Oil and natural gas production continued to grow in the United States in 2013 even as progress on new federal laws and regulations stalled – but local opposition to shale gas and oil development increased.
Canadian shale gas also ballooned – to 2.8 billion cubic feet per day in May 2013 – but still lagged behind its southern neighbor. Canadian shale gas represented only 15 percent of the country’s 2012 production, but jumped to 20 percent in 2013, as per the Canada National Energy Board and U.S. Energy Information Administration (EIA).
Outside North America, a dozen countries conducted exploratory shale gas drilling – but only China reported commercially viable production, according to EIA. China’s shale gas represented only one percent of the country’s total gas production.
U.S. Production Grew
U.S. oil and natural gas production grew substantially in 2013, but low gas prices continued to shift drilling activities away from natural gas. Below are just a few statistics (EIA data) to document these patterns:
- In 2012 shale gas was 39 percent of U.S. dry gas production, and Marcellus production was 18 percent of U.S. production. By comparison, shale gas was 28 percent of production in 2011.
- Natural gas marketed production is projected to have increased from 69.2 Bcf/d in 2012 to 70.4 Bcf/d in 2013.
- The Henry Hub 2013 average price ($3.69 per thousand cubic feet, mcf, est.) was significantly above 2012 ($2.65/mcf), but nowhere close to the 2008 price of almost $8/mcf.
- The Bakken Shale produced approximately one million barrels per day in December 2013, and increased oil production from the formation contributed to September 2013 domestic oil production being almost 20 percent over September 2012.
- Oil well completions increased 18 percent while natural gas completions declined 30 percent, and total well completions increased 6 percent (American Petroleum Institute, third quarter 2013 compared to the third quarter 2012).
President Obama stated his intent to reduce greenhouse gas emissions, including reducing methane emissions from oil and gas operations, through executive branch actions because of congressional inaction, and many expected a rush of new regulations.
The early focus of this activity has been on coal-fired power plants, and almost no federal hydraulic fracturing regulations were finalized in 2013. The inaction may reflect longer times for the White House review process, plus the difficulty in dealing with the large number of comments received when draft rules and regulations were released.
The most recent White House regulatory agenda includes:
- The Bureau of Land Management plans to release its new hydraulic fracturing rules in May 2014.
- EPA’s draft guidance for hydraulic fracturing using diesel is not yet scheduled for release.
- The U.S. Coast Guard has sent a draft regulatory proposal on barge transport of flow-back fluids from hydraulic fracturing to the Office of Management and Budget (OMB).
Preliminary ideas evidently include requiring barge operators to have certification of no hazardous materials in wastewater shipments – a potentially expensive and time-consuming requirement given that the fluid comes from multiple well sites.
State, Local Bans and Regulations
Local bans on hydraulic fracturing appeared around the country in 2013; the tally is about 400 state and local bans.
State bans or moratoria have been enacted in Maryland, New Jersey, New York and Vermont.
Most of the numerous local bans have not yet taken effect, and many are currently being fought in the courts. A few examples:
- In Pennsylvania, the state Supreme Court ruled in December that the Marcellus Shale drilling law, Act 13, which allowed companies to drill anywhere in the state without regard to local zoning laws, is unconstitutional.
- In Colorado, four municipalities have recently banned or suspended hydraulic fracturing. Governor (and past AAPG member) John Hickenlooper has expressed the position that the municipalities lack the authority to determine the use of the state’s natural resources.
Six states have strengthened their regulation of hydraulic fracturing: California, Colorado, Ohio, Pennsylvania, Utah and Wyoming; simultaneously, the governors of energy-producing states have reiterated their opposition to federal regulation of hydraulic fracturing. In late December the governors of 12 energy-producing states sent an open letter to Washington regulators and policy makers asking that regulation be left to the states.
Many Senate and House bills have been introduced on both sides of the safety debate, to either strengthen or weaken federal regulation of hydraulic fracturing – but no legislation that would affect hydraulic fracturing has passed either the House or the Senate, let alone both.
Both last year and this year the proposed bills focused on requiring disclosure of chemicals used in hydraulic fracturing fluid, or giving states the authority to regulate hydraulic fracturing on federal lands.