Discussion Paper - Energy Technology Innovation Policy Project, Belfer Center

The Next Frontier in United States Unconventional Shale Gas and Tight Oil Extraction: Strategic Reduction of Environmental Impact

    Authors:
  • Vanessa R. Palmer
  • Yiqiao Tang
  • A. Patrick Behrer
| March 2013

Abstract

The unconventional fossil fuel extraction industry—in the U.S., primarily shale gas and tight oil—is expected to continue expanding dramatically in coming decades as conventionally recoverable reserves wane. At the global scale, a long-term domestic supply of natural gas is expected to yield environmental benefits over alternative sources of fossil energy. At the local level, however, the environmental impacts of shale gas and tight oil development may be significant. The development of technology, management practices, and regulatory policies that mitigate the associated environmental impacts of shale gas development is quickly becoming the next frontier in U.S. unconventional fossil resource extraction.

In this report, we argue that strategic planning by both companies and regulatory agencies to minimize the environmental impacts of unconventional extraction requires a contextualized understanding of regional issues and the available technical, management, and policy interventions to mitigate them. Following an introduction to the topic of impact mitigation in hydraulic fracturing, we present a brief discussion of the history of the U.S. unconventional oil and gas extraction industry and its associated environmental challenges. Next, we characterize the environmental concerns in three key U.S. unconventional plays, differentiating between concerns common between plays and those specific to the Barnett, the Marcellus, or the Bakken. We follow this section by reviewing opportunities for environmental impact mitigation and the policy incentives that might drive their adoption in tight oil and shale gas operations.

Finally, we present cost-benefit analyses for three technologies—reduced emissions completions, model-assisted optimized hydraulic fracturing, and reduced-impact well site foundations—contextualized in the specific environments of the focus plays. These technologies offer a comparative perspective on the scale of technology benefit (global, regional, local), the range of forces driving adoption (regulation, cost-minimization, lease holder demands), and the degree of current adoption (widely adopted to very limited adoption). We find that two of the three technologies are currently cost neutral or cost-saving without additional regulatory intervention, while the third is expected to become cost-neutral before 2014.

The laggard adoption of environmental mitigation technologies in the unconventional shale gas and tight oil extraction industries, however, suggests that cost effectiveness is a necessary but insufficient condition for technology implementation. Lease-holder education and empowerment, incentives for technology implementation, and regulatory interventions will be critical in stimulating widespread adoption of these technologies. Finally, effective policy instruments will be based upon a systemic understanding of the regional impacts associated with unconventional oil and gas extraction and will adapt as drilling activity expands to new plays.

For more information on this publication: Please contact Energy Technology Innovation Policy
For Academic Citation: Mauter, Meagan S., Vanessa R. Palmer, Yiqiao Tang, and R. Patrick Behrer. “The Next Frontier in United States Unconventional Shale Gas and Tight Oil Extraction: Strategic Reduction of Environmental Impact.” Discussion Paper, 2013-04, Energy Technology Innovation Policy Project, Belfer Center, March 2013.

The Authors