This month we’ve seen a lot of stories on fracking, hydraulic fracturing to get natural gas from shale. Among these, an EPA statement on water pollution, a report on earthquakes happening in unusual areas, fights over which government controls the land and how shareholders get information on fracking risks that landowners don’t. Shale natural gas accounts for 27 percent of natural gas production in the U.S. And natural gas provides a large part of this country’s energy needs. With jobs, energy and the impact on the environment, Diane and her guests look at new concerns over hydraulic fracturing.

Guests

  • Peter Robertson senior vice president of legislative and regulatory affairs of America's Natural Gas Alliance
  • Lee Fuller vice president of government relations for the Independent Petroleum Association of America.
  • Bill Leith manager of the Advanced National Seismic System at the U.S. Geological Survey.
  • Dusty Horwitt senior council, the Environmental Working Group.
  • Ian Urbina investigative reporter, The New York Times.

Transcript

  • 10:06:56

    MS. DIANE REHMThanks for joining us. I'm Diane Rehm. Hydraulic fracturing is a controversial topic. Supporters say it's a cleaner energy source and creates jobs at home. Those opposed say there are too many environmental risks. There have been a number of recent reports on fracking, which we'd like to address this morning. Joining me in the studio: Ian Urbina of The New York Times, Peter Robertson of America's Natural Gas Alliance and Lee Fuller of the Independent Petroleum Association of America.

  • 10:07:43

    MS. DIANE REHMJoining us from a studio in East Lansing, Mich., Dusty Horwitt. He's with the Environmental Working Group. We are going to take your calls, 800-433-8850. Send us your email to drshow@wamu.org. Join us on Facebook or send us a tweet. And let me say at the top of the hour, which I have said a number of times on previous programs on fracking, our family owns property in the Marcellus Shale in Northeastern Pennsylvania. So I do, indeed, have a personal interest.

  • 10:08:39

    MS. DIANE REHMWe have not leased our land and do not intend to. Let me start with you, Ian Urbina. Why do you think we're seeing so many new reports out about fracking?

  • 10:08:55

    MR. IAN URBINAI guess there are two reasons. One is that I think about a year-and-a-half ago, there was a sharp increase in interest in the topic. And as a result of that, various constituencies began setting it closer from different perspectives. That corresponded, to some degree, with a steady rise of drilling in eastern states. And I think also, there's discussion on the Hill, on Capitol Hill, about methods for possibly better regulating the industry. And I think that's also directed new attention to the topic.

  • 10:09:43

    REHMIs the EPA in charge of regulating fracking?

  • 10:09:51

    URBINAYes and no, mostly no. Generally speaking, drilling is regulated by the states. Most of the oversight is provided by the states. The EPA has some authority in some areas, but pretty limited authority.

  • 10:10:05

    REHMPretty limited.

  • 10:10:06

    URBINAYes.

  • 10:10:07

    REHMIan Urbina of The New York Times. How much does natural gas account for energy use in the U.S., Lee Fuller?

  • 10:10:18

    MR. LEE FULLERWell, the last numbers I've seen, it's about 25 percent or so of our energy supply. Now, I think that the total volume of natural gas will grow, but I think the percentage will grow more slowly than the volume because energy demand itself will be increasing. It's -- obviously, a couple of potential areas that it will have opportunities to fill will be used for electric power generation. There's a lot of attention on the potential for natural gas to be used for vehicle fuels as well. And, certainly, it will continue to play its longstanding roles for home consumption and industrial source for feedstocks.

  • 10:11:03

    REHMLee Fuller, he's vice president of government relations for the Independent Petroleum Association of America. Turning to you, Dusty Horwitt, give me the environmental risks of fracking as you see them.

  • 10:11:24

    MR. DUSTY HORWITTWell, there are number of risks throughout the process. One of the risks is what happens underground. You're injecting, in hydraulic fracturing, anywhere from tens of thousands of gallons of fluid up to -- we've seen the figure as high as 8 million gallons of fluid underground at high pressure. And there is a concern that those fluids could migrate underground into drinking water aquifers.

  • 10:11:51

    MR. DUSTY HORWITTThere's also concern that some of the chemicals used in those fluids, some of which are carcinogenic, could spill above ground and get into an aquifer. And then after the process is complete, you have to pump a lot of that fluid up out of the ground. You could have a couple of million gallons of wastewater per well, and you have to dispose of that water somewhere. If you put it in a pit onsite, those pits can leak and get into the groundwater.

