American Natural Gas

Hydraulic Fracturing Explained

The production of shale gas via hydraulic fracturing is conceptually rather simple. Essentially, a well is drilled vertically into deep shale formations. Typically, these wells are a mile or more deep. This means that there are thousands of feet of rock between the wells and sub-surface aquifers and drinking water wells, which are typically less than a few hundred feet deep. The wells are encased in layers of concrete and steel to ensure their integrity. A technique called horizontal drilling is also typically used ” basically, the well shaft is gradually turned ninety degrees and drilling continues along a horizontal plane. This allows drillers to maximize subsurface exposure to the shale formation while minimizing disruption on the surface.

After the well is drilled, hydraulic fracturing ” which is only a small part of the overall production operation ” is used to unlock the natural gas trapped in the underground shale formation. A mixture of mostly water, small sand or ceramic particles, and a small percentage of chemicals are injected into the well under pressure. The hydraulic pressure forces the shale to crack, and the small sand or ceramic particles, called “proppants,” prop open tiny fractures in the shale formation. This allows the natural gas that had been trapped in the shale formations to exit through the well, where it is captured for processing. Increasingly, producers are reusing the water from previous fracturing jobs, which can lead to environmental efficiencies and should mitigate concerns over water usage and storage.

Common Criticism of Hydraulic Fracturing, and the Other Side of the Story

Critics of shale gas extraction, and more particularly hydraulic fracturing, typically express concerns that hydraulic fracturing could lead to environmental contamination. Some suggest that the fluids associated with this process will somehow migrate thousands of feet up through layers of rock to aquifers. However, the authors of this article are aware of no credible scientific theory that such subsurface migration is technically possible, much less that it has actually happened.

Other critics argue that wastewater associated with the process could be introduced into the environment after the hydraulic fracturing job. Some complain that the chemicals used in the hydraulic fracturing process are not adequately disclosed, but many of the states where hydraulic fracturing is prominent either currently require such disclosure or are in the process of requiring such disclosure. In addition, industry has undertaken voluntary disclosure through an online registry, fracfocus.org, where users can learn the compounds used in particular hydraulic fracturing operations. Another common theme among critics is that hydraulic fracturing is too “new” to be safe; this is inaccurate”although the process has, like many technologies, been refined over the years, the first commercial hydraulic fracturing application was in 1949.

Other critics argue that there is not enough regulation in place, particularly at the federal level, but the reality is that shale gas production is subject to extensive ” and growing ” regulation at the state and federal level. Producers must comply with detailed permitting, well construction, and disposal guidelines, among other requirements. Additional regulations are or may soon be in place. For instance, the Delaware River Basin Commission has proposed a detailed regulatory scheme governing natural gas production in its area. The governors of Pennsylvania, Maryland, and other states have convened expert bodies to study shale gas extraction and propose state-level policies. All of which is to say that shale gas production is already governed by an extensive and growing regulatory scheme. In addition, producers have strong economic and other incentives to produce this resource cleanly.

The State of the Science

To date, no study has established that adverse health effects are associated with hydraulic fracturing. The few papers that claim to suggest such an effect have been rejected by the broader scientific community. To the extent there are anecdotal reports of harm, these are insufficient to establish with any certainty that hydraulic fracturing, particularly when properly done, poses a risk to human health.

Currently, the federal Environmental Protection Agency (EPA) and the Department of Energy are conducting extensive reviews of shale gas production, with a particular focus on hydraulic fracturing. These reviews likely will add to the existing database of information. In addition, researchers associated with universities and other institutions are conducting smaller-scale studies that may shed light on particular issues such as the treatment of wastewater.

The Litigation Landscape

Shale gas production, and in particular hydraulic fracturing, has generated growing litigation around the country. The litigation ranges from single-plaintiff cases and putative class actions alleging personal injury and property damage to public interest suits that seek to radically overhaul the regulatory environment currently governing production or shut down production in particular areas. The trends can be categorized as follows.

Personal Plaintiffs Litigation

Much of the shale gas litigation involves people who claim that hydraulic fracturing has injured them and/or their property. These cases range from individual actions to mass actions and putative class actions. Typically, such plaintiffs bring claims in negligence, strict liability, nuisance, trespass, and so on. Plaintiffs also commonly seek medical monitoring costs, but the law varies from state to state as to the availability of such damages. The basic theory of these cases is that substances associated with hydraulic fracturing, such as fracturing fluid chemicals, entered the environment and damaged the plaintiffs and/or their land. An interesting twist is a set of related cases in Arkansas ” all filed by the same firm ” alleging that the underground injection storage of hydraulic fracturing waste has caused earthquakes.

