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Peeling back the layers: A closer look at proposed fracking regulations

cover 330 200Anyone who’s read a newspaper, turned on a TV or listened to chitchat in a grocery store sometime over the last six months has probably heard about North Carolina’s impending foray into the world of natural gas exploration. At the end of May, the state legislature passed a bill to lift a statewide moratorium on hydraulic fracturing, or fracking, for fossil fuels. And in July, the Mining and Energy Commission released a draft set of rules to govern the industry. 

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Depending who you ask, that document contains either the strictest regulations of any of the 34 states that allow the practice, or a joke specially designed to favor industry and render citizens powerless. 

The rules document covers a lot of ground in its 105-page span, but some sections are especially adept at drawing out praise from supporters and criticism from opponents.

 

Wastewater

The issue: The basic idea behind fracking is to prop open cracks in deep rock layers so that trapped oil and gas can flow out and up the wellbore. To do that, freshwater — plus sand and chemicals used to thicken it, are injected down the wellbore. When the water returns to the surface, it’s gunked up with chemicals from the fracking mixture and from the minerals underground, which often haven’t been exposed to oxygen for thousands of years or more. Each frack uses several million gallons of water — exact amounts vary by well — so that leaves a lot of dirty water to deal with. 

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The rule: In many states, wastewater is simply injected into uncontained wells deep below the ground. North Carolina has banned that type of well. Companies can truck the waste to injection wells in other states, clean it up for shipment to a municipal wastewater treatment plant, build their own treatment facility or recycle it to use for another frack.   

The rulemakers: Eliminating injection wells is a big win for the environment, and taking that easy out away from companies will make recycling frackwater more economically appealing. Essentially, all the water that comes up from the wellbore will be recycled in some way — either for another frack or to be sent to a water treatment plant and later returned to the water cycle. That will make fracking in North Carolina much less hydrologically demanding than in other states, where dirty water disappears down disposal wells, likely never to be seen again. 

“As the rules are written, you can treat it for the intended purpose,” said Vikram Rao, chairman of the Mining and Energy Commission. “You can treat it to send to a special facility for further treatment, or you can send it to a certain site for discharge.” 

The rule allows the flexibility for companies to decide what will work best in any given situation. 

“It’s just going to depend on what the environment is at that particular time,” said David McGowen, executive director of the N.C. Petroleum Council. 

The critics: Municipal wastewater treatment plants aren’t set up to handle the chemicals that come with frackwater — water quality standards for many of those chemicals don’t even exist yet. In theory, companies could set up their own wastewater treatment facilities, but those cost money and would only be economically viable if there turned out to be a huge gas play in North Carolina, something that many doubt.  

“There are some really wealthy companies, some of the big ones that might have a subsidiary build a plant for the water if the field was big enough,” said Grady McCallie, policy director for the N.C. Conservation Network. “There’s just no evidence that we’ve got that much gas, and the evidence is that we don’t.” 

Companies must submit a plan spelling out where their wastewater will go, but the requirements for that plan are kind of fuzzy too, said Katie Hicks, assistant director of Clean Water for North Carolina. 

“It can be a facility that doesn’t even exist yet. One very reasonable change they could make is to require it to be a facility that’s already operating, that has a clean compliance record, that’s doing this thing properly,” Hicks said. 

As far as recycling frackwater goes, the technology is getting better. But there still comes a point when reusing the water just becomes a lot more expensive than bringing in a fresh load. And when that happens, the rules don’t give a lot of clear answers as to what happens next. 

“Either the [municipal] facilities are going to say ‘No, we’re not going to take this water,’ or they’re going to take it and discharge it with pollutants in it,” said Mary McLane Asbill, senior attorney for the Southern Environmental Law Center. As to which of those options they’d actually be allowed to choose, she said, “I think it’s kind of unclear.”

 

Pit storage

The issue: After frackwater comes back up the wellbore, it has to go somewhere before traveling to its next destination, whether that’s recycling for another frack or treatment and discharge.  

The rule: The rules allow the frackwater to be temporarily stored in open pits. Pits must be double-lined with synthetic material and include a system to detect leaks within 24 hours. They must be 200 feet away from any permanent body of water, though companies can request variances on a case-by-case basis. Pits are intended as temporary storage, but the rule does not define “temporary.”

The rulemakers: Typically, a drilling rig will spend only about three weeks at a particular wellbore. Once drilling is done, the pit would be emptied and its contents disposed of in a more permanent manner, so it’s not material that stays around for very long. And in the meantime, the structure is monitored closely. 