  • 10:12:22

    MR. DUSTY HORWITTWe've seen reports of the water being taken to wastewater treatment plants that are not equipped to deal with it, and then that water is released into rivers that are sources of drinking water. So there are a range of risks associated with the process.

  • 10:12:37

    REHMDusty Horwitt, he is senior counsel for the Environment Working Group. And turning to you, Peter Robertson, you see that there are environmental arguments for fracking. Give us those.

  • 10:12:56

    MR. PETER ROBERTSONWell, the environmental arguments really are in favor of natural gas, and there are a number of benefits of natural gas, Diane. When it's burned to create power, it produces only about half of the greenhouse gases that other fossil fuels do. It has virtually no mercury, no particulate matter, no sulfur dioxide and 80 to 90 percent fewer oxides of nitrogen and carbon monoxide. Those are issues that are creating real health risks today and where burning more natural gas can produce cleaner air for communities all across our country.

  • 10:13:34

    REHMAnd I gather that fracking especially has created a number of jobs.

  • 10:13:42

    ROBERTSONWell, absolutely. Fracking is an essential part of natural gas production these days, especially for the so-called shale gas industry, which horizontal drilling, directional drilling that hydraulic fracturing have allowed us to tap into a resource that was previously unavailable to us. And that's what's creating a revolution in America's energy economy today.

  • 10:14:07

    REHMPeter Robertson, senior vice president for government relations for America's Natural Gas Alliance. Do join us, 800-433-8850. Ian Urbina, the EPA recently released a report on water pollution. What did it say?

  • 10:14:31

    URBINAIt was a report out of Wyoming, a community called Pavilion. It was report that found likely connection between the drinking water, the aquifer in that community and the -- some of the chemicals used in drilling. And it was significant because the industry has long contended that such a connection does not and has never existed. There have been documented cases elsewhere, but this was the most recent one. The report had some distinctions though, asterisks with it, one of which was the EPA did not conclusively tie the two.

  • 10:15:16

    URBINAIt set a probable connection. It also pointed out that the drilling that was occurring there was a much shallower drilling than is occurring in most of fracking elsewhere and therefore may have been more risky, or there may have been more of a possibility of this type of scenario than there are with the more standard type of drilling.

  • 10:15:37

    REHMWhich tends to go down as much as 10,000 feet as opposed to 1,000 feet.

  • 10:15:44

    URBINAThat's right.

  • 10:15:45

    REHMI want to point our listeners to the editorial page of The Wall Street Journal, which, this morning, takes issue with that report from the EPA. One of the questions it raises, and perhaps any of you might answer this, is, number one, it took water from an area of Wyoming that has had some water contamination problems in the past. Could the chemicals that they found in their testing have been there prior to the onset of fracking, Ian?

  • 10:16:32

    URBINAI think it's possible, and this may be a question that Dusty should jump in on as he's looked at this much closer. It does seem possible. My impression was that the EPA attempted to factor out that and found some closer ties to the type of chemicals that were used most recently and chemicals that were found in the deep aquifers they tested.

  • 10:16:55

    REHMWhat was your reaction, Dusty?

  • 10:17:01

    HORWITTWell, it's certainly cause for concern. The -- as Ian mentioned, the EPA did raise some caveats, but they specifically drilled deep monitoring wells to look at the ground water at depth so that they would be able to screen out the possibility that contaminants were leaking into the water from the surface, for example, from pits, waste pits from the oil and gas industry. That's why they went so deep. One of the contaminants they found in at least one of the monitoring wells was benzene, which is a known human carcinogen.

  • 10:17:39

    HORWITTThe EPA said that benzene can be found naturally. It can come up naturally with natural gas. However, in this part of the country, in Wyoming, the gas typically comes up without this condensate so...

  • 10:17:52

    REHMAnd, quickly, what is the relevance to what was found in Wyoming to the fracking occurring in Pennsylvania and New York, from your view?

  • 10:18:06

    HORWITTWell, the EPA found problems with the cementing in these gas wells drilled in Wyoming. We've seen those problems all across the country, including in Pennsylvania, and if you don't have proper cement in place in your well, contaminants can migrate up the side of the well. We've also seen Chesapeake and its disclosures to investors, which we'll get into, talk about greater risk in their deeper and horizontal wells. Those are the ones likely to be drilled in Pennsylvania and eastern states.

