02/08/2011 06:37 pm ET | Updated May 25, 2011

Responding to the Hydraulic Fracturing Issue

As we've discussed before, the practice of hydraulic fracturing to produce oil and gas has grown into a controversy being argued about in local townhalls all over the country all the way to the halls of Congress in Washington.  Making matters worse, as usually happens when it comes to environmental issues, it's hard to sort out fact from fiction. 

Hydraulic fracturing and the issues surrounding it is no different.  This controversy started years ago with environmental groups (without much actual evidence) claiming water well contamination directly caused by hydraulic fracturing.  The issue boiled down to groundwater contamination and who was responsible for regulating underground injection activities.  There was even an argument about whether hydraulic fracturing even qualified as underground injection according to clean water regulations. 

The controversy started in Alabama back in the late 1980's, but spread to other oil and gas producing states as state agencies, the courts, the EPA, and Congress struggled with the problem, passing around the hot potato to one another.  As this issue gained attention, the rhetoric grew more heated.  The industry, believing they were doing nothing wrong, dismissed the claims as unfounded, and anti-development groups tried to use the power of the courts and government regulation to shut down all oil and gas operations.  The issue was partially resolved, at least from a regulatory point of view, when the Congress exempted frac'ing from the Safe Drinking Water Act in its 2005 energy bill, displeasing the environmental community, but establishing some permanence to the regulatory regime.

However, the rapid increase in recent years of shale oil and gas development, which is totally dependent on multiple frac jobs per well to be productive, has once again raised the public awareness of the issue.  The documentary Gasland by Josh Fox raised the awareness in some cases to hysteria.  He filmed several examples of landowners lighting the natural gas in the water coming from their faucets, implying that nearby oil and gas development was totally responsible, ignoring the fact that many water wells are completed in water bearing zones that contain naturally occurring biogenic gas.  In simple terms, biogenic gas is associated with shallow formations, and thermogenic gas is associated with deeper strata normally explored by the industry.  While there are some real cases of contamination from oil and gas operations, many are not, but Gasland ignored all those.  In late 2010, some of the errors in the documentary were refuted by the Colorado Oil and Gas Conservation Commission in an attempt to set straight at least some of the public record, but the industry generally dismissed all concerns, the normal response.

The problem with a complex issue such as hydraulic fracturing is that the public often panics over the wrong issues, and the industry panics about the money.  Anti-development environmental groups focus on lighting gas from faucets, leaping to the conclusion that it comes from frac jobs applied thousands of feet below and miles away, using that false conclusion in an attempt to shut down all oil and gas operations, an unrealistic and zealous position that our economy and, indeed, our society, simply cannot tolerate.  The industry, on the other hand, generally takes the position that it's just too complicated for the public to understand, denies that there has ever been any problems in the history of hydraulic fracturing when there has, constantly waving the money/jobs flag.

So, having framed the problem, is there an example of anyone in the industry trying to get in front of this issue rather than just fighting the environmentalists and regulators?  Yes, there are several, but one notable company is Chesapeake Energy, who has been very active in establishing a program they call Green Frac, an effort to make hydraulic fracturing a more benign process.  Recognizing the inherent risks to the environment, water resources, and, (let's be honest) their bottom line, the company has aggressively been working on several fronts to improve the frac'ing process and their transparency.  Out of necessity due to water shortages in the Fort Worth basin in 2007, Chesapeake began an effort to recycle the water they use;  they now call the progam Aqua Renew and use it throughout their operations to reduce water usage.  They have also looked for more green solutions to frac issues, and have, by their own admission, eliminated 25% of the additives used in their frac fluids.  Their CEO, Aubrey McClendon, has not been afraid to get in front of the public to talk about the tough issues, including the environment, natural gas for transportation and power generation to help us reduce our dependence on foreign oil.  As an aside, one of the huge mistakes we make as an industry is hiding behind closed doors while we let lobbyists and corporate mouthpieces issue tightly controlled messages rather than speaking for ourselves.  Aubrey breaks that mold by speaking openly to the industry and to the public, setting an example for the rest of us. You might disagree with some of his positions, but at least you have the opportunity to hear from him directly.

Another company working to improve frac technology to limit its affects on the environment is a relatively new one called FracTech.  This company is focused on more green ingredients to frac fluids and a strictly controlled environmental management system to minimize potential damage caused by hydraulic fracturing.  FracTech just recently hired a former Chesapeake executive, Marcus Rowland, as their CEO, a nod to that company's visibility on this issue.

Hydraulic fracturing will continue to be a controversial issue for the near future until we, as an industry, get our arms around the real environmental risks and embrace the public's concerns about this necessary completion technique.  If we do so, perhaps then some of the rhetoric will cool off so we can truly develop a long term energy solution (and regulatory framework) that not only provides for our country's needs, but also protects the environment for our children and their children.  

Bob Cavnar, a 30-year veteran of the oil and gas industry, is the author of Disaster on the Horizon: High Stakes, High Risks, and the Story Behind the Deepwater Well Blowout. He is CEO of Luca Technologies.