“There are safeguards in place on that pit,” said MEC member Jim Womack at an informational forum organized by N.C. Sen. Jim Davis, R-Franklin. “When a liner does begin to fail — and it’s inspected regularly — then the pit is drained and it’s [the liner is] replaced.”

The critics: Objections to the open pit scenario are numerous and loud. First, critics argue, “temporary” is not defined, and while a rig might hang around a wellbore for only 21 days, there could be five, eight, 10, or more wells per wellpad. Multiply any of those numbers by three weeks, and the timeframe gets a lot longer. And what if the company goes bankrupt, or just decides it’s cheaper to keep the wastewater in the pit than to dispose of it promptly? Remember, they say, the rules regarding disposal aren’t exactly clear-cut. 

And while the dirty water sits there, plenty can go wrong. 

 “Pits are designed to catch a certain amount of rain, but there are storms that are heavy enough that it will overwhelm the pit, and what’s in it just flows away into the river,” McCallie said. “Because Western North Carolina gets such heavy localized rainfall, there’s real concern that pits are just not a safe solution, and we think the final rules ought to ban them.”

 

Setbacks

The issue: A standard feature of oil and gas rules is a regulation stipulating how far industrial equipment must be from homes, streams, roads and other features. Setbacks are important because they regulate how big a buffer people and the environment get from runoff, noise, air pollution and other impacts associated with the industry. Distances of those setback requirements vary drastically from state to state.

The rule: Wells, tanks, pits and tank batteries must be at least 650 feet from homes, high-occupancy buildings and wells people drink out of; 200 feet from any wetland or permanent waterway; and 100 feet from the 100-year floodplain, intermittent streams and rights-of-way such as roads and railroads. 

The rulemakers: Setback distances are one of the most-commented-on topics from the rules. The committee took a careful look at what rules other states had in place and came up with their numbers based on what has kept people and the environment safe elsewhere. 

“That’s what we tried to do is be informed by other states, and all I can tell you is we deliberated strongly on what other states did,” Rao said. 

“They strike a fairly delicate balance,” McGowan said of the setbacks, protecting people and the environment while keeping opportunity open for industry. 

The critics: Despite rulemakers promoting the rules as the strongest set in the nation, they fall conspicuously short in this department. For example, Hicks said, in New York pits must be at least 2,000 feet away from streams, but in North Carolina that distance is 200 feet. 

“A good minimum to ask for is at least 1,500 feet from occupied buildings and at least 1,500 feet from public wells,” she told a group of fracking opponents gathered at Jackson County Library last week to prep for the Sept. 12 hearing.

Then, too, there’s the absence of any regulations about steep slopes. Chemicals are much more likely to travel quickly 200 feet down a 15 percent slope than across 200 feet of flat land. 

There’s also the issue of using the 100-year floodplain as a starting line to measure the distance from a wastewater storage pit. Heavy rain events are on the rise, according to the National Climate Assessment, so Hicks worries that using historical data about the typical reach of a severe flood could be problematic. 

“I think it’s a joke to have waste stored in open pits as close as 100 feet from the 100-year floodplain,” she said. 

 

Bonding

The issue: When a company sets out to drill for oil and gas, there’s always a risk that the cash flow won’t work in their favor and they’ll disappear before the aftermath is all taken care of. That’s why states typically require companies to post a cash bond, intended to pay the cost of cleanup and reclamation if the company doesn’t. 

The rule: There are several different kinds of bonds an operator could have to submit. Two of those have amounts outlined in the rules or in the May 2014 law. According to the rule set, operators must post a well plugging bond of $5,000 per well, plus $1 for each linear foot of wellbore. According to the law known as the Energy Modernization Act, companies must also post an environmental damage bond of $1 million. 

The rulemakers: $1 million is a substantial amount of money. It’s enough to deter an operator from walking away from a bad investment, and those funds would go a long way toward cleaning up the aftermath. 

“I do think, to be fair, the bond is pretty substantial,” granted Asbill, even though her overall view of the rules is negative. 

The critics: $1 million is plenty for the state to close an abandoned well and reclaim the land around it, but it doesn’t look like the money could be used to repair any harm done to neighboring properties. 

“That doesn’t address the lack of a long-term remedy for contamination and injury,” McCallie said. 

 

Casing 

The issue: When constructing a well, layers of steel casing and concrete barriers are used to keep the frack fluid from escaping into the ground around it. 