  • 10:18:36

    REHMDusty Horwitt, he's senior council for the Environmental Working Group. Short break. We'll be right back.

  • 10:20:04

    REHMAnd we're back. Talking about new reports raising additional concerns about fracking going on in this country, I have with me in the studio Lee Fuller of the Independent Petroleum Association of America, Peter Robertson of America's Natural Gas Alliance and Ian Urbina of The New York Times, on the line with us, Dusty Horwitt of the Environmental Working Group. Lee Fuller, I'd be interested in your reactions to the EPA report that came out on what was happening in Wyoming.

  • 10:20:52

    FULLERWell, let me comment on that in a couple ways. The first is, why are we focused so much on that particular report or others? And it -- I think it's important to put this in some context. And the context is that we've probably done a million two or so hydraulic fracturing jobs in United States since it was initiated.

  • 10:21:14

    FULLERAnd the success record for that effort has been extraordinary to the point where we're now looking for one or two instances or a few instances to try to suggest that there is some systemic problem with fracturing when, in fact, all of the analyses that have been done have suggested that fracturing is safely managed now and continued to be safely managed. The Pavilion report, first of all, I think, doesn't really show information that's particularly different from the last time there was a Pavilion report. It hasn't been peer reviewed.

  • 10:21:48

    FULLERIt's very important that we not jump at conclusions with respect to Pavilion until there's a better chance for questioning to be made. Even EPA administrator Jackson has -- have been very cautious about taking a position on the quality of this report. Secretary Salazar of the Department of Interior has been very critical. The State of Wyoming is concerned about the quality of the data.

  • 10:22:10

    FULLERIn fact, one of the monitoring wells of EPA drill may well have been drilled into a natural gas formation. And the reason why they're seeing various chemicals and various compounds there could be from their own well operation.

  • 10:22:22

    REHMIan Urbina, do you want to comment?

  • 10:22:25

    URBINAI would just add, I think, to what Lee said in that the context here is important, and indeed there had been a lot of wells drilled without problems. I think the concern is that it only takes one mistake, and because we're talking about drinking water and we're talking about aquifers that are deep underground that are difficult to decontaminate if there is a problem, there is where the attention being paid to these instances to ensure that we figure out if they -- if it can occur, how might it occur and what sort of regulations would be put in place to prevent that from ever happening.

  • 10:23:07

    REHMPeter.

  • 10:23:08

    ROBERTSONWell, the industry takes these concerns very seriously, obviously, Diane. I agree with what Lee Fuller said that the concern is that there are a number of issues with the report that the EPA has put out. And we think the only way to resolve this is to ensure that this report receives the highest level of an independent peer review by people credentialed in the relevant areas.

  • 10:23:36

    REHMNow, would that be the industry itself?

  • 10:23:40

    ROBERTSONWell, the EPA has said they're going to put the report out for a 45-day public comment period first, and then they will put it out for an external peer review. So it will be people outside of EPA that review this report, and it could well include people who've worked in the industry before as well as people outside of the industry.

  • 10:24:00

    REHMYou know, I'm interested, Dusty Horwitt, as to how much people whose land is leased for this kind of drilling are told about the risks. Have we, in fact, learned that shareholders are told more about those possible risks than the landowners themselves?

  • 10:24:32

    HORWITTThat appears to be the case according to our recent investigation. We found that about two dozen landowners in five different states told us that they have not been told the risks of natural gas drilling when agents of drilling companies approach them and ask them to lease their land from -- for drilling. They supplied us with copies of their leases. We reviewed those leases, and they did not include any significant disclosure of risks.

  • 10:25:01

    HORWITTWe spoke to attorneys in the industry, and they said, typically, companies don't disclose risks to landowners. And then, at the same time, we found that multiple drilling companies were disclosing long lists of risks to their shareholders, including leaks, spills, explosions, blowouts, environmental damage, inadequate insurance, bodily injury and death. Under -- they are required to disclose these risks under federal law, and they're required to disclose only the most significant risks to shareholders.

  • 10:25:29

    HORWITTSo when we make these disclosures, that's an indication that the companies themselves believe that these risks are significant, and our investigation showed landowners are generally not hearing these risks.

  • 10:25:40

    REHMWhy are shareholders, though, entitled to know more than landowners?

