January 29, 2010
On January 26, 2010, shareholders for twelve natural gas companies requested disclosure of environmental and financial risks associated with extracting gas from the underground Marcellus Shale formation through hydraulic fracturing or “hydofracking. ” This proposed process has received a great deal of attention in recent months. Environmental organizations and others have expressed concern that the fracturing chemicals utilized in the process have not been disclosed to the public and are guarded by companies as a trade secret.
The companies from which shareholders are seeking reports include Cabot Oil & Gas Corp., Chesapeake Energy, Exxon Mobil Corp., Hess Corp., El Paso Corp., Energen Corp., EOG Resources, EQT Corp., Range Resources, Ultra Petroleum Corp., Williams Companies Inc., and XTO Energy Inc. In addition to seeking information about the chemicals to be utilized, shareholders are requesting increased transparency of potential environmental impacts, substitution of less-toxic fracturing fluid, and adoption of best practices for drilling activities. As quoted by BNA, Larisa Ruoff of Green Century Capital Management, one of a group of advocacy organizations leading the new shareholder campaign, said “[s]hareholders believe that through the adoption of best practices and policies to phase out the most toxic chemicals used in this process, companies can ensure that they are both protecting the environment and their balance sheets from unnecessary and potentially devastating risks.”
January 8, 2010
In addition to the New York City Department of Environmental Protection and the Natural Resources Defense Council, the United States Environmental Protection Agency (“EPA”) has submitted comments on the New York State Department of Environmental Conservation’s (“DEC”) Draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) addressing natural gas drilling in the Marcellus Shale formation.
In a letter dated December 30, 2009, EPA expresses several concerns with the DSGEIS. EPA notes that the original GEIS that the DSGEIS supplements was issued in 1992 and expresses concerns that existing conditions may have significantly changed since that time. In addition, EPA asserts that the analysis and discussion of cumulative and indirect impacts in the DSGEIS should be significantly expanded. EPA encourages both the New York State Public Service Commission, which has regulatory authority over the pipelines that would transport the natural gas, and the New York State Department of Health, which has primary enforcement responsibility under the Safe Drinking Water Act, to take a more active role in the SEQRA process.
EPA joins with the DEP in expressing serious concerns over potential adverse impacts to the New York City water supply, and notes that water sources serving upstate communities deserve similar protection. Accordingly, EPA suggests that EPA, DEC and DEP work together to “develop an enhanced oversight approach” that would allow for the coordination of applicable regulatory programs to better protect drinking water supplies that could be impacted by natural gas drilling. EPA also encourages DEC to release information regarding the chemical composition of hydrofracturing solutions, which to date has been closely guarded by industry under claims that such composition represents a trade secret not subject to public disclosure. Access a complete copy of EPA’s comment letter here (pdf).
January 4, 2010
On December 30, Sive, Paget & Riesel (“SPR”) submitted a comment letter on behalf of the Natural Resources Defense Council (“NRDC”) addressing deficiencies in the Draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) prepared by the New York State Department of Environmental Conservation (“NYSDEC”) regarding proposed natural gas extraction from the Marcellus Shale formation in the Southern Tier of New York State. SPR’s comment letter, prepared by Steven Barshov and Jessica Steinberg, focused principally on matters of concern to towns and other units of local government within whose territory such proposed natural gas drilling would occur.
SPR’s comment letter identified multiple deficiencies in the DSGEIS related to potential impacts of concern to units of local government, including traffic, noise, visual, community character and land use impacts. SPR’s comment letter also encouraged DEC to adopt regulations that would provide units of local government with meaningful advisory input to NYSDEC during well permitting. Access a complete copy of SPR’s comment letter—which is attached to NRDC’s comment letter—here (pdf).
December 29, 2009
Last week, New York City’s Department of Environmental Protection (“DEP”) called upon New York State’s Department of Environmental Conservation (“DEC”) to rescind its Draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) addressing natural gas drilling in the Marcellus Shale formation. The Marcellus Shale formation, which contains large quantities of natural gas, extends from Ohio and West Virginia through parts of Pennsylvania and into New York’s Southern Tier. Notably, the formation includes lands in the watershed that provides drinking water to New York City and, in total, approximately half of the state’s population.
DEP has taken the position that any drilling in the watershed should be banned due to risks posed to the drinking water supply by the technique used to extract gas from the underground shale, known as high-volume hydraulic fracturing. In its comments on the DSGEIS, DEP makes a number of arguments to support its contention that the DSGEIS does not adequately analyze the potential significant adverse environmental impacts of drilling in the Marcellus Shale formation, including the following:
The DSGEIS does not adequately analyze the possibility that contaminants may spill into surface waters or migrate underground into natural drinking water supplies or water supply tunnels;
- The DSGEIS’s requirements for the disclosure of the chemicals used in the hydraulic fracturing process are insufficiently protective of human health and the environment;
- The DSGEIS engages in “segmentation” in violation of the New York State Environmental Quality Review Act (“SEQRA”) by failing to adequately analyze potential significant adverse environmental impacts associated with waste disposal, surface water withdrawals, induced growth, cumulative impacts, air quality impacts, pipeline construction, and ancillary infrastructure;
- The no-drill buffer zones proposed in the DSGEIS are inadequate to protect New York City’s drinking water supply; and
- The DSGEIS does not sufficiently analyze alternatives to hydraulic fracturing, and does not at all address alternatives to natural gas development.
