Risks associated with shale development and production garner much negative publicity, and industry response has been uneven depending upon operator size, although continuous improvement efforts are under way, said a report from Harvard Business School and the Boston Consulting Group.
Risks include water availability, air pollution, seismic events possibly associated with wastewater disposal wells, and community consequences such as increased traffic and burdens on public services.
"The risks of unconventional development are exacerbated by uneven industry regulatory compliance and uneven regulatory enforcement," said the HBS-BCG report entitled "America's Unconventional Energy Opportunity."
"Many of the environmental incidents, most associated with unconventional, like drinking water contamination and chemical spills, are the result of operator noncompliance rather than insufficient regulations," the HBS-BCG report said (UOGR, July/August 2015, p. 18).
Harvard business professor Michael E. Porter, BCG partner and managing director David S. Gee in Washington, DC, and Gregory J. Pope, BCG principal in San Francisco, wrote the report in which they noted that geology, water stress, and population density affect shale production.
For example, the Marcellus shale in Pennsylvania has much available water, but wastewater injection is a problem because of Pennsylvania's geology. Water can be scarce in the frequently drought-stricken Permian basin, but the area is suitable for wastewater disposal.
No one-size fits all
"Best practices to address local environmental risk are not one-size fits all and must be tailored to circumstances," HBS-BCG researchers said. "That increases the complexity of regulation."
Industry's compliance also poses a factor. Drinking water contamination and chemical spills typically stem from noncompliance by small operators rather than insufficient regulations, the report said.
Thousands of producers and contractors participate in unconventional development. The players range from giant international oil companies to family operations, meaning operational capabilities vary widely.
HBS-BCG researchers used 2013 information from the Pennsylvania Department of Environmental Protection to demonstrate the variation in performance among producers.
"Producers from the bottom third of [the number of] new wells drilled have more than four times the rate of violations as firms in the top third of new wells drilled," HBS-BCG researchers said, adding industry is improving best practices such as well construction.
"Our research reveals that it is truly possible to successfully and economically manage the environmental risks of unconventional," HBS-BCG researchers said.
The South Texas Eagle Ford is an example of where producers and regulators have worked together to improve water recycling in a water-scare region. Producers are implementing new technologies while the Texas Railroad Commission (TRC) changed regulations making it easier for producers to recycle.
Induced seismicity is an issue in Oklahoma and north Texas. The TRC implemented 2014 rules requiring injection-well permit applicants to determine seismic history within 100 sq m of a proposed disposal well and to outline disposal volumes.
The Oklahoma Corporation Commission's Oil & Gas Conservation Division (OGCD) recently announced plans to reduce oil and gas wastewater disposal well volume in northern Oklahoma County and southern Logan County to try and reduce earthquakes.
Operators have a 60-day period during which disposal volumes are to be reduced 38%, or about 3.4 million bbl, under the 2014 total.
Previously, the Oklahoma Geological Survey said it's "very likely" that a majority of frequent earthquakes across central and north-central Oklahoma were triggered by the injection of produced water into disposal wells.
Separately, Ohio regulators tightened permitting for drilling near fault lines or in areas with a history of seismic activity.
*Paula Dittrick is editor of OGJ's Unconventional Oil & Gas Report