  • 10:25:50

    HORWITTWell, they shouldn't be. We think that landowners should get at least as much disclosure as shareholders. The shareholders are entitled to this disclosure as a result of the Great Depression. Congress responded to the Great Depression in 1933 and 1934, passing laws to prevent stock fraud, which was viewed as a major cause of the Great Depression.

  • 10:26:13

    HORWITTBut as I said, the risks to landowners from drilling -- risks to their health, to their property values, to their water -- are just as great, at least as great as risks to shareholders. So we think landowners should get similar disclosures before they lease.

  • 10:26:29

    REHMLee Fuller's had a pair of criticism.

  • 10:26:33

    FULLERWell, I think it's important again to put this issue in some context. We have about a million oil and gas wells that are in operation today in United States and around 8.5 million leaseholders. So the process for actually going through the leasing activity is one that has been working in general quite well. I think that the dilemma that one runs into here is that much of that activity in the past has been in parts of the country where there's been sort of a cultural understanding of oil and gas operations -- Oklahoma, Texas, New Mexico.

  • 10:27:08

    FULLERAs the industry has moved into areas like the Marcellus in Pennsylvania and New York where they're -- even though there's been activity in those states for a century and a half in Pennsylvania's case, the familiarity with the industry is not as extensive. And there probably needs to be a better mechanism to share information with potential leaseholders as that contract is being negotiated.

  • 10:27:32

    FULLERSimilarly, I think the potential mineral estate owners need to be well aware of what it is that they're dealing with, and they should seek out information on it. And, hopefully, the kinds of attention that's been given to oil and natural gas development, United States will put that higher on their agenda as well. But it's a process that, I think, needs attention. I think the industry needs to be a greater participant in sharing information.

  • 10:28:01

    REHMBut why should shareholders have been given more information than landowner?

  • 10:28:09

    FULLERWell, it's an apples and oranges issue. The shareholder information that's being put out is, of course, being put out as a part of the requirements that are imposed by the government...

  • 10:28:20

    REHMBy the SEC.

  • 10:28:22

    FULLER...by the SEC. Much of what's being said there is not specifically focused on individual risk. It's focused on the fact that these operations are construction operations. They are energy raw material extraction operations. They create a certain amount of potential for risk, either a failure, in other words, that the well isn't completed, and therefore, the shareholder might be at risk for that, as well the potential for litigation.

  • 10:28:52

    FULLERCertainly, the litigation aspects in the forthcoming couple of years, I think, are going to increase because they're becoming somewhat of a cottage industry and looking for ways to challenge the development of oil and natural gas in United States.

  • 10:29:06

    REHMIan, why is it that shareholders know more than landowners?

  • 10:29:12

    URBINAYou know, I think Dusty hit on the point in that there was federal law that apply to them that has not emerged with regard to the relationship between landowners and companies. And I think that this is getting back to your original question of who provides oversight of this industry. Drilling is mostly left to the states, and so there has not been federal law that requires these sorts of disclosures in leases.

  • 10:29:40

    URBINAThere are, you know, the Times did two weeks ago an extensive review of leases and compiled a database of over 110,000 oil and gas leases from six states and reviewed what they include and what they don't include. And it's very clear that these leases tend to lack a lot of key protections that a lot of lawyers for landowners would argue need to be in there.

  • 10:30:09

    MR. DIANE REHMSuch as?

  • 10:30:11

    URBINASuch as a requirement for -- if there is damage to livestock, landscape or water source.

  • 10:30:22

    REHMContamination of water.

  • 10:30:23

    URBINAOr air or simply, you know, surface impacts, an explicit requirement that the relevant party, the drilling company, will have to repair those and pay out of their own pocket. A requirement -- and some of these things are acquired already by state regulations, which is part of the reason they don't appear in leases.

  • 10:30:47

    URBINABut even if a state has a law on the book that says a company needs to do something in a certain situation, an average landowner does not have the financial resources to sue and require the company to do what the law tells them to do. And they're better equipped if those things are made explicit in their lease. So a lot of these leases don't include terms that would be beneficial to the landowner, partially because landowners, especially in the East, are not as experienced with negotiating these leases, and they're not getting help from lawyers on the front end.

  • 10:31:23

    REHMPeter?

  • 10:31:24

    ROBERTSONDiane, I'd just like to point out that this explosion, if you will, in natural gas drilling is a relatively recent phenomenon. And as Lee pointed out, I think the industry is moving towards more transparency all the time. If you just look at the issue of the content of hydraulic fracturing fluids, the Ground Water Protection Council, a trade association of state government agencies responsible for protecting the quality of groundwater, started a site called fracfocus.org.