DEP also issued a report in conjunction with its comments.
The comment period for DEC’s DSGEIS has been extended to December 31, 2009. While New York City’s interest in upstate drilling is based primarily on potential impacts to its watershed and water supply infrastructure, upstate municipalities are likely to focus on other issues, including tax revenues, road and truck traffic impacts, noise impacts, and preemption of local regulatory authority.
November 10, 2009
Last week, Congress passed legislation that “formally urges the U.S. Environmental Protection Agency to conduct a new study on the risks that hydraulic fracturing poses to drinking water supplies.” The statement, which is found in the 2010 Department of Interior, Environment, and Related Agencies Appropriations Act, calls for a “transparent, peer-reviewed process that will ensure the validity and accuracy of the data.” An earlier EPA study, conducted in 2004, found no risk, but has faced criticism. Current EPA administrator Lisa Jackson has acknowledged that a new study is needed.
Earlier this year, the Fracturing Responsibility and Awareness of Chemicals Act of 2009 (“FRAC Act”) was introduced in both houses of Congress. Currently, hydraulic fracturing is exempted from regulation under the Safe Drinking Water Act (“SDWA”). The FRAC Act, if enacted, would repeal the exemption, thus subjecting hydraulic fracturing to the SDWA’s regulatory scheme and requiring drillers to disclosure the chemical ingredients of fracturing fluid.
Hydraulic fracturing, a process used to extract natural gas from shale, involves the use of high-pressure fluid to fracture underground rock. The exact components of the fracturing fluid are unknown to the public, as drilling companies have maintained that the ingredients are proprietary. Nationwide, concerns have been raised about potential contamination of underground and surface drinking water by the agents and byproducts of hydraulic fracturing.
Last week’s legislation is of particular interest to New Yorkers because a gas shale formation underlies a significant part of the Catskill watershed which provides much of the City’s drinking water supply. New York’s Department of Environmental Conservation has recently released a draft Supplemental Generic Environmental Impact Statement (“DSGEIS”) on drilling in this shale formation. The comment period for the DSGEIS closes on November 30, 2009.
October 5, 2009
The New York State Department of Environmental Conservation (“DEC”) has released its draft Supplemental Generic Environmental Impact Statement (“SGEIS”) for natural gas drilling activities in the Marcellus Shale formation. The draft SGEIS supplements the existing 1992 Generic Environmental Impact Statement (“GEIS”) and analyzes the range of potential significant adverse environmental impacts of shale gas development using horizontal drilling and high-volume hydraulic fracturing known as “hydrofracking”. The draft SGEIS outlines safety measures, protection standards, and mitigation strategies that operators would have to follow to obtain permits.
The City of New York has a particular interest in the SGEIS because the Marcellus Shale formation underlies a significant part of the Catskill watershed which provides much of the City’s drinking water supply. Erosion, runoff, and possible contamination of groundwater with toxic chemicals are just three of the potential dangers highlighted in a report prepared for the City by environmental consultants Hazen and Sawyer/Leggette, Brashears and Graham. This report, available here in PDF, found that in addition to construction-related surface water impacts, the presence of a wellbore can “allow previously isolated contaminants to flow into shallow groundwater or surface water.” The SGEIS would allow drilling within a few hundred feet of reservoirs, with some mitigation safety measures in place. This would include the need for a site-specific State Environmental Quality Review Act (“SEQRA”) review in certain instances. Use of hydrofracking in locations outside of New York is thought to have contributed to groundwater contamination, with further investigations underway.
DEC is accepting public comments on the SGEIS from now until November 30, 2009. Mayor Bloomberg hasn’t yet given the City’s comments, nor the City’s overall position on the State’s plan, but has said he’ll do everything in his power to keep reservoirs safe.
August 28, 2009
Controversy continues over the process known as hydraulic fracturing (or “hydrofracking”) to recover underground natural gas deposits. Preliminary results from water sampling conducted by EPA have revealed chemical contaminants used in hydrofracking in wells utilized for drinking water in Pavillion, Wyoming. The results, while preliminary, may be the first demonstrated instance of hydrofracking causing contamination to water supplies.
Hydrofracking is currently being considered for use in a number of states, including New York, which is preparing an environmental impact statement for the potential use of hydrofracking for recovery of natural gas in the Marcellus Shale formation. The development of the Marcellus formation has been encouraged in the New York State Draft Energy Plan of 2009, calling also for safeguards in place to protect water supplies. Other states, including North Dakota, have defended the technology as environmentally safe (pdf). In addition, Congress is considering regulating hydrofracking by removing an exemption for the process under the Safe Drinking Water Act.
If contamination of water supplies can be confirmed as being linked to hydrofracking, it will no doubt impact the debate, and future potential uses of the technology.
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