These personal plaintiffs litigation cases are largely at the earliest stages of motion to dismiss practice or discovery, but as these cases advance, they may face serious hurdles. Defendants likely will focus at least in part on causation, and the sheer difficulty that plaintiffs will have of showing via serious and reliable evidence, that shale gas production actually caused the injuries at issue. For instance, as noted above, there does not appear to be a credible theory to explain how fracturing fluids a mile or more below ground could migrate up through thousands of feet of rock to reach aquifers. One is left to wonder whether many of the plaintiffs will be able to prove their cases, and defendants may wish to seek Lone Pine-type orders or other case management devices to test early in the litigation whether the plaintiffs can meet their causation burden. To date, the only tribunal of which we are aware to consider the causation question ” the Railroad Commission of Texas, which regulates oil and gas production in that state ” found that the producer”s operations had not contaminated nearby water wells as alleged. (Final Order, No. 7B-0268629 (Tex. R.R. Comm”n March 22, 2011)). Counsel would thus do well to familiarize themselves with the science early on.

Another development is the rise of consortiums of plaintiffs” firms, which are both signing up plaintiffs and seeking to influence public perceptions of shale gas extraction outside the context of actual cases. Some such groups have begun initiating scientific investigations into shale gas extraction.

We expect this type of litigation to increase in volume. Already we have seen litigation in key producing states like Texas and Pennsylvania, but as shale gas production expands in other states litigation is likely to follow.

Institutional/Public Interest Litigation

A number of private and governmental institutions have initiated litigation in the context of shale gas and natural gas more broadly. These suits seek to force changes to the regulatory environment, usually by making it more difficult to produce natural gas, or even attempt to shut down production operations in particular areas. For instance, two suits recently filed in Pennsylvania federal courts respectively aim to require operators to obtain more extensive air emissions permitting and could increase the potential litigation exposure of wastewater treating facilities that have handled shale gas wastewater. (Citizens for Pennsylvania”s Future v. Ultra Resources, Inc., No. 4:11-cv-01360-JEJ (July 21, 2011, M.D. Pa.); Clean Water Action v. Municipal Authority of McKeesport, No. 2:11-cv-00940-NBF (July 19, 2011, W.D. Pa.)).

Similarly, environmental organizations are suing the federal government in an Arkansas federal court in a challenge to the government”s decision to permit gas drilling on certain public lands. (Ouachita Watch League v. Henry, No. 4:11-cv-00425-JLH (E.D. Ark.)). Recently a federal district judge in Colorado rejected efforts by the Natural Resources Defense Council and others to overturn a decision by the U.S. Forest Service and the Bureau of Land Management to allow natural gas production operations in a national forest. (Natural Resources Defense Council v. Vilsack, No. 1:08-cv-02371-CMA (D. Colo.)). In early August 2011, more than 100 environmental and allied organizations petitioned the EPA to undertake wholesale regulation against the entire oil and gas production industry under the Toxic Substances Control Act, which seems to be a novel use of that law.

This type of institutional or public interest litigation is also expected to increase, particularly as shale gas production spreads to new areas. Courts tend to be rather deferential to the agency decisions that are often at issue in these cases, but many of these institutional plaintiffs are sophisticated ” even if they do not prevail in the courts, actual or threatened litigation may influence agency decision-making and the political climate more generally.

Predictions Going Forward

We have been closely studying these issues for some time, and offer the following predictions. We expect that, for a variety of reasons, American shale gas production will continue to increase. Important factors driving this growth will be high energy prices, increasing concern for reducing dependence on foreign energy, the desire for economic opportunity in often struggling areas, and technological innovation that will allow for even cleaner and more efficient production. Likewise, we expect that the regulatory environment surrounding shale gas, particularly with regard to hydraulic fracturing, will grow in scale and complexity as the states and the federal government weigh in. Relatedly, we expect that litigation in this sector will increase, at least until plaintiffs begin to face strong challenges to their ability to show that they and/or their property have been harmed. In that regard, counsel and commentators ” on both sides ” would do well to familiarize themselves with the science in this area.

”

Joshua Becker, a member of this newsletter”s Board of Editors, is a partner, and Aaron Block is an associate in Alston & Bird”s Atlanta office, where they are in the firm”s Products Liability Practice Group. They concentrate their practice in the areas of mass and toxic torts and complex litigation, and have significant experience with natural gas and hydraulic fracturing issues.

”

There are trillions of cubic feet of natural gas locked deep beneath the United States. Much of this gas is so-called “shale gas,” which is essentially trapped in shale formations a mile or more below the ground. Key deposits are in the Marcellus and Utica Shales, massive formations underlying much of Pennsylvania, New York and neighboring states, and in the Barnett Shale in Texas. There are significant production and exploration operations in many other states as well.

Although techniques for unlocking shale gas have been available for decades, recent economic and technological factors have made it possible to extract this domestic energy source efficiently on a massive scale. This game-changing energy source holds the promise of American jobs and American energy security.