  • 10:31:51

    ROBERTSONAnd the industry is voluntarily downloading the content of hydraulic fracturing fluids onto this site, so that anybody can search it. It's -- the site's only been active a few months, and there's already around 8,000 wells on the site. And many states are adopting this FracFocus website as their compliance mechanism for their mandatory requirements for the disclosure of hydraulic fracturing fluids.

  • 10:32:16

    REHMDusty Horwitt, does that satisfy you as far as at least knowing what's in those compounds?

  • 10:32:27

    HORWITTWell, we'd like to see mandatory disclosure so that there's an incentive for companies to disclose everything that's in their fluid and that they know that they'll be held accountable if they don't. And some states have already taken these steps. One thing that's important to point out in the landowner context is that this information about hydraulic fracturing -- whether it's disclosed by the companies or whether there are programs like yours, or articles like Ian Urbina's in The New York Times -- this information has only come out basically in the last couple of years.

  • 10:33:00

    HORWITTAnd a lot of these leases were negotiated, you know, years ago, 2005, 2006, 2007. And landowners told us again and again -- retired architecture professor John Miller in New York, retired sales representative for a book company Suzanne Hinderliter, also in New York, told us they didn't know about hydraulic fracturing at the time they signed their leases.

  • 10:33:25

    REHMSo you're saying that they signed those leases without adequate understanding of exactly what that would mean?

  • 10:33:38

    HORWITTThat's right. They didn't know what the process would entail. We heard that again and again. And one attorney we talked to, Joe Heath, he's the general counsel for the Onondaga Nation in New York, and he's worked with hundreds of landowners in leasing situations. You know, he talked about the legal problems, some of which Ian Urbina addressed, and it's very difficult for, first of all, landowners to get legal counsel who's experienced in the oil and gas leasing.

  • 10:34:09

    HORWITTAnd then after the lease is signed, there may be very little that landowners can do to get out of their leases. So Joe Heath suggested that maybe the attorney general of New York and maybe attorneys general in other states can step in and do something to help landowners.

  • 10:34:24

    REHMDusty Horwitt of the Environmental Working Group. And you're listening to "The Diane Rehm Show." One other issue that has come up, has been raised by Dan in Tulsa, Okla., who says, "I've heard a couple of reports that the recent rash of earthquakes in Oklahoma are due to fracking. Is this true? And, of course, we've seen earthquakes in places like Ohio, West Virginia and even the District of Columbia." Joining us now by phone the U.S. Geological Survey is seismologist Bill Leith. Good morning to you, Bill.

  • 10:35:13

    MR. BILL LEITHGood morning. Thanks for having me.

  • 10:35:14

    REHMIs there any indication that fracking itself can cause earthquakes?

  • 10:35:21

    LEITHActually, there's an important distinction to be made here. The fracking itself probably does not put enough energy into the ground to trigger an earthquake. It does -- the fracturing of the rock by the high-pressure injection during the fracking process causes what we would call micro earthquakes, very small earthquakes that reflect the breaking up of the rock due to the fracture.

  • 10:35:48

    LEITHAnd these actually can be useful to the operator of the fracking operation to see that the fracking is doing what it's supposed to be doing. But they're not a safety hazard. They're typically less than magnitude two. The largest of them might be so locally, but they're really not something that we should be concerned about. On the other hand, Mr. Horwitt, earlier in the program mentioned the disposal risks. When the -- these deep wells are fractured, there's a phenomenon called flow back.

  • 10:36:22

    LEITHIt's the flow back to the surface of the injected fluid and also of the so-called formation water, the natural water that exists down at the fracture depth. And that flow back water actually contains a lot of the gas that's trying to be recovered. So this isn't clean drinking water. It's typically a brine. It can't be dumped into local streams because of the Clean Water Act, and so the operator of the well needs to dispose of that.

  • 10:36:50

    LEITHAnd it can be put into ponds, it can be trucked away to a treatment plant, or it can be re-injected locally, or it can be re-injected not locally. And this is a lot of water. In Arkansas, for example, where the wells were injecting in the area of a magnitude 4.7 earthquake that occurred earlier this year, they were injecting, I'm told, about a million gallons a month. That's about the size of a small lake. And we have examples of disposal wells that are permitted for much higher volumes than that.

