The Fracking Debate, by Daniel Raimi (introduction)

THE FRACKING DEBATE THE RISKS, BENEFITS, AND UNCERTAINTIES OF THE SHALE REVOLUTION

D A N I E L RAIMI

THE FRACKING DEBATE

O

Raimi

Praise for

“A deft, fair analysis that clarifies the issues for both the general public and concerned policy makers.”

Kirkus Reviews (starred review)

Thomas B. Murphy, director, Penn State Marcellus Center for Outreach and Research

“Raimi’s book offers the most balanced, honest, and comprehensive account of fracking available, telling the story from all sides. Readers will appreciate the personal accounts from Raimi’s travels to far-flung oil fields coupled with in-depth yet accessible analysis of the science, regulations, and politics of the U.S. oil and gas boom.”

Hannah Wiseman, Florida State University College of Law

Daniel Raimi is a senior research associate at Resources for the Future, focusing on energy and climate issues. He teaches energy policy at the Gerald R. Ford School of Public Policy at the University of Michigan and is a faculty affiliate with the University of Michigan Energy Institute.

“The Fracking Debate cuts through the thicket of questions and viewpoints surrounding the shale revolution with balanced evidence and insight delivered through engaging stories. It’s a refreshing ride—refreshing because you get the clear sense you are learning with the author as he seeks the truth about the shale boom.”

Richard Newell, president and CEO, Resources for the Future

“The Fracking Debate is the most user-friendly resource on the key policy questions around hydraulic fracturing I have come across. Raimi tackles all of the hot-button topics surrounding fracking concisely and in plain language. This belongs on the bookshelf of every local elected official and state legislator who is grappling with hydraulic fracturing.”

Matthew Lepore, director, Colorado Oil and Gas Conservation Commission

“ ‘Fracking’ signifies a blessing or curse depending on who’s saying it. In truth, it’s both. Raimi methodically explores the risks and rewards of a technical revolution that has made the United States the largest producer of oil and gas in the world once again. A thoughtful and accessible look at a highly contentious and generally misunderstood subject.”

THE FRACKING DEBATE

“This fair and unbiased book, holistic in its range and robust in its depth, provides a nuanced but accessible understanding of the shale revolution.”

THE FRACKING DEBATE The Risks, Benefits, and Uncertainties of the Shale Revolution

Mark S. Brownstein, Environmental Defense Fund

cup.columbia .edu | printed in the u.s. a .

Jacket design: Jordan Wannemacher Jacket image: Mark Thiessen/Getty Images Author photo: Story Photographers

columbia

columbia universit y press | new york

ISBN: 978-0-231-18486-1

Center

on

Global Energy Policy Series

9 780231 184861

Daniel Raimi

ver roughly the past decade, oil and gas production in the United States has surged dramatically—thanks largely to technological advances such as highvolume hydraulic fracturing, more commonly known as “fracking.” This rapid increase has generated widespread debate, with proponents touting economic and energy-security benefits and opponents highlighting the environmental and social risks of increased oil and gas production.

Despite the heated debate, neither side has a monopoly on the facts. In this book, Daniel Raimi gives a balanced and accessible view of oil and gas development, clearly and thoroughly explaining the key issues surrounding the shale revolution.

The Fracking Debate directly addresses the most common questions and concerns associated with fracking: What is fracking?

Does fracking pollute the water supply?

Will fracking make the United States energy independent? Does fracking cause earthquakes? How is fracking regulated? Is fracking good for the economy? Coupling a deep understanding of the scholarly research with lessons from his travels to every major U.S. oil- and gas-producing region, Raimi highlights stories of the people and communities affected by the shale revolution, for better and for worse. The Fracking Debate provides the evidence and context that have so frequently been missing from the national discussion of the future of oil and gas production, offering readers the tools to make sense of this critical issue.

CONTENTS

Acknowledgments ix

1. INTRODUCTION 1 2. WHAT IS FRACKING? 11 3. DOES FRACKING CONTAMINATE WATER? 31 4. WILL FRACKING MAKE ME SICK? 55 5. DOES FRACKING CAUSE EARTHQUAKES? 75 6. IS THERE ANY REGULATION ON FRACKING? 89 7. IS FRACKING GOOD OR BAD FOR CLIMATE CHANGE? 107 8. WILL FRACKING MAKE THE UNITED STATES ENERGY INDEPENDENT? 135 9. IS FRACKING GOOD FOR THE ECONOMY? 151 10. WILL FRACKING SPREAD AROUND THE WORLD? 173 11. DO PEOPLE LIVING NEAR FRACKING LOVE IT OR HATE IT? 191 12. WHAT’S NEXT? 207 Notes 215 Index 253

1 INTRODUCTION

I

wasn’t expecting a polka band.