The rule: The standards for casing and cement are numerous and complex, relying heavily on American Petroleum Institute standards. For much of the wellbore’s length, the well is lined with two layers of steel casing with concrete between — the topmost section has three layers of steel and two of concrete. That level of protection does not extend the whole way down. The horizontal part of the wellbore has just one layer of steel casing around it, but the freshwater-bearing portions of the geology would be required to have that double protection. 

The rulemakers: North Carolina’s casing and cementing standards are taken from the best of what other states have done and the lessons learned from the worst that others have experienced. The leaks and water quality issues reported in states such as Pennsylvania are mainly due to wells drilled at the beginning of the shale gas rush, which were built with less sophisticated techniques and less oversight, Womack said. 

“What they did is they got started and then they put their rules together, and a lot of these companies, these early companies, these independent drillers that came in, they cut corners and they didn’t follow API best practices in their well construction and they got into trouble,” Womack said at the forum. 

By contrast, North Carolina is adopting its rules, complete with API standards for well construction, outright. 

“North Carolina’s well construction standards are the best in the nation,” Womack said. “I’m not saying they’re going to be perfect wells, but they’re going to be a heck of a lot better than what you’re seeing in Pennsylvania.”

The critics: Stringent well construction standards are all well and good, but even the best-built infrastructure degrades over time. What happens in 20, 30 or even 100 years when the wells have sat unused for years? The newest technology may be much better than what was going in the ground during the early days of shale gas exploration, but the industry is really only about a decade old and hasn’t yet stood the test of time. 

“They’ve got old vertical holes that are connecting different layers, and whatever casing they’ve had has long since eroded,” McCallie said. “Once it gets into one of those layers it can move up and down the other pipes too.” 

McCallie said he hasn’t heard much discussion — or read much rule-making — that deals with that longer view. 

“It’s a very short horizon,” he said. “Nothing addresses that longer term.”

 

Chemical disclosure

The issue: Hundreds of different chemicals go into the frack fluid used to coax the shale gas out, and the cocktail varies by geology and by company. The MEC had to decide how much of the mixture’s contents companies would be required to disclose and how much could be protected as a trade secret, a concept akin to the Coca-Cola recipe. 

The rule: Companies must disclose all the contents of their frack fluid to the MEC, the state geologist and the state Department of Emergency Management, and the list must also be printed on a sheet stored onsite wherever the chemicals are used. They must also post the ingredients on www.FracFocus.com — except for trade secrets. The MEC has authority to approve or reject requests to have an ingredient designated a trade secret, which would mean its identity would no longer be public knowledge. According to the May legislation, disclosing a trade secret is a misdemeanor. 

The rulemakers: Trade secrets are protected in every other industry, so there’s no reason that the rules should be different for mineral extraction. 

“There are other industries that also affect our health that have trade secrets that are protected every day,” Womack said at the forum. 

That said, the burden of proof is on the company to prove that something should be protected as a trade secret.

“A company making a trade secret claim would have to defend it with a special committee of the [Mining and Energy] Commission,” Rao said. 

The critics: There’s no assurance that, in the event of an emergency, the information would get from the people who have it to the people who need it in a timely manner. 

For example, Therese Vick of the Blue Ridge Environmental Defense League said at the forum that a wellpad in Ohio caught fire this summer, and firefighters and first responders had no idea how to treat it because the Environmental Protection Agency didn’t send the chemical information for five days. 

“The records that were required to be kept on site, they were on site,” Vick said. “They were in the trailer that was on fire.”

 

What’s not there

The proposed rules aren’t an exhaustive index of all needed regulations. According to Womack, that will change. The MEC had two years to write the rules, so it hit the ones that are necessary to establish a strong regulatory framework for the industry to proceed in North Carolina — a framework that he unequivocally calls “the strongest in the nation.” But the work’s not done. 

“We didn’t do everything that you might desire to do in a full and mature set of rules,” he said at the forum. “There are some things we have on our wish list of rules that other states haven’t done but we want to study and implement over time.”

In the coming years, Womack said, the MEC will work on its second and third rounds of rules. 

But a wish list for later doesn’t solve the problems now, McCallie said. 

“This package of rules has some gaping holes in it and some major inadequacies,” he said, while recognizing that the MEC has “worked very hard” on “a very tight timeframe.”

Among the issues that the proposed rule set does not address are:

Air quality. Shale gas production can impact air quality on a number of fronts — the main culprits are fumes produced when flaring off excess gas and exhaust from trucks carrying water, drilling rigs and other equipment. The proposed rules do not address or regulate these impacts. The oil and gas industry is exempt from the portion of the Clean Air Act that treats smaller sources of pollution grouped together — such as wellheads — as a single source. 