  • 10:37:25

    REHMAll right. Bill Leith, I'm going to ask you stay on with us as we open the phones, take calls from our listeners, more of your email, your tweets and your postings on Facebook.

  • 10:40:04

    REHMAnd welcome back. It's time to open the phones. We have a number of people with us: Ian Urbina of The New York Times, Peter Robertson of the Natural Gas Alliance, Lee Fuller of the Petroleum Association of America, Dusty Horwitt of the Environmental Working Group and joining us in just these last few moments, Bill Leith. He's with the U.S. Geological Survey. Just before the break, Bill Leith, you were talking about this kind of flow back. Is that what has created, then, some of these earthquakes that we've seen happen in odd areas?

  • 10:40:57

    LEITHIt's the disposal of that flow back water.

  • 10:40:59

    REHMYeah.

  • 10:40:59

    LEITHAnd it doesn't occur, of course, at every disposal well. And the things that are a factor are, how deep is the injection activity, how high is the pressure at which they are disposing of the fluid, how much fluid is disposed of in these wells? The best documented recent case of this is in Arkansas, that magnitude 4.7 earthquake that occurred there earlier this year, where they were injecting large volume of water over a period of many months and triggering earthquakes that we actually could track with a local seismic network as they moved along a fault.

  • 10:41:39

    REHMAnd, finally, what are you most concerned with or looking at now with regard to these quakes?

  • 10:41:49

    LEITHScientifically, I think that the big issue is whether or not the earthquakes can be controlled. So, say, a large earthquake does occur in the vicinity of one of these disposal wells, can one reduce the pressure or the volume at that well and continue to operate it, or does it -- or is the safety concern too high? And, really, we don't have the data that we would like in order to make that determination.

  • 10:42:17

    LEITHMany of the well operators don't keep that information. And so it's sort of an open question as to whether these wells, once they've triggered a moderate-sized earthquake, can be managed so as to minimize the earthquake risk.

  • 10:42:34

    REHMAll right. And now turning to you, Ian Urbina, before we open the phones, talk about the local governments, some of which are objecting to fracking in Pennsylvania and how they're running into regulations by state governments.

  • 10:42:55

    URBINAMm hmm. Yes. So it's a very complicated situation right now in which there are competing realms, all of -- each of which is attempting to exert its authority over how drilling is going to proceed. If you go at a higher level of altitude, you have the federal government trying to decide what role. And specifically within the federal government you have different pockets, different agencies -- the EPA, Department of Energy, USGS -- all sort of providing input.

  • 10:43:22

    URBINAAnd it's an open question as to what role the federal government is going to play if there are going to be any changes in that. On a more local level, as you point out, in the states it's equally or more complicated. So you have a competition, to some degree, between on the state level and state lawmakers, say, who are attempting to standardize the regulation of the industry, sometimes standardize it in ways that environmental advocates and landowner activists think is too lax in other times and ways that the industry and landowners and others think is actually fostering of industry.

  • 10:44:05

    URBINABut that's at the state level. Then on a even lower altitude, you have local officials, municipal officials, who are trying -- and especially in Pennsylvania this is playing out -- who are now, as they learn more, as Lee said earlier, realizing that maybe they need to establish zoning ordinances and other regulations so as to manage the traffic, the air pollution, all these things, the water use of the industry.

  • 10:44:31

    URBINAAnd so they're passing various ordinances, sometimes outright bans, other times just management ordinances. And that is setting up a fight between state level officials on the one hand, lawmakers sometimes.

  • 10:44:44

    REHMWho want to enjoy taxes.

  • 10:44:48

    URBINAIt varies, you know? It varies. On the state level, there are some who are fighting for industry to allow industry to proceed more consistently and with less regulation. And then there are other lawmakers who are fighting the opposite, but there's a -- you know, a duel between these different altitudes. And there are also fights going on in different realms. So you have the judiciary. You have the courts, which are becoming a realm in which a lot of these fights are getting decided through litigation.

  • 10:45:18

    URBINABut you also have the legislature, you know, the state legislature, in which lawmakers are trying to pass laws that will limit or expand the local level folks. So it's a very complicated situation. It's very unclear as to ultimately who's going to be -- what realm is going to be the ultimate decision, you know, decision-maker for this.

  • 10:45:41

    REHMAnd, Dusty Horwitt, what role is your group playing in this?

