14 April 2015

Sidley Shale Gas and Hydraulic Fracturing Report

Vol. 4. No. 15

Federal

EPA Proposes Effluent Limitations Guidelines and Standards for Oil and Gas Extraction. On April 7, the Environmental Protection Agency (EPA) proposed effluent limitations guidelines for oil and gas extraction that would require pre-treatment of wastewater from hydraulic fracturing operations before discharge into a publicly owned treatment works (POTW). In the supporting preamble, EPA states it has found that pre-treatment is necessary because such wastewater contains materials that are not commonly found in wastewater treated by POTWs, and thus could disrupt POTW operations or pass through the treatment system without being addressed before the final effluent is discharged into the environment. Chemicals of concern for POTWs include salts, organic and inorganic chemicals, metals and naturally occurring radioactive materials. According to EPA, there are not currently any oil and gas extraction facilities that discharge wastewater to POTWs, meaning that, if finalized, the proposed rule will not result in significant changes to current industry practices.

International

Canada: Northwest Territories Proposes Hydraulic Fracturing Regulations. The Northwest Territories recently proposed hydraulic fracturing regulations that go beyond those required by federal Canadian requirements. Specific provisions include a risk assessment, environmental protection plan, a spill contingency plan, fluid transportation and disposal plans, and a plan for monitoring seismic events. Public disclosure of hydraulic fracturing chemicals is not required, so a company’s willingness to disclose such information would be considered during evaluation of permit applications on a case-by-case basis. While there are no active hydraulic fracturing activities in the Northwest Territories, several companies have made proposals to drill in the Canol shale, which may hold as much as three billion barrels of oil.

Studies

EIA Study Identifies Opportunities to Increase Processing of Shale Oil. In response to rising production of domestic shale oil, the Energy Information Administration (EIA) has identified several opportunities to increase processing at U.S. refineries. Unlike crude oil, there are no restrictions on the export of refined petroleum products. Since 2011, production of domestic light crude oil has increased from 5.6 million to 8.7 million barrels per day, and is expected to increase to 9.5 barrels per day by 2016. Among the low-cost options for increasing processing of domestic crude at U.S. refineries identified by EIA are displacement of imported crude oil, increased refinery capacity utilization, and investments to reduce bottlenecking through installation of equipment to remove restrictions on throughput. However, to keep up with increased production, EIA concluded that expansion projects would eventually be needed.

Study Reports Correlation Between Natural Gas Development and Radon Levels in Pennsylvania. A recent study conducted by the Johns Hopkins Bloomberg School of Public Health reported a correlation between natural gas development and indoor radon levels in Pennsylvania. The study analyzed approximately two million indoor radon tests conducted across Pennsylvania between 1987 and 2013. However, the authors of the study cautioned that they were unable to conclude that oil and gas development was causing increased radon levels. The authors also explained that the study did not take into account potential confounding variables, such as home construction, remediation efforts or the use of gas for heating. Further, in contrast to the Johns Hopkins study, a January 2015 study commissioned by the Pennsylvania Department of Environmental Protection, found that there was little potential for additional radon exposure beyond background levels due to increased natural gas extraction.

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