fracturing or forcing drilling companies to disclose the composition of their “frac-fluids.”

On June 9, 2009, H.R. 2766 was introduced by two Colorado congressmen.  Titled “Fracturing Responsibility and Awareness of Chemicals Act of 2009” and nicknamed “The FRAC Act”, this legislation would return oversight of hydraulic fracturing operations to the EPA.  In addition, non-proprietary “frac-fluid” formulas would have to be provided the public on an “appropriate website” and proprietary formulas would have to be disclosed to medical professionals in cases of medical emergencies (LOC, 2010).  As of May 5, 2010, the bill in still in committee and has yet to pass.

Conclusion

The US Government is not well-known for conducting expeditious research studies, thus the situation in New York will most likely not be guided by new federal regulation.  The DEC will need to continue studying the problem independently and make decisions on how best to regulate the practice of fracking within the state.  If H.R. 2766 passes prior to the completion of the new EPA study, the timetable for new regulation may shorten.

The balance between the nation’s dependence on energy sources and the need to protect the environment has been precarious for some time.  Previous controversial projects include the construction of the Alaskan pipeline, the construction of off-shore drilling rigs in California, and more recently, the construction of “Cape Wind” off the shore of Massachusetts.

The Catskills drilling debate is evidence of the need to leverage federal resources to study solutions and provide guidance and regulation for commercial operations that can impact not only the nation’s water supply, but the environment in general.

References

(API 2010 Hydraulic Fracturing)API. (2010). Hydraulic Fracturing. Retrieved from http://www.api.org/policy/exploration/hydraulicfracturing/

(Bhanoo S 20091224 City officials say drilling in watershed has risks.)Bhanoo, S. (2009, December 24). City officials say drilling in watershed has risks. New York Times. Retrieved from http://www.nytimes.com/2009/12/24/science/earth/24drill.html

(Catskills Center 2010 New York City watershed)Catskills Center. (2010). New York City watershed. Retrieved from http://www.catskillcenter.org/atlas/nycwatershed/nycw_1watershedbasins.htm

(Hanel J 2008 Secreta surround gas-field chemicals.)Hanel, J. (2008). Secreta surround gas-field chemicals. Durango Herald online. Retrieved from http://archive.durangoherald.com/asp-bin/article_generation.asp?article_type=news&article_path=/news/08/news080720_1.htm

(LOC 2010 H. R. 2766.)LOC. (2010). H. R. 2766. Fracturing Responsibility and Awareness of Chemicals Act of 2009, , . Retrieved from Library of Congress.

(Lustgarten A 2010318 EPA launches national study of hydraulic fracturing)Lustgarten, A. (2010, March 18). EPA launches national study of hydraulic fracturing. Retrieved from http://www.propublica.org/feature/epa-launches-national-study-of-hydraulic-fracturing

(Navarro M 2010423 State decision blocks drilling for gas in Catskills.)Navarro, M. (2010, April 23). State decision blocks drilling for gas in Catskills. New York Times. Retrieved from http://webcache.googleusercontent.com/search?q=cache:kZaVJzIo43QJ:geology.com/articles/marcellus-shale.shtml+natural+gas+reserves+in+new+york+state&cd=1&hl=en&ct=clnk&gl=us

(Usgs 2002 Assessment of the undiscovered oil and natural gas resources of the Appalachian basin province, 2002)USGS. (2002). Assessment of the undiscovered oil and natural gas resources of the Appalachian basin province, 2002. Retrieved from http://pubs.usgs.gov/fs/fs-009-03/FS-009-03-508.pdf