  • 10:45:48

    HORWITTWell, our organization primarily provides research and information to the general public, to elected officials and to grassroots citizens on the ground. For example, I went to speak a few months ago in Rockingham County, Va. There were a number of landowners there concerned about this process, as well as public officials, and this is one of those localities where the county government has decided to put the brakes on shale gas drilling, at least for the time being because they are not comfortable with the environmental risks.

  • 10:46:27

    REHMNow, Lee Fuller, how do you see this argument going on between state officials and local officials?

  • 10:46:39

    FULLERWell, I think it really is a reflection of kind of a basic state governance question. Most states reposit their regulatory actions for environmental issues with a state agency, and they do that so that they can develop the expertise and have the capacity to be able to make the decisions that are necessary when considering something as complex as any kind of environmental regulation.

  • 10:47:04

    FULLERAnd for that reason, that tends to be the point at which the take-off for making the decisions occur. If we look at -- if I were to reverse this issue in some way and say, let's say that the state regulators said that a particular action was a bad one, would it be appropriate for a municipality with part-time officials running it to say, well, we disagree with that? The state says the speed limit should be 55 miles an hour. We want to have it 90 in our town.

  • 10:47:40

    FULLERIt's all of a question of trying to balance off between who has the best capacity to make a judgment on complex issues, and states have typically, for environmental permitting, put that in the hands of the -- of a state agency.

  • 10:47:53

    REHMAll right. I'm going to open the phones, first to Herman in St. Petersburg, Fla. Thanks for waiting. You're on the air.

  • 10:48:04

    HERMANThank you. I live in St. Petersburg and we found minerals from Georgia, which suggests that the aquifers are all connected. And I was wondering with all the assurances from the energy industries -- all of which have had mishaps, from the Exxon Valdez to drilling in the Gulf, to pipelines -- whether we will need all that energy simply to drive for a glass of drinkable, potable water.

  • 10:48:28

    REHMPeter Robertson, can you talk about that?

  • 10:48:32

    ROBERTSONWell, Diane, clearly we're going to need more energy to drive a growing economy in the United States, and natural gas is a cleaner form of energy. It's abundant. It's domestic. It creates energy security, and it's creating enormous economic benefits in the United States. IHS, one of the most respected consulting firms in the energy arena, did a study recently and talked about the economic advantages that natural gas is providing and is going to provide 600,000 jobs now, going up to 1.4 million by 2035.

  • 10:49:10

    ROBERTSONThe average household -- well, because of the lower prices of natural gas, because of the abundance of shale gas, the average household will save $1,000 in energy cost between 2012 and 2015. Otherwise...

  • 10:49:25

    REHMI understand all that. Excuse me for interrupting, but our caller is concerned about the safety of drinking water. And I wonder, Dusty Horwitt, is there a trade-off going on here?

  • 10:49:43

    HORWITTSure, there is. One quick comment on Peter's remarks is it's important not to overstate the jobs benefits. There have been economists who've looked at this and have said that in fact that the jobs benefits are likely to be modest, in part, because people drilling new wells are likely to be the same people drilling wells today. So you're not going to increase jobs dramatically. And the water contamination issue is a real concern.

  • 10:50:13

    HORWITTIn Dimock, Pa., 19 families lost their drinking water because of natural gas drilling. And the state estimated it would cost $12 million to extend public waterlines to those -- just those 19 families. New York City has estimated, if their drinking water upstate were contaminated by natural gas drilling, it would cost in a minimum $8 billion to build a water filtration plant plus $200 million a year to operate that plant. So we're talking about significant costs if water is contaminated, and that is why we have to look very carefully at drilling and conduct it very carefully.

  • 10:50:48

    REHMAnd what's happening with the Delaware River Basin Commission? Dusty.

  • 10:50:55

    HORWITTThe Delaware River Basin Commission is a state-federal commission that has jurisdiction over water issues in the Delaware River basin, which provides drinking water for 15 million Americans, including people in New York City and Philadelphia. There are five members of the commission: the governors of New York, New Jersey, Delaware and Pennsylvania, and then there's a federal representative. They recently proposed draft regulations to allow drilling for shale gas in the Delaware River basin.

  • 10:51:24

    HORWITTThey were going to vote on those regulations about a month ago, and then the governor of Delaware announced publicly that he was going to vote no because he was not comfortable with the environmental risks involved. And then the commission announced it was going to postpone its vote. And that is where things stand now.

