Energy firms, environmentalists agree on 'fracking' standards

Energy companies and environmentalists have reached rare common ground over the controversial practice of hydraulic fracturing or “fracking” of fossil fuels, agreeing to a set of environmental standards that would diminish the environmental impact of drilling operations in the northeastern United States.

The collaborative effort would raise the bar on the environmental practices for virtually all energy companies drilling in the Marcellus Shale formation, which stretches from Ohio to Pennsylvania, West Virginia to New York. It also signals that the controversial practice of fracking may be gaining legitimacy. Rather than trying to ban it, environmental groups may have to start pushing to regulate it.

“It’s here,” says Mark Brownstein, associate vice president and chief counsel of the US energy and climate program of the Environmental Defense Fund (EDF), which was part of the collaborative effort. “Ninety percent of new oil and gas wells developed onshore in the United States are using some form of hydraulic fracturing.” The point of the collaborative effort “is making sure that it’s done with the utmost attention to the environment.”

Monday’s announcement of the new standards – and the creation of a new center to promulgate those standards – come as Illinois wrestles with legislation that would regulate horizontal hydraulic fracturing. On Thursday, a vote on a compromise bill that had support from both environmentalists and the oil and gas industry was postponed because a new wrinkle over licensing caused industry to withdraw its support for the measure.

The 15 new standards agreed to Monday by energy companies, environmental groups, and philanthropic organizations in the Northeast are voluntary.

“These standards are not a substitute for strong regulation or enforcement,” says Mr. Brownstein of New York-based EDF. The real test, he adds, is whether energy companies follow through and agree to become certified. “It remains to be seen whether industry is ready for this.”

Shell, one of four energy companies behind the collaborative effort, says it is eager to go through the certification process, which involves an audit by an independent party.  

“Shell, they’re chomping at the bit to get out the door” and get certified, says Andrew Place, interim executive director for the new Pittsburgh-based collaborative center, the Center for Sustainable Shale Development. “We've done 90 percent of the heavy lifting for where we need to go.”

Companies will be able to get certified later this year.

The standards themselves cover a wide range of environmental issues, such as requiring 90 percent of the water used to be recycled, closed-loop drilling, ground-water monitoring, limits on flaring of gas coming out of the well, and emissions controls on equipment and storage tanks.

“There are very few if any [companies] meeting these standards” as a whole, says Mr. Place, who is also corporate director for energy and environmental policy for EQT Corp., a regional natural gas company that was part of the collaborative effort.

The new standards will involve a moderate increase in costs. But by becoming certified, companies could recapture valuable gases that they currently flare, reduce their risks of an environmental disaster, and demonstrate a commitment to the communities where they operate, he adds. “It increases the community's confidence that this is – and can be – done well.”

The certification may also offer a competitive advantage. Since fracking involves frequent new drilling, companies are always looking to move into new areas. Certified companies could have a much better chance than noncertified firms of winning approval to drill from new communities. For drillers in the Northeast, the big prize would be New York, which has enacted a moratorium on fracking.

While the new collaboration may weaken support for moratoriums, opposition to fracking is not limited to local environmental concerns. Many landowners worry about settling effects on their land. Small communities are concerned about the societal and cultural impact of a sudden surge in drilling activity. Many environmentalists oppose any increase in natural gas drilling because it reduces the incentives to move to renewable sources of energy.

Thus, the battle over fracking looks likely to continue. But this week’s agreement could mark a turning point in how unconventional oil and gas companies and environmentalists engage each other.