It was February 2016, and I was in Houston, Texas, for CERAWeek, the annual energy-industry confab that brought together highfliers from around the world: heads of state, corporate icons, academic experts, and others came to discuss the state of the oil and gas industry, learn about new technologies, and assess what might lie ahead. With prices at crushing lows—a barrel of crude oil was trading for about thirty dollars, down from one hundred dollars two years earlier—I’d expected a somber air. But at the week’s opening evening, a grand cocktail party with the crème de la crème of the industry, sponsored by the German corporate giant Siemens, it was as though I had entered an alternate reality, one in which the industry was thriving, crude oil and natural gas prices were near all-time highs, and celebration was the order of the day.

At least that’s what it felt like as the six-person polka band started up, the tuba belting out lumps of bass notes as servers sliced thick, heavy slabs of beef at the two prime-rib carving stations. Hotel staff stood behind black-draped bars, pouring top-shelf liquor, fine wines, and ­microbrews. At other tables, three-tiered silver platters gleamed atop white tablecloths, boasting rich arrays of German-themed hors d’oeuvres.

Regardless of the challenges the industry faced, tonight was a night to have fun, to network, and, inevitably, to commiserate about the pain of low prices.

Had it not been for the crushing prices, there would have been every reason for domestic oil and gas companies to celebrate: production of both oil and natural gas was near all-time highs, and the United States

2 Introduction

had reclaimed the title of world’s largest producer. Just ten years earlier, most had expected the country’s decades-long decline in production to continue indefinitely and, with it, an ever-deepening reliance on energy imported from other continents. But things had changed.

As I’ll describe over the course of this book, the U.S. oil and gas industry has, over the past decade or so, combined a suite of technological breakthroughs with incremental improvements that have pushed production to levels beyond what even the most optimistic forecaster would have dreamed. These innovations brought the industry to new heights, took it to new corners of the United States, and sparked controversies no one had anticipated.

It was this revolution, the “shale revolution,” that had brought me to the Hilton Americas in Houston. CERAWeek was something of a culmination for me: a chance to meet some of the industry’s high rollers after spending years getting to know the small-timers of the oilfield and traveling the many back roads of the shale revolution.

IN THE OILFIELD My journey started in the summer of 2011. I was a graduate student at Duke University in Durham, North Carolina, and was spending the summer interning at the state’s Department of Environment and Natural Resources (which has since been reorganized and is now known as the Department of Environmental Quality). While I was there, the legislature asked the agency to write a report on the potential for shale gas development in the state. I volunteered for the job and, despite my lack of experience with the oil and gas industry, was tasked with writing a portion of the report.

As I began my research, two themes quickly emerged: one detailing a list of horror stories about the dangers of fracking and a second narrative about the glories of the American energy renaissance. As I learned more and began talking with friends about the myths and realities of fracking, I started to field an array of questions. At dinner parties, out having drinks with friends, and even over my first Christmas dinner with my soon-to-be mother- and father-in-law, I heard variations on the same few

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themes: Were fracking chemicals safe? Was fracking causing earthquakes? Was fracking contaminating water across the country?

Everyone who learned I was doing research on fracking had questions, and most of these questions rested on the presumption that the process was inherently dangerous. Many assumed that fracking was wreaking havoc on landscapes and communities across the United States. Gingerly, I would tiptoe through the history, risks, and unknowns of shale development. At the end of the conversation, I would occasionally get a final question: Could I recommend any books that offered an accessible discussion of the full issue? I didn’t have a good answer.

My experience that summer piqued my interest in oil and gas, but in North Carolina, there was no opportunity to witness shale development firsthand. Luckily, I began working on a research project a couple years later that provided exactly this opportunity. The project focused on local government finances: how increased (or decreased) oil and gas development had affected local revenues and services and how those issues played into state tax policy. The position took me to all the major shale gas and oil “hot spots”: western North Dakota, northeastern Pennsylvania, southern Texas, western Texas, Louisiana, Colorado, Wyoming, and more. I spent most of my days driving between small towns, stopping wherever I could snap a nice photo of a drilling rig, pump jack, or flare stack. In each town, I would spend an hour or two interviewing local government officials and eating at local restaurants, learning about people’s experience with shale development.

Once the interviews were through and I had finished my work for the day, I had a full evening on my hands to explore. If I wasn’t too tired after a long drive or day of meetings, I’d find a place to have dinner and sit at the bar, listening to the local chatter. Often, I’d join the conversation, or—just as often—my neighbor or the bartender would ask, “What brings you to town?” But they knew what I was going to say: it was the oilfield.

