The Risks and Regulation of Shale Gas Development: Research Findings

Transcription

1 RFF s Center for Energy Economics and Policy The Risks and Regulation of Shale Gas Development: Research Findings Alan Krupnick, PhD Director, Center for Energy Economics and Policy National Governors Association, September 9-10, 2013

2 Risk Matrix 2

3 Sloan Project on Environmental Risks Risk Matrix 1. Expert survey of shale gas development risks 2. Statistical analysis: a) Effects of shale gas activity on surface water quality in Pennsylvania b) Analysis of chemical assays of flowback/produced water c) Property Value effects 3. State-by-state regulatory analysis 4. Public Survey 5. Summary 3

4 Overlap of each groups high priority routine risk pathways

5 Consensus routine risk pathways

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7 Non-consensus top government concerns White area: All groundwater effects, including from pit or pond storage of fracturing fluids, DWI, saline intrusion from drilling. Other for states: The above effects on surface water, drilling fluids and cuttings to both surface and groundwater; frack fluids hydraulic fracture propagation to groundwater Noticeably lower state priorities: community and habitat effects and air pollutants 7

8 State-by-state regulatory analysis 31 states 27 regulatory elements across shale development process Sources of data: statutes, regulations, independent reports, and interviews with regulators 8

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10 Elements Regulated New York West Virginia Colorado Pennsylvania Michigan New Mexico Alabama Kansas Louisiana Ohio Oklahoma Texas Wyoming Nebraska Maryland Natl. Average Arkansas Illinois North Dakota Indiana Kentucky Montana Mississippi Utah South Dakota Tennessee California Virginia Top 5 states by number of gas wells

11 Stringency of Quantitatively Regulated and Unregulated Elements 100% 90% 80% 70% 60% 50% 40% 30% 20% 74% 61% 60% 60% 59% 57% 57% 54% 54% 52% 51% 51% 47% 46% 46% 45% 44% 44% 42% 42% 40% 31% 28% 25% 25% 22% 13% 10% 0% Maryland Nebraska New York West Virginia Colorado Pennsylvania Louisiana Kansas Alabama Texas Michigan Oklahoma North Dakota New Mexico Ohio Arkansas Wyoming Montana Mississippi Illinois Utah South Dakota California Kentucky Indiana Tennessee Virginia Top 5 states by number of gas wells

12 Some Findings Heterogeneity is the rule. States average regulating about 70% of our elements (18-95%) Mostly command and control Of these, numerical standards range from 9% to 75% of maximum stringency Lack of transparency and data availability 12

13 RFF project focuses on environmental risks Surface from shale Water gas Quality development Risk Study (PNAS, 2013) We exploit spatial and temporal variation in the proximity of shale gas wells, waste treatment facilities, and surface water quality monitors in Pennsylvania to estimate: 1. the impact of shale gas wells on downstream chloride and TSS concentrations; and 2. the impact of shale gas waste treatment and release to surface water on downstream chloride and TSS concentrations. 13

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15 RFF project focuses on environmental risks from Conclusions shale gas development No statistically significant impact of shale gas wells on downstream chloride concentrations. A positive result here would have been consistent with contamination problems from spills, dumping, etc. Release of treated shale gas waste to surface water by permitted waste facilities appears to increase downstream chloride concentrations. Effect is significant only for POTWs, not CWTs. Shale gas wells appear to increase downstream TSS concentrations. 15

16 Public Survey Public concerns for shale gas development well known, but no information currently available on Risk valuation Risk preference tradeoffs We survey public in Texas and Pennsylvania to elicit attitudes and (monetary) preferences for five key risk attributes 16

17 Degree of concern about the environmental consequences of shale gas development (1=none, 7=extreme concern) 30% 25% 26% 20% 20% 15% 10% 7% 9% 12% 13% 11% 11% 11% 10% 13% 12% 15% 15% 8% 8% 5% 0% No opinion PA TX 17

18 Degree of support of shale gas development (1=not at all, 7=extremely supportive) 25% 20% 21% 21% 20% 19% 18% 17% 15% 10% 9% 11% 12% 10% 12% 7% 7% 5% 6% 4% 4% 0% No opinion PA TX 18

19 Primary (conservative) WTP Estimates (mean, 90% CI), Controlling for Information Treatment and Baseline Groundwater (1,000 wells w/ problems) 6.5 Surface Water (% water bodies w/ problems) 3.6 Air Quality (days of standard violation) Local Community (% time loss) Wildlife Habitat (% habitat fragmented) PA WTP TX WTP 19

20 Thank you 20