Shale Daily / NGI All News Access

Chevron Exec: Industry Must Meet 'Higher Standard'

The natural gas industry will miss out on the prize of shale if it can't convince the public that development is safe, a Chevron Corp. executive told a Pittsburgh audience Thursday.

"If the public becomes concerned, if their issues are not addressed, they can pull our effective license to operate and make it very challenging for us as an industry," Bruce Niemeyer, vice president of the Appalachian and Michigan unit for Chevron, said at the Platts Fourth Annual Appalachian Gas conference. "We don't have to look very far back in our industry's history to see that sort of thing; a year ago, April 2010, there was a single event on a single well and that effectively stopped the entire industry in the deepwater Gulf of Mexico."

The warning came during a presentation promoted as an outlook for the Marcellus Shale, but Niemeyer refused to offer details about the work Chevron is planning in the region, saying, "If we as an industry don't get right with this on the front end of a world-class development, then any forecasting that Chevron on anybody else might do is going to be a miss."

Niemeyer pointed to a recent survey conducted by the Mercyhurst [College] Center for Applied Politics that showed public support for natural gas development because of its economic benefits, but public concern about threats to the environment and a belief that the industry doesn't care about the environment (see Shale Daily, Oct. 13).

"This is a world-class resource, and we are going to be in the process of developing it for decades. And in order to be able to do that, and in order for it to reach its full potential, we have to operate at a higher standard than is sometimes required of us," Niemeyer said.

For instance, Niemeyer said, Chevron currently uses four layers of casing and four layers of cement on each well, publicly discloses its hydraulic fracturing (fracking) fluids and gives every employee "stop-work authority" to shut down operations if a problem might be brewing.

He called opposition to hydraulic fracturing a "complete red herring," repeating familiar claims that industry has used the technology more than one million times without a contamination incident and that fracturing takes place thousands of feet beneath aquifers, but he gave credence to concerns about water contamination from improper well construction.

Winning over the public also means supporting existing regulations, Niemeyer said. "Because, quite frankly, as good as we operate, the public ultimately develops its confidence when regulators verify that we are operating in compliance with their expectations," he said.

However, Niemeyer doesn't believe the federal government should be responsible for regulating natural gas development but should instead leave oversight to the state.

Improving public opinion of natural gas might require the industry to be brutally honest, according to John Carroll, an environmental lawyer with Pepper Hamilton LLP. "We tend to say, 'Oh, it's never a problem.' Well, it is a problem once in a while," he said.

For instance, while there isn't a documented case of hydrofracking sending fractures thousands of feet from a deep shale formation to a shallow aquifer, there are environmental issues connected to natural gas development in general and hydrofracking in particular.

"You can do dumb things and cause problems," Carroll said. Some incidents could be caused from "things" that aren't so "dumb."

While geology eventually prevents fractures in shale formations that are 5,000 feet deep from reaching shallow aquifers only 500 feet deep, an operator could theoretically fracture through the cap of a shale formation into the more porous sandstones above it, he said.

While operators have been acquitted of contamination by gas "fingerprinting" used to identify the source of natural gas in a water supply, Carroll said pressure from a shale well can exert on the surrounding geology and potentially "push" biogenic gas into groundwater. "Sometimes it's not related at all to the gas operations, but many times it is."

He also said abandoned vertical wells that haven't been plugged could potentially allow hydrofracking fluids to rise into shallower horizons (see Shale Daily, Aug. 5).

Also citing the Mercyhurst poll,Carroll noted that most of the respondents wanted to see more regulations in Pennsylvania. While the state currently regulates casing and safety, Carroll said it does not have "fracking regulations." He also noted that Pennsylvania has issued 65 citations for faulty casing this year. "That's actually quite a few, I think," he said.

For that reason, he said, companies might consider cementing the entire vertical portion of a shale well, even though Pennsylvania regulations only require casing through aquifers.

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