The only question remaining was whether I was an engineer, a driller, a geologist, an exec, or something else.

When I told them I was doing research, I got a variety of reactions.

Some were skeptical, assuming that I was in town to look for environmental damage and try to put them out of business. Others, after learning I was researching government issues, let loose on the evergreen

4 Introduction

topics of regulation, taxes, and the unwelcome hand of the federal government. But after a few minutes of conversation, most of my neighbors at the bar were happy to talk about what it’s been like to live or work in the oilfield through the boom and, as the heady days of 2013 turned to wary 2014 and eventually to the doldrums of 2015, through the bust.

I talked with hundreds of locals and out-of-towners, pipeliners and frackers, drill-baby-drillers and no-fracking-wayers about the oilfield.

During those conversations, I learned as much about how fracking has affected the United States as I did from the hundreds of peer-reviewed articles, books, and news reports that I read during the same time.

A few years into my work, I was in Ann Arbor, Michigan, giving a talk at the Ford School of Public Policy (where I would eventually become a lecturer) describing a recent paper on tax policy related to oil and gas development. I flew in the night before and was having dinner with Barry Rabe, the professor who had invited me to town. As we ate and talked, he asked about the places where I’d traveled to do my research.

When I described the kinds of conversations I’d been having—both my interviews during the day and my informal conversations with locals at night—Barry asked if I’d thought about writing a book. I agreed it’d be a great way to document the experience but didn’t think I had the time. I was busy finishing my research, looking forward to taking on new projects, and hesitant to wade into the caustic terrain that characterizes much of the debate over fracking.

But as the months went on and I traveled to even more oil and gas regions—Oklahoma, New Mexico, Ohio, California, Alaska, and others— I gathered more stories and met more people. The map in figure 1.1 shows each of the major oil- and gas-producing regions of the United States that I have visited over the past several years. This is the oilfield. The dots on the map indicate each of the more than 200,000 oil and gas wells in the United States that have been drilled directionally or horizontally, rather than vertically. These wells, particularly the horizontal ones, are where the shale revolution has taken place, and most of them have been fracked.

I’ll describe what fracking is, and what it isn’t, in chapter 2, along with a discussion of why horizontal drilling, in particular, is an important part of the story.

Introduction

5

Bakken Green River

DenverJulesburg

Uintah

Utica

Hugoton

Kern County

Miss. Lime

Piceance San Juan

Fayetteville

Anadarko Los Angeles

Haynesville Permian Eagle Ford

FIGURE 1.1 An

Marcellus

Woodford

Barnett

annotated map of the author’s travels from 2013 through 2015

Map indicates all horizontally and directionally drilled wells. Data not available for Alaska. Annotations by the author.

Source: Drilling Info database.

A frequent mistake of some commentators is to assume that every place where oil and gas are pulled out of the ground looks the same. That couldn’t be further from the truth. Oil and gas production happens in and around some of the biggest U.S. cities, such as Los Angeles and Fort Worth, where wells pop up in backyards, along freeways, or next to fastfood drive-throughs. Oil and gas drilling happens in some of the most rural parts of the country, such as western North Dakota and southwestern Wyoming, where cows and tumbleweeds easily outnumber people. It happens in the fast-growing suburbs north of Denver and on the outskirts of Pittsburgh, where drilling rigs cast shadows over new apartment buildings and strip malls encroach on land previously devoted to farming, ranching, and oil and gas.

To understand how the oil and gas industry fits into the lives of people in these diverse regions, it’s helpful to know at least a little bit about them. The stories that begin each chapter of this book will take us to a few of these places, but if you’ve never visited an oilfield personally,

6 Introduction

think about adding the Permian basin, Utica shale, or another producing region to your list of travel destinations. A few days of driving through oil and gas country, coupled with conversations across a barstool, can teach you as much as dozens of journal articles and research reports.

THE CHALLENGE OF UNCERTAINT Y The goal of this book is to present a full view of shale development in the United States, drawing both from the ground-level experiences I’ve had and from the academic literature that continues to develop. In my opinion, a full view of shale development must recognize three critical facts: first, the shale revolution has created benefits; second, the shale revolution has caused damage and imposed costs; and, finally, there are still a number of important uncertainties. In this book, I will try to give readers an honest perspective on the scale and importance of all three elements.

