Editor's Note: The following story is part of a periodic series exploring regional issues of interest or importance outside San Antonio.
A new economic impact study by UTSA’s Center for Community and Business Research (CCBR) is a real attention-getter: It concludes that activity in the Eagle Ford Shale play totaled a whopping $61 billion in 2012. But the report doesn't tell the whole story. [Click here to download the CCBR document.]
Presented in Tuesday in Austin and Thursday in San Antonio, the study is the latest in a string of releases, including a 155-page report issued two weeks ago by the Texas Eagle Ford Shale Task Force, that measures the massive expansion of oil and gas drilling and its direct and indirect impact on local economies throughout South Texas.
However, these studies are not measuring the external costs of environmental damage, the use and loss of scarce groundwater, and the long-term impact of fossil fuel use and climate change.
Acknowledging such shortcomings, CCBR Director and lead researcher for the UTSA report Thomas Tunstall, pointed out that, historically, failing to account for pollution has been “a weakness of economics. That’s how we end up with Superfund Cleanup sites like the Love Canal.”
Government and industry both have developed more sophisticated methods for measuring the damaging effects of pollution and environmental and resource degradation since the mid-20th century when Hooker Chemical dumped 21,000 tons of toxic chemicals in the Love Canal.
Amid all the celebrations over Eagle Ford wealthy and job creation, its important for the region's long-term interests to apply those lessons learned to development projects like the Eagle Ford Shale.
Fossil fuel extraction is a messy process with toxic byproducts. Fortunately, the Eagle Ford Shale is in a lightly populated area, so the respiratory problems associated with oil and gas production and diesel-burning trucks and generators aren’t going to kill that many people. But all that burning of chemicals is having an impact.
“The Eagle Ford is now visible from space”, says Tunstall, as shown in the cover picture from the study, partly as a result of burning off excess methane at the source, a process known as flaring.
In order to avoid flaring, new oil wells require pipelines, and the development of the Eagle Ford Shale has come so quickly that pipeline production can't keep up or is impractical in areas of sparse well activity, leading to a high rate of flaring and even venting, which is the practice of dumping unburnt methane into the atmosphere, an even more potent source of pollution.
New EPA guidelines concerning air pollution from fracking will go into effect in 2015, but at the moment the Eagle Ford Shale produces about 50% more nitrogen oxides (precursors to ground-level ozone and smog) than the entire eight-county San Antonio metro area. Ground-level ozone causes asthma and increases death rates for respiratory ailments.
The plumes of chemicals are having a direct impact on San Antonio. When the wind blows from the south, San Antonio has experienced much higher levels of ground-level ozone than normal. As a result, San Antonio is for the first time in noncompliance with federal ozone standards, despite cutting its own production of nitrogen oxides by 20% over the last five years. Although we’re showing good environmental stewardship by reducing local emissions, San Antonio will face a raft of federal restrictions on development, as well as worsening respiratory health risks, due to the Eagle Ford Shale activity.
The Eagle Ford Shale Task Force report, acknowledging the problems related to flaring, announced a “Flaring Initiative” and promised “a higher level of scrutiny to applications for ﬂaring and venting operations.” This led to a dust-up at a public hearing, when Chairman Barry Smitherman of the Texas Railroad Commission (which is charged with regulating the fossil fuel industry) confronted fellow commissioner David Porter, who had put together the report.
Smitherman testily pointed out that he had not received an advance copy of the report, and hadn’t been consulted on the flaring issue. He ended up demanding that a team of lawyers be brought in to ensure that no new regulations had been put into place without his say-so.
While amusing at some level, this incident of petty authority also displays the reflexive Texas distrust of regulation, even from the so-called regulators themselves. How can we be confident in proper oversight when state overseers spend their time bickering and side-stepping their responsibilities?
This sort of gold rush chaos is the norm for the Eagle Ford Shale. Things move fast, and even the focus of development has changed from a massive ramp-up of natural gas production to an equally fast runup in oil production after natural gas prices cratered. Initial predictions of the path of future development, such as those by UTSA from a couple of years ago, have proven wrong.
“The only way to know what’s going on is to get out there,” says UTSA’s Tunstall, who travels south several times a month to investigate conditions. Local communities themselves are often unaware of what’s happening in their midst. The UTSA report is intended to “help policymakers and stakeholders to plan for developments.”
