J. Daniel Arthur, President, ALL Consulting
A recent Wall Street Journal editorial commented that an accompanying article in that newspaper “makes the case that huge natural-gas discoveries in shale rock are on the verge of, well, changing everything.” The May 10 article postulated that shale gas from plays the world over will have major geopolitical impacts from improving US-China relations to moderating Iran’s nuclear program.
The US is on the forefront of shale gas production, with several plays in various stages of development, and the world is watching. The Haynesville Shale is potentially a world-class gas resource, with an estimated 250 Tcf of recoverable gas in an area one-tenth that of the Marcellus play. It is still in an early development phase, with companies jockeying for land position and learning how to optimize production from the Haynesville’s very deep horizontal wells.
And along with the land rush and new drilling come the environmental and community impacts associated with deep horizontal drilling and high-volume, multistage hydraulic fracturing. However, the experience of dealing with these impacts in the Haynesville seems to be different from that in other shale plays, particularly the Marcellus.
For example, when the use of groundwater from Louisiana’s Carrizo-Wilcox Aquifer for high-volume fracturing was found to be potentially damaging to that Aquifer, the industry worked with state and local governments and water-related organizations to identify alternative water sources, such as the Red River, Toledo Bend and the non-potable Red River Alluvial Aquifer. The industry also found sources of wastewater suitable for fracturing, such as produced water from Cotton Valley wells, water pumped out of lignite mines, and gray water from a paper mill south of Shreveport. Now the industry gets 75% of its fracture water from surface sources and is progressing toward a goal of 90%.
This was done without shutting down drilling. It was done with partnerships among industry, state agencies, local governments, universities, water authorities and the public. Contrast this with the impact of water issues in the Marcellus Shale region, where worries about water supply have caused significant delays in drilling. Of course, Louisiana is a water-rich state. The northern part of the state averages 48 in. of rainfall a year. But the Marcellus region also has plenty of water (about 40 in. of annual rainfall), so that is not the big difference.
Water sourcing is not the only issue that has been handled in a calmer manner in the Haynesville region. Shale gas operations generate noise and traffic and occupy the land with equipment and facilities. There are concerns about the impacts of high-volume hydraulic fracturing on groundwater and surface water. In New York, these and other concerns have resulted in a hiatus in well permitting while the state completes a supplemental environmental analysis. In Pennsylvania, there have been calls for a drilling moratorium in state forests. What is happening in the Haynesville region?
Louisiana’s attitude toward hydraulic fracturing was summed up by Jim Welsh, commissioner of the Louisiana Office of Conservation, in a recent interview. Commissioner Welsh said, “Regarding contamination by fracing, in my opinion, we have never witnessed any problems causing any aquifer contamination. We have done exhaustive research of our records and haven’t found anything.”
As a result, there has been no move by the agency to propose additional frac regulations. The state did pass new regulations last year in response to Haynesville development. They address operations in urban areas and regulate such issues as setbacks from buildings and noise moderation. Otherwise, the state agency considers the existing statewide rules to be adequate. The only new rule currently pending is one that makes it easier to reuse produced water, including fracture flowback water, for fracing, thus reducing the need for additional surface water.
Why the difference in the level of regulatory activity and public concern? There are probably a host of reasons, including differences in population density. But it may be that Louisiana is just more familiar with oil and gas operations. Although the Appalachian Basin is the birthplace of the US oil and gas industry, many areas of current development have not seen drilling before, or not for many decades. Government and the public in the Haynesville region may better understand the risks involved in shale gas drilling and production and how those risks can be mitigated. It is also likely that the industry has learned lessons in other plays, such as the Barnett, that it is transferring to this newer play, and that these lessons are helping to make operations, and relations with the public and governments, run more smoothly.
But there is no reason for complacency. As we have seen time and again, a single adverse incident can throw up barriers to further drilling and production. In addition, the regulatory regime that comes out of New York’s current efforts will be scrutinized across the country. The industry must continue to apply the lessons it has learned to minimize environmental impacts on water, air and land. And it is critical to communicate openly and frequently with local communities to stay in touch with and immediately address their issues. It would be a mistake to underestimate the concerns, whether real or perceived, of the governments and citizens of the Haynesville Shale region. The partnerships formed to move Haynesville development forward thus far should serve as a model for the future.
Finally, there may be a message in the variety of reactions to shale gas development across the country. That message is that state governments know their resources and environment the best, including the geology, hydrology, climate, demographics, economics and, of course, their state laws and regulations. They have decades of experience in regulating the industry in their states. It seems clear that they are in the best position to be the primary regulators of US shale gas operations. 
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THE AUTHORS
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J. Daniel Arthur is a founding member of ALL Consulting and has served as the company’s President since its inception in 1999. He is a petroleum engineer specializing in fossil energy, planning, engineering analysis and environmental issues, with over 25 years’ experience. Mr. Arthur also has experience evaluating large-scale resource plays, conducting implication analysis of new laws and regulations, and evaluating options for developing resources.
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