  • 10:51:41

    REHMSo there we are. Lee Fuller, back to this question of who has the authority, whether it does, in fact, ultimately rest with the federal government, the state government or local municipalities.

  • 10:51:56

    FULLERWell, and that's not an atypical situation. We always have a federal, state and local balance when were dealing with regulations. I think it's important to, though, to look at this issue in that broader context. The earlier question that was raised about was is my drinking water being in peril. Well, let's look at some of the fact-based dynamics behind it. Drinking water -- groundwater is essentially a very shallow formation.

  • 10:52:23

    FULLERIt's generally within the first thousand feet of an area. And shale gas, as you pointed out earlier, is generally developed around five to 10,000 feet below the surface, so that the pathway out of the reservoir is essentially nonexistent. The pathway of concern is either the wellbore or the surface. The wellbore protections that have been put in place have been put in place for decades, and they're constantly improving.

  • 10:52:48

    FULLERThe Dimock example that was raised earlier may be an indication of a situation where there was a failure in a particular construction of a series of wells or maybe in a situation whether is naturally occurring methane in the formations that were being used for private water wells. Those kinds of incidents haven't occurred with respect to municipal systems because they're much more carefully monitored and much more carefully constructed to acquire the water.

  • 10:53:14

    FULLERSo we have to look at this and recognize that anything that comes out of the wellbore is going to be regulated under a federal-state regulatory system, much like those UIC wells that the geologist was talking about earlier, are regulated under the federal Safe Drinking Water Act.

  • 10:53:27

    REHMLee Fuller of the Independent Petroleum Association of America. What about that, Dusty, are -- is the fact that these wells are drilled so deeply and the water wells are much more shallow, does that give sufficient protection, or do you see issues where that simply is not the case and water contamination is at risk?

  • 10:54:07

    HORWITTThere is still a risk. We investigated an EPA report to Congress that was published in 1987. And in this report to Congress, EPA concluded that hydraulic fracturing can and did contaminate underground sources of drinking water. There was a case study included in that report with the West Virginia water well, the EPA concluded, had been contaminated by hydraulic fracturing.

  • 10:54:32

    HORWITTWe investigated and found that within 1,700 feet of that water well, there were four abandoned natural gas wells that extended deeper than that -- than the gas well that was the likely source of the contamination. And so what could have happened is the hydraulic fracturers could have connected with those old, abandoned wells, and contaminants could have migrated up those wells to the surface, where they could have contaminated the aquifer.

  • 10:54:57

    HORWITTAlso in our review of the gas company's disclosures to investors, as I mentioned before, we found that Chesapeake, which is the second leading gas producer in the country, has disclosed to its investors for years that their deep and horizontal drilling operations carry a greater risk of mechanical failure than their shallow and vertical operations. They didn't go into detail what those risks are, but if there's some failure in the cement, as Mr. Fuller mentioned, you could have migration from deep underground up the side of the wellbore to the surface where aquifers could be contaminated.

  • 10:55:33

    REHMIan Urbina.

  • 10:55:34

    URBINAI think that the discussion often gets focused on the contamination potential as caused by the fluids from fracking. And it strikes me that there's a much broader set of issues to focus on. In addition to the fluids, gas migration, you know, is a serious concern. If you're a landowner and you depend on well water, ultimately you don't really care if it's a casing issue or if it's caused by fracking or if it's gas that leaks into your water or if it's a liquid.

  • 10:56:08

    URBINAAt the end of day, if you lose access to your drinking water, that's what matters. And there have been a number, including out of Duke, a number of studies that have pretty well documented that various range of problems can emerge with various causes, below ground and above ground. And at the end of the day, if your water gets affected by any of these risks, it's a serious problem for you.

  • 10:56:34

    REHMWhere are we going with this? Is the Congress going to take this up and seriously debate this issue?

  • 10:56:43

    URBINAI don't know. I think they're seriously going to debate it. I think they're doing -- they're looking very closely at the issues and their study, but what will come out of it, it's really unclear.

  • 10:56:52

    REHMAll right. Well, clearly, there is lots more to say. And we will continue to follow this issue. Ian Urbina of The New York Times, Peter Robertson, Natural Gas Alliance, Lee Fuller of the Independent Petroleum Association of America, Dusty Horwitt of the Environmental Working Group, and Bill Leith of the U.S. Geological Survey. Thank you all, and thanks for listening. I'm Diane Rehm.

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