April 2013, Vol. 240 No. 4

Editor's Notebook

Editor's Notebook: Setting Standards

Jeff Share, Editor

Some important news broke March 20 likely to have major implications for the oil and gas industry going forward. In Pittsburgh, which has become the business hub for the Marcellus Shale, a consortium of environmental organizations, energy companies and philanthropic foundations have formed the Center for Sustainable Shale Development (CSSD). The goal is to provide producers with certification of performance standards for shale development.

The CSSD has established 15 initial performance standards that it says are “designed to ensure safe and environmentally responsible development of the Appalachian Basin’s abundant shale gas resources.” The standards will form the basis of the CSSD’s independent, third-party certification process.

This is an unprecedented movement on several fronts: it marks the first certification of the fracking process and hopefully will keep the federal EPA from trying to apply unnecessary national standards. CSSD also creates a process that should be followed as shale plays continue to emerge throughout the nation.

Said Nicholas Deluliis, president of CONSOL Energy, ”CSSD is focusing on the establishment of standards that will initially address the protection of air and water quality and climate; it will be expanded to include other performance standards such as safety. Fundamentally, the aim is for these standards to represent excellence in performance.”

Companies can begin seeking certification in these areas later this year and CSSD also plans to develop programs to share best practices.

The founding participants are an interesting mix: Chevron; Clean Air Task Force; CONSOL Energy; Environmental Defense Fund; EQT; Group Against Smog and Pollution (GASP); Heinz Endowments; Citizens For Pennsylvania’s Future; Pennsylvania Environmental Council; Shell, and William Penn Foundation.

Participating energy companies and philanthropic foundations are funding CSSD which was recommended by the Shale Gas Production Subcommittee of the U.S. Secretary of Energy’s Advisory board as a means of having industry and involved stakeholders resolve outstanding issues.

There are impressive names on CSSD’s Board of Directors: Armond Cohen, executive director, Clean Air Task Force; Jared Cohon, president of Carnegie Mellon University; Deluliis of CONSOL Energy; Paul Goodfellow, vice president, U.S. Unconventionals, Shell; Paul King, president, Pennsylvania Environmental Council; Fred Krupp, president, Environmental Defense Fund; Bruce Niemeyer, president, Chevron Appalachia; Jane Long, principal associate director/Fellow, Lawrence Livermore National Laboratory (retired); Paul O’Neill, former U.S. Treasurer and former CEO of Alcoa; David Porges, president and CEO of EQT Corp.; Robert Vagt, president, The Heinz Endowments, and Christine Todd Whitman, former EPA administrator and former governor of New Jersey.

Niemeyer of Chevron explains industry’s role in this foundling group: “Raising the bar on performance and committing to public, rigorous and verifiable standards demonstrates our companies’ determination to develop this resource safely and responsibly. Throughout the development of CSSD, the collaborative effort of regional organizations, foundations and energy companies has been the key to achieving consensus on regional performance standards.”

Though Pennsylvania has taken the lead in shale development, West Virginia, Ohio and New York also are part of the vast Marcellus resource. Activity has been increasing in West Virginia and Ohio where the Utica Shale is now under development. Most of the opposition has centered in New York state but the establishment of CSSD along with several recent studies that have minimized the risks of shale development may finally persuade reluctant state lawmakers to move ahead with fracking – providing it’s not already too late.

Cohen of the Clean Air Task Force offers an enlightened view from an environmentalist perspective.

“While shale development has been controversial, everyone agrees that, when done, producers must minimize the environmental risk. These standards are the state of the art on how to accomplish that goal, so we believe all Appalachian shale producers should join CSSD, and the standards should also serve as a model for national policy and practice.”

It took two years for CSSD participants to agree on a shared vision of performance and environmental risk minimization for natural gas development in the Appalachian region. What they finally came to terms with was a set of “progressive and rigorous standards based on today’s understanding of the risks association with natural gas development and the technical capacity to minimize those risks.” And, as in any successful negotiation, no one got everything wanted.

What happened does not surprise me. Hundreds of billions of dollars are literally at stake. During my state-sponsored tour last fall to western Pennsylvania, it was very obvious that everyone involved in the shale development wants to do whatever it takes to make this work, and for good reason: they expect it to last until through 2070 or so.

As someone once said in Houston, failure is not an option.

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