But to critics, this energy source may be associated with potential environmental hazards, which has predictably spawned a growing trend of litigation and regulatory scrutiny around the country. Most of these critics focus in particular on a widely used technique for unlocking this trapped resource: hydraulic fracturing, which some call “fracking.” Hydraulic fracturing has been safely used more than a million times, but misinformation about the practice is widespread. Below, we explain the hydraulic fracturing process and the litigation that it has generated. We also offer some thoughts about what the future is likely to look like for shale gas production.

Hydraulic Fracturing Explained

The production of shale gas via hydraulic fracturing is conceptually rather simple. Essentially, a well is drilled vertically into deep shale formations. Typically, these wells are a mile or more deep. This means that there are thousands of feet of rock between the wells and sub-surface aquifers and drinking water wells, which are typically less than a few hundred feet deep. The wells are encased in layers of concrete and steel to ensure their integrity. A technique called horizontal drilling is also typically used ” basically, the well shaft is gradually turned ninety degrees and drilling continues along a horizontal plane. This allows drillers to maximize subsurface exposure to the shale formation while minimizing disruption on the surface.

After the well is drilled, hydraulic fracturing ” which is only a small part of the overall production operation ” is used to unlock the natural gas trapped in the underground shale formation. A mixture of mostly water, small sand or ceramic particles, and a small percentage of chemicals are injected into the well under pressure. The hydraulic pressure forces the shale to crack, and the small sand or ceramic particles, called “proppants,” prop open tiny fractures in the shale formation. This allows the natural gas that had been trapped in the shale formations to exit through the well, where it is captured for processing. Increasingly, producers are reusing the water from previous fracturing jobs, which can lead to environmental efficiencies and should mitigate concerns over water usage and storage.

Common Criticism of Hydraulic Fracturing, and the Other Side of the Story

Critics of shale gas extraction, and more particularly hydraulic fracturing, typically express concerns that hydraulic fracturing could lead to environmental contamination. Some suggest that the fluids associated with this process will somehow migrate thousands of feet up through layers of rock to aquifers. However, the authors of this article are aware of no credible scientific theory that such subsurface migration is technically possible, much less that it has actually happened.

Other critics argue that wastewater associated with the process could be introduced into the environment after the hydraulic fracturing job. Some complain that the chemicals used in the hydraulic fracturing process are not adequately disclosed, but many of the states where hydraulic fracturing is prominent either currently require such disclosure or are in the process of requiring such disclosure. In addition, industry has undertaken voluntary disclosure through an online registry, fracfocus.org, where users can learn the compounds used in particular hydraulic fracturing operations. Another common theme among critics is that hydraulic fracturing is too “new” to be safe; this is inaccurate”although the process has, like many technologies, been refined over the years, the first commercial hydraulic fracturing application was in 1949.

Other critics argue that there is not enough regulation in place, particularly at the federal level, but the reality is that shale gas production is subject to extensive ” and growing ” regulation at the state and federal level. Producers must comply with detailed permitting, well construction, and disposal guidelines, among other requirements. Additional regulations are or may soon be in place. For instance, the Delaware River Basin Commission has proposed a detailed regulatory scheme governing natural gas production in its area. The governors of Pennsylvania, Maryland, and other states have convened expert bodies to study shale gas extraction and propose state-level policies. All of which is to say that shale gas production is already governed by an extensive and growing regulatory scheme. In addition, producers have strong economic and other incentives to produce this resource cleanly.

The State of the Science

To date, no study has established that adverse health effects are associated with hydraulic fracturing. The few papers that claim to suggest such an effect have been rejected by the broader scientific community. To the extent there are anecdotal reports of harm, these are insufficient to establish with any certainty that hydraulic fracturing, particularly when properly done, poses a risk to human health.

Currently, the federal Environmental Protection Agency (EPA) and the Department of Energy are conducting extensive reviews of shale gas production, with a particular focus on hydraulic fracturing. These reviews likely will add to the existing database of information. In addition, researchers associated with universities and other institutions are conducting smaller-scale studies that may shed light on particular issues such as the treatment of wastewater.

The Litigation Landscape

Shale gas production, and in particular hydraulic fracturing, has generated growing litigation around the country. The litigation ranges from single-plaintiff cases and putative class actions alleging personal injury and property damage to public interest suits that seek to radically overhaul the regulatory environment currently governing production or shut down production in particular areas. The trends can be categorized as follows.