One of the most challenging things about writing a book about fracking (or any other timely policy issue) is that many of the topics and questions are moving targets. While research on some issues is well developed and the lessons fairly straightforward, a number of unanswered questions remain, and uncertainty runs like a steady stream through some of the most important elements of this book.

For some readers, the existence of these uncertainties may elicit the question: With all we don’t know about fracking, why take the risk?

This question leads to a discussion of the precautionary principle, the notion that until all the risks of an activity are fully understood, it’s best to wait.

One does not have to agree with this philosophy to understand that it is a coherent way of looking at the world. Nations such as France and Germany, along with the state of New York, have essentially adopted this approach, banning fracking or imposing extended moratoriums. Compared with their U.S. counterparts, European policy makers tend to embrace the precautionary principle more readily when considering new

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technologies. A prime example is genetically modified foods, or GMOs. European nations have adopted far stricter regulations than the United States for growing and selling these crops.

But if you apply the precautionary principle to GMOs or to oil and gas development, should you apply it to everything?

Consider mobile phones. Some fear that the widespread use of these devices may increase the likelihood of developing cancer. The National Cancer Institute at the National Institutes of Health stated in 2016 on its website: “Studies have thus far not shown a consistent link between cell phone use and cancers of the brain, nerves, or other tissues of the head and neck. More research is needed because cell phone technology and how people use cell phones have been changing rapidly.”1 For an individual or policy maker prone to the precautionary principle, this statement might justify a ban on cell phones. At the very least, it provides a pretty compelling reason for the risk-averse to avoid them. What’s more, there are a number of areas where we know that cell phones have caused damage. For example, research and common experience have shown that the proliferation of mobile phones has increased vehicle and pedestrian accidents2 and reduced the quality of life for anyone within earshot of an inconsiderate cell phone user (but I digress).

My analogy may be a little flippant, but the principle is clear: fracking produces benefits, risks, and uncertainties. But that’s nothing new. Policy makers and individuals balance benefits and risks every day. Cell phones provide enormous benefits to virtually every person in the United States and billions more around the world. Fracking, which serves a completely different purpose in the economy, probably provides smaller economic benefits than mobile technology, but, as I will describe in chapter 9, the economic effects have been enormous, affecting energy consumers around the world.

In short, the precautionary approach may be appropriate in some cases, but it can’t be used to justify many of the trade-offs that you and I make every day. If the precautionary principle is the lodestar by which we navigate risks and rewards, it quickly becomes difficult to justify using any number of new technologies.

8 Introduction

MY GOAL While I will identify and examine these uncertainties, there are also benefits and risks that we understand pretty well. In each chapter, I’ll assess these three elements one question at a time. Those questions are the ones that, in my experience, come up most often when I talk with colleagues, students, friends, and relatives in classrooms, across dinner tables, and in bars. Along the way, I’ll try to give a flavor of the places I’ve traveled and provide a sense of some of the hundreds of people I’ve met in the oilfield.

While no one person can be an expert on all of the questions addressed in this book, I’ve been lucky enough to work closely over the past several years with some of the leading experts in the fields of environmental and energy economics, hydrogeology, environmental law, and state regulation. I’ve also gotten to know some of the leading figures in academia, industry, and advocacy. Conversations with many of these experts have helped shape my understanding of each issue, and my hope is that each chapter hits the most important elements of the fracking debate.

Still, I’m certain that neither side of this often-heated debate will agree with every aspect of this book. In fact, I am confident that both sides will take issue with certain portions. But that probably means I’m striking a reasonable balance. As I’ll try to demonstrate, neither side has a monopoly on the right answers. Where oil and gas advocates make misleading or demonstrably false arguments, I’ll try to put them into context and, where necessary, correct them. Where antifracking advocates make unsubstantiated claims or stoke unwarranted fear, I’ll do the same.

Debate surrounding each of the topics described in this book will— and should—continue. Barring some major and unforeseen shift in energy policy, economics, or politics, shale development and fracking is going to continue for the foreseeable future, and a well-informed public debate should be a part of the policy-making process. But it needs to be well informed. After the election of 2016, when basic facts (let alone nuanced interpretations of complex questions) were sometimes scorned, I understand this may be a Sisyphean task.

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Indeed, as I’ve watched and listened to the often vitriolic and misleading debates over fracking, there tends to be far more heat than light.

Well-crafted studies that do not align with one side’s preexisting views are rejected out of hand, and any shred of evidence confirming that same preexisting view is trumpeted as “the Science.” The average person doesn’t know what to think or whom to trust.

The truth is that there are real risks, real benefits, and real uncertainties surrounding fracking. My goal is for readers of this book to come away with a better understanding of all three.