This lack of knowledge applies to the damage created by the Eagle Ford Shale development, too. Among the better-publicized downsides to the development has been heavy wear and tear on the road and highway system. The UTSA report identifies $2 billion in needed repairs, but that number will go higher. “Communities are still in the planning stages for road projects”, says Tunstall. There is nothing happening in Austin to indicate the Texas Legislature, which has reaped an Eagle Ford tax windfall, will allocate the funds South Texas counties and communities will need to repair and maintain their roadways.
Water issues are another developing topic. The Eagle Ford Shale wells use the hydraulic fracturing, or fracking, process. Fracking takes huge amounts of water, mixes it with various secret chemicals, and injects it into the ground.
Fracking was found to contaminate groundwater in an EPA investigation in Wyoming. According to the Task Force report, there is “not a single documented groundwater contamination case associated with the process of hydraulic fracturing in Texas,” possibly because the industry has been stonewalling EPA investigations in Texas.
Fracking operations guzzle water, and we’re in the middle of a drought. It’s unclear how much fracking is adding to the burden of the state as a whole -- as of 2010, Texas mining operations, which includes oil and gas wells, used only 1.6% of the state’s water, and as Tunstall notes, “we’d still have water issues in Texas regardless,” since the population of Texas continues to grow rapidly.
However the Eagle Ford Shale extends under some very dry regions, and in some places, fracking accounts for more than 10% of annual water use. Carrizo County landowners are having difficulty drawing water from their wells.
In some areas, drillers are able to take advantage of lax regulations and acquire water at well-below-market rates.
If fossil fuel development is truly providing $60 billion or more in value, then all of these problems could be dealt with and we’d still end up well ahead as a society. Hazardous industries need to be somewhere, and sparsely populated areas are ideal. Once we consider carbon emissions, however, the development seems misguided.
Some industry insiders praise natural gas because of its lower carbon emissions, calling it a “bridge” to a sustainable energy future, a fuel that can be burned until a clean energy infrastructure is in place. Natural gas has about half the carbon emissions of coal when burned.
Unfortunately, flaring, venting, and leakage during the production process releases greenhouse gas into the atmosphere, and if the rate of leakage is 3.2% or higher, then coal is actually “better” for the environment. Right now the EPA thinks the leakage rate is 2.4%, while one study suggests leakage of up to 8%.
The Environmental Defense Fund is working with the University of Texas in Austin on a large-scale study, with the support of major oil companies, so we should have an agreed-upon number soon, but right now we can assume that much of the carbon benefit of natural gas is vanishing in a puff of air.
Cheaper natural gas is also beginning to crowd out nuclear energy, as aging and expensive nuclear plants are shut down because it’s cheaper to build and run natural gas plants. Natural gas is an environmental catastrophe when it means that zero-carbon-emission sources like nuclear plants are shut down, or when a company builds a new natural gas plant rather than developing clean energy.
The bottom line is that natural gas isn’t clean enough to burn indefinitely.
If we want to try to keep global warming under 2 degrees Celsius, the scientific consensus is that we need to keep carbon dioxide concentrations under 450 parts per million. To attain that goal, the next Secretary of Energy, Ernest Moniz, thinks we need to start phasing out natural gas use by 2050. Another recent study argues that we’d need to start cutting natural gas use by the 2020s.
As climatologist Ken Caldeira has put it: “I see natural gas as a bridge fuel; unfortunately, it is a bridge to a world with high CO2 levels, melting ice caps, acidified oceans, etc.”
But the Eagle Ford Shale isn’t even primarily about natural gas any more. There are now more oil wells than natural gas wells operating in the Eagle Ford Shale, and that is unlikely to change. With natural gas prices remaining low, few new gas wells are being drilled. New oil wells will be profitable as long as oil stays between $50-$65 a barrel, well below current prices. Oil, of course, causes even more carbon dioxide pollution than natural gas, with similar groundwater and air pollution issues.
The Eagle Ford Shale, like the entire fossil fuel industry, thrives because of its ability to evade regulation that would account for the social costs of carbon dioxide. Right now the US government and the International Monetary Fund estimates those costs at $25/ton of CO2, while others suggest costs as high as $250/ton.
The IMF estimates that the US subsidizes fossil fuels to the tune of nearly $1 trillion a year by failing to hold the oil and gas industry accountable for the costs to the air and environment.
Once those social costs are properly accounted for, through a carbon tax, a cap-and-trade scheme, or some other legislative means, then we can look at fossil fuels in a more balanced way. Until then, headlines claiming massive benefits that ignore the long-term consequences and costs due to the expansion of the fossil fuel industry have to be viewed with a very skeptical eye.