Personal Plaintiffs Litigation

Much of the shale gas litigation involves people who claim that hydraulic fracturing has injured them and/or their property. These cases range from individual actions to mass actions and putative class actions. Typically, such plaintiffs bring claims in negligence, strict liability, nuisance, trespass, and so on. Plaintiffs also commonly seek medical monitoring costs, but the law varies from state to state as to the availability of such damages. The basic theory of these cases is that substances associated with hydraulic fracturing, such as fracturing fluid chemicals, entered the environment and damaged the plaintiffs and/or their land. An interesting twist is a set of related cases in Arkansas ” all filed by the same firm ” alleging that the underground injection storage of hydraulic fracturing waste has caused earthquakes.

These personal plaintiffs litigation cases are largely at the earliest stages of motion to dismiss practice or discovery, but as these cases advance, they may face serious hurdles. Defendants likely will focus at least in part on causation, and the sheer difficulty that plaintiffs will have of showing via serious and reliable evidence, that shale gas production actually caused the injuries at issue. For instance, as noted above, there does not appear to be a credible theory to explain how fracturing fluids a mile or more below ground could migrate up through thousands of feet of rock to reach aquifers. One is left to wonder whether many of the plaintiffs will be able to prove their cases, and defendants may wish to seek Lone Pine-type orders or other case management devices to test early in the litigation whether the plaintiffs can meet their causation burden. To date, the only tribunal of which we are aware to consider the causation question ” the Railroad Commission of Texas, which regulates oil and gas production in that state ” found that the producer”s operations had not contaminated nearby water wells as alleged. (Final Order, No. 7B-0268629 (Tex. R.R. Comm”n March 22, 2011)). Counsel would thus do well to familiarize themselves with the science early on.

Another development is the rise of consortiums of plaintiffs” firms, which are both signing up plaintiffs and seeking to influence public perceptions of shale gas extraction outside the context of actual cases. Some such groups have begun initiating scientific investigations into shale gas extraction.

We expect this type of litigation to increase in volume. Already we have seen litigation in key producing states like Texas and Pennsylvania, but as shale gas production expands in other states litigation is likely to follow.

Institutional/Public Interest Litigation

A number of private and governmental institutions have initiated litigation in the context of shale gas and natural gas more broadly. These suits seek to force changes to the regulatory environment, usually by making it more difficult to produce natural gas, or even attempt to shut down production operations in particular areas. For instance, two suits recently filed in Pennsylvania federal courts respectively aim to require operators to obtain more extensive air emissions permitting and could increase the potential litigation exposure of wastewater treating facilities that have handled shale gas wastewater. (Citizens for Pennsylvania”s Future v. Ultra Resources, Inc., No. 4:11-cv-01360-JEJ (July 21, 2011, M.D. Pa.); Clean Water Action v. Municipal Authority of McKeesport, No. 2:11-cv-00940-NBF (July 19, 2011, W.D. Pa.)).

Similarly, environmental organizations are suing the federal government in an Arkansas federal court in a challenge to the government”s decision to permit gas drilling on certain public lands. (Ouachita Watch League v. Henry, No. 4:11-cv-00425-JLH (E.D. Ark.)). Recently a federal district judge in Colorado rejected efforts by the Natural Resources Defense Council and others to overturn a decision by the U.S. Forest Service and the Bureau of Land Management to allow natural gas production operations in a national forest. (Natural Resources Defense Council v. Vilsack, No. 1:08-cv-02371-CMA (D. Colo.)). In early August 2011, more than 100 environmental and allied organizations petitioned the EPA to undertake wholesale regulation against the entire oil and gas production industry under the Toxic Substances Control Act, which seems to be a novel use of that law.

This type of institutional or public interest litigation is also expected to increase, particularly as shale gas production spreads to new areas. Courts tend to be rather deferential to the agency decisions that are often at issue in these cases, but many of these institutional plaintiffs are sophisticated ” even if they do not prevail in the courts, actual or threatened litigation may influence agency decision-making and the political climate more generally.

Predictions Going Forward

We have been closely studying these issues for some time, and offer the following predictions. We expect that, for a variety of reasons, American shale gas production will continue to increase. Important factors driving this growth will be high energy prices, increasing concern for reducing dependence on foreign energy, the desire for economic opportunity in often struggling areas, and technological innovation that will allow for even cleaner and more efficient production. Likewise, we expect that the regulatory environment surrounding shale gas, particularly with regard to hydraulic fracturing, will grow in scale and complexity as the states and the federal government weigh in. Relatedly, we expect that litigation in this sector will increase, at least until plaintiffs begin to face strong challenges to their ability to show that they and/or their property have been harmed. In that regard, counsel and commentators ” on both sides ” would do well to familiarize themselves with the science in this area.

”

Joshua Becker, a member of this newsletter”s Board of Editors, is a partner, and Aaron Block is an associate in Alston & Bird”s Atlanta office, where they are in the firm”s Products Liability Practice Group. They concentrate their practice in the areas of mass and toxic torts and complex litigation, and have significant experience with natural gas and hydraulic fracturing issues.

”