A cooperative and coordinated effort by state and federal agencies and the industry to develop and promulgate “best practices” is key to winning the public’s trust and to successful development of the nation’s shale gas resources, according to a report issued Thursday by a federal advisory panel.

In a 41-page report the Secretary of Energy Advisory Board (SEAB) Natural Gas Subcommittee said it was aware that several different models for best practices were being discussed in the industry and planned to monitor their progress over the next 90 days. But the panel stressed that whatever approaches emerge as favorites, they must address air and water quality issues.

The subcommittee recommended that companies be required to disclose the chemical contents of fracking fluids. While “the subcommittee shares the prevailing view that the risk of fracturing fluid leakage into drinking water sources through fractures made in deep shale reservoirs is remote,” it “nevertheless believes there is no economic or technical reason to prevent public disclosure of all chemicals in fracturing fluids, with an exception for genuinely proprietary information.”

Other recommendations include reducing the use of diesel fuel, improved communication between state and federal regulators, minimizing drilling impacts on communities and providing more information on shale gas to the public.

The SEAB subcommittee report, completed as directed in 90 days, basically endorsed a state or regional system enabled and encouraged by coordinating activities on a national scale. “The realities of regional diversity of shale gas resources and rapid change in production practices and technology mean that a single best engineering practice cannot be set for all locations and for all time,” the report said.

“Rather, the appropriate starting point is to understand what are regarded as ‘best practices’ today, how the current regulatory system works in the context of those operating in different parts of the country, and establishing a culture of continuous improvement.”

The subcommittee recommends:

To carry out some of its recommendations the SEAB report recommends:

The subcommittee said it was encouraged that several companies and other groups had recognized the value of best practices and were considering creating a mechanism to encourage them.

“The design of such a mechanism involves many considerations including the differences in shale production and regulations in different basins, making most effective use of mechanisms that are currently in place and respecting the different capabilities of large and small operators,” the subcommittee said.

Among the most promising best practices, the subcommittee noted:

“It should be stressed that any industry best practice mechanism would need to comply with anti-trust laws and would not replace any existing state or federal regulatory authority,” the subcommittee said.

On the issue of providing more information to the public, the subcommittee said it was “struck by the enormous difference in perception about the consequences of shale gas activities,” and warned the industry that a response “that hydraulic fracturing has been performed safely for decades rather than engaging the range of issues concerning the public will not succeed.”

As a remedy, the subcommittee recommended creating a national database to provide the public with information on shale gas development and production. The panel estimated that such a database would cost about $20 million to build and about $5 million a year to maintain.

“This recommendation is not aimed at establishing new reporting requirements,” the subcommittee said. “Rather, it focuses on creating linkages among information and data that is currently collected and technically and legally capable of being made available to the public. What analysis of the data should be done is left entirely for the users to decide.”

The subcommittee added that the GWPC and STRONGER — a nonprofit that performs peer review of state regulatory activities — were useful tools to educate public as well, and recommended that the federal government allocate $5 million to the two programs beginning in FY2012.

“Too few states participate in STRONGER’s voluntary review of state regulatory programs,” the subcommittee said, adding that “encouraging these multi-stakeholder mechanisms will help provide greater information to the public, enhancing regulation and improving the efficiency of shale gas production.”

In an effort to mitigate the short-term and cumulative impacts shale gas drilling has on communities, land use, wildlife and ecological systems, the subcommittee said federal, regional, state and local jurisdictions needed to take “a more holistic” approach to the issue, and recommended:

“The process for addressing these issues must afford opportunities for affected communities to participate and respect for the rights of mineral rights owners,” the subcommittee said.

In a blog post on Thursday, John Hanger, the former chief of the Pennsylvania Department of Environmental Protection, lauded the report as a “detailed road map” to responsible development, but added “it will be interesting to see which companies and organizations rise to the constructive challenges contained in this report.”

Fred Krupp, president of the Environmental Defense Fund and a member of the SEAB panel, agreed. “This report is an important first step,” he said Thursday. “At a time when so much of the debate in Washington is characterized by discord and paralysis, it finds common ground and offers a clear consensus.”

Industry groups were supportive of the report.

“While we continue to study the details of the report, we are particularly pleased with the recommendation to bolster the role of the multi-stakeholder group STRONGER and the Ground Water Protection Council to work within the state regulatory framework,” Dan Whitten, spokesman for America’s Natural Gas Alliance (ANGA) said Thursday. “The report also reinforces ANGA’s prior commitment to disclosure of hydraulic fracturing fluids through the state-based GWPC registry, FracFocus.org.”

The Independent Petroleum Association of America (IPAA) also supported the STRONGER and GWPC recommendations, and called the report “a useful starting point” for further discussions on shale gas regulatory reform.

“[The] report marks another instance where evaluation of shale gas development using hydraulic fracturing concludes, on balance, that the current state and federal regulatory processes are effectively protecting the public while allowing the development of America’s abundant natural gas,” IPAA CEO Barry Russell said Thursday. “[It] stands in stark contrast to the strident, hysterical demands for moratoria on hydraulic fracturing.”

American Gas Association (AGA) CEO Dave McCurdy echoed that sentiment. “We commend the subcommittee’s effort to further an informed and transparent process on how to better protect public health and the environment in meeting our nation’s energy needs through the use of hydraulic fracturing,” McCurdy said Thursday. “AGA member companies recognize that public confidence in our industry’s ability to develop this important domestic source of energy will be furthered by open, fact-based dialogue, collaborative actions and public accountability.”

DOE Secretary Steven Chu formed the subcommittee in May following a policy speech by President Obama calling for both increased development and scrutiny of natural gas (see Shale Daily, May 9; April 4; March 31).

The composition of the subcommittee has been hotly debated, with fracking supporters and opponents each complaining that the other side had too much representation (see Shale Daily, June 7; May 11). On Wednesday a group of 28 scientists — representing 22 universities and institutions in 13 states — urged Chu to remove six of the seven panel members, including Chairman John Deutch, due to their financial ties to the natural gas industry.