Forced pooling. Forced pooling is a mechanism that would allow the MEC to grant a drilling permit to a company even if 100 percent of the people through whose land the wellbore would pass did not agree to lease their land. The Department of Environment and Natural Resources requested a study on the topic from the MEC to inform its own recommendation to the legislature but did not in fact make any such recommendation. The May legislation merely states that a study is needed to make a decision about forced pooling. The reality of forced pooling and the mechanisms by which it would work if it did become law are still unclear. 

“From now until the legislature does do something, there is no forced pooling allowed with regard to horizontal drilling or hydraulic fracturing, but it’s one of the issues that people are most fearful of,” Asbill said. 

Eminent domain. If there proves to be enough natural gas in North Carolina to draw industry interest and investment in infrastructure, there’s potential that eminent domain could be used to make way for pipelines. But that’s another possibility that has not been hashed out in pen and ink just yet. 

“Eminent domain could occur with this industry when you’re talking about the rights to put pipeline and that sort of thing or other types of machinery on your property,” Womack said. 

Statute of repose. North Carolina’s statute of repose states that if a person tries to take legal action for an injury done to them more than 10 years after harm occurred, nothing can be done because the window has expired — even if they just found out the harm had occurred. After the statute came up in a U.S. Supreme Court ruling regarding the CTS Superfund site in Asheville, the legislature loosened the language to make it easier for people to recover damages, but some worry that statute could apply to any health impacts related to shale gas extraction.

“People are very vulnerable. It’s a very vulnerable thing,” Vick said when discussing the statute. 

However, no one seems quite certain whether that standard would apply in this case. Neither the rules nor the May legislation address the issue. 

“I have not thought about it in the context of fracking problems,” Asbill said. 

 

Only a draft

The proposed rules are certainly making headlines, but they are only a draft. Public comment will remain open through Sept. 30, and a public hearing beginning at 5 p.m. Friday, Sept. 12, at Western Carolina University’s Ramsey Center will give residents of the western counties a chance to voice their opinions in person. 

“If you have ideas of things that should be added to that list, by all means submit that to the Mining and Energy Commission,” Womack told the crowd at the Sept. 2 forum. 

After the public comment period ends, the Mining and Energy Commission will begin sorting through the comments and deciding on which changes to make. The MEC expects to adopt a final rule set sometime in November. The document will then travel to the Rules Review Commission for approval before reaching the General Assembly. 

Womack expects the legislature to approve permitting sometime around the first of April 2015, allowing the first drilling permits to be issued in July or August 2015. 

Asbill is concerned about the timeline, wondering if it’s too tight to allow careful consideration and — if necessary — rewriting of the rules. 

“They’ve compressed all the schedules. There’s not time for them to make substantive change to these rules,” she said. 

Womack, however, disagrees, pointing out the complexity of the MEC’s organization and the many stakeholders involved in the process. 

“We’re late to the game,” said N.C. Sen. Andrew Brock, R-Mocksville, who joined Womack on the forum’s panel, “but the thing about it is we’re doing it the right way.” 

 

What is fracking? 

Around since the 1940s, fracking is nothing new. The process involves injecting a combination of water, chemicals and sand to prop open the cracks in rocks below the surface, allowing any oil or gas the rocks contain to flow into the wellbore and up to the surface. 

What is new is combining it with horizontal drilling. These wells can go as deep as 2 miles below the ground before turning to proceed horizontally through the hydrocarbon-bearing formation. Fracking then commences in this long, deep wellbore, allowing previously unrecoverable fossil fuels to make their way to tanks and pipelines. 

It’s only been the past decade or so that these two technologies have been used together, and it’s this partnership that has caused fossil fuel production to surge in the United States, along with questions about the method’s safety. 

 

Let your voice be heard

If you’ve got an opinion on the proposed rules, there are two ways to get it out there:

Attend the public hearing 5 to 9 p.m. Friday, Sept. 12, at Western Carolina University’s Ramsey Center in Cullowhee. Those who wish to speak should arrive early, with signups beginning 4 p.m. Commissioners are not allowed to answer questions, and comments are limited to three minutes. 

Submit a written comment by Sept. 30 to http://portal.ncdenr.org/web/mining-and-energy-commission/public-comment-meetings or send a hard copy to DENR-Division of Energy, Mineral, and Land Resources, Attn: Oil and Gas Program, 1612 Mail Service Center, Raleigh, N.C. 27699-1612. The rules are available at the website listed above. 

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