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Risk Governance Guidelines for Unconventional Gas Development
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Report
Risk Governance Guidelines for Unconventional Gas Development
international risk governance council
international risk governance council Risk Governance Guidelines for Unconventional Gas Development
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All rights reserved, International Risk Governance Council, Lausanne, 2013. Reproduction of original IRGC material is authorised, provided that IRGC is acknowledged as the source.
ISBN 978-2-9700-772-8-2
Abbreviations and acronyms
AC Atlantic Council
ACC American Coal Council
API American Petroleum Institute
CBM coal bed methane
CGES Centre for Global Energy Studies
CNG compressed natural gas
CO2 carbon dioxide
DOE (US) Department of Energy
EAI (US) Energy Information Administration
EC European Commission
EPA (US) Environmental Protection Agency
ERA environmental risk assessment
ERCB Energy Resources Conservation Board
GHG greenhouse gases
GWP global warming potential
HAP hazardous air pollutant
IEA International Energy Agency
JRC (EC) Joint Research Centre
LCA life cycle assessment
LNG liquefied natural gas
NIOSH (US) National Institute for Occupation Safety and Health
NGOs non-governmental organizations
NOx nitrogen oxides
NORM naturally occurring radioactive material
NYSDEC New York State Department of Environmental Conservation
OECD Organisation for Economic Co-operation and Development
RAE (UK) Royal Academy of Engineering
SCER (Australia) Standing Council on Energy Resources
SOx sulfur oxides
SRI Siena Research Institute
tcm trillion cubic meters
TDS total dissolved solids
UG unconventional gas
UGD unconventional gas development
VOCs volatile organic compounds
Cover: photograph cta88/iStock.
Risk Governance Guidelines for Unconventional Gas Development international risk governance council
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Contents
Preface 5
Executive summary 6
Section 1: Global interest in unconventional gas development 8 Recoverable UG reserves: how much and where? 8The drivers of UGD 10 Recommendations 12
Section 2: Identifying and managing risks 13 Introduction 13Phases of UGD 13 Risk identification and risk governance recommendations 15 Land 15 Water 17 Air 24
Section 3: The need for political legitimacy 28 North America 28Europe 33 Asia 41 Recommendations 43
Section 4: The evolution of regulatory systems for UGD 44 Introduction 44Defining key policy instruments 44 How and why regulatory systems vary 45 Distinctive aspects of UGD and its regulation 48 Key components of a regulatory system 49 Stakeholder coordination, education and participation in the regulatory system 55 Recommendations 58
Section 5: Roundtable on responsible UGD 59 Organization 59 Functions 61
Conclusions 65
References and bibliography 66
Appendix: Tabulation of enhanced natural gas production resources 76
Acknowledgements 91
About IRGC 92
international risk governance council Risk Governance Guidelines for Unconventional Gas Development
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Tables, figures and boxes
FiguresFigure 1: Assessed shale gas and shale oil basins in the world 9
Figure 2: Recoverable natural gas reserves in trillion cubic meters (tcm) in 2011 9
Figure 3: Projected employment patterns, percent of highest employment, for each of the stages of development of a hypothetical shale gas development 10
Figure 4: Basic dynamics of shale gas extraction in a horizontal wellbore 15
Figure 5: Change from all developments (due to UGD and other activities) in percent interior forest by watershed in Bradford and Washington counties, Pennsylvania, from 2001 to 2010 16
Figure 6: Estimated fracture propagation determined by micro-seismic monitoring of hydraulic fracturing operations in the wells drilled in the Barnett and Marcellus shale plays 20
Figure 7: Greenhouse gas emissions: unconventional versus conventional 26
Figure 8: The dialogue process on UGD in Germany 38
TableTable 1: Total natural gas production and consumption in OECD countries for selected years 11
BoxesBox 1: Job creation and occupational hazards 10
Box 2: Induced seismicity 21
Box 3: Greenhouse gas emissions 26
Box 4: Dialogue process on UGD in Germany 37
Box 5: European public opinion about unconventional gas development 41
Box 6: Pennsylvania scrambles to address wastewater disposal issues 47
Box 7: Types of monitoring 50
Box 8: Shale gas regulations in the US 54
Box 9: The trend toward public disclosure of hydraulic fracturing fluids 55
Box 10: Recognizing and complying with existing EU environmental law will be crucial for UGD in Europe 56
Box 11: Examples of constructive roundtable discussions 61
Box 12: Industry associations involved in data and experience collection and sharing 62
Box 13: Knowledge transfer on technical, regulatory and policy issues between nations 62
Risk Governance Guidelines for Unconventional Gas Development international risk governance council
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Preface
Based on concerns that unconventional gas development is both under-regulated in some jurisdictions and also over-
regulated in other parts of the world, the IRGC offers a set of risk governance recommendations relating to the development
of this resource. The goal is that by applying these recommended actions, risks to the environment, climate, economy
or society will be significantly reduced while the benefits of utilizing this newly available resource will be strengthened.
This report was generated based on an expert workshop, held in November 2012, an extensive literature review and
numerous conversations with experts in academia, scientific institutions, industry, regulatory authorities and policymakers.
The aim of this report is to help experts, in various countries and context conditions, to design policies, regulatory
frameworks and industrial strategies to maximize the benefits that unconventional gas development could promise while
reducing the associated risks. It will be followed by a policy brief that focuses on providing policy recommendations.
international risk governance council Risk Governance Guidelines for Unconventional Gas Development
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Numerous countries throughout the world are exploring the
potential promise of unconventional gas development (UGD)
as a component of national energy policy. IRGC presumes that
policymakers seek to maximize the overall well-being of society,
taking into account the risks and benefits of UGD compared with
the risks and benefits of alternative energy sources. The global
interest in UGD has been stimulated by a rapid increase in shale
gas development in North America over the past 15 years.
This policy brief defines UGD as the use of advanced methods of
hydraulic fracturing, coupled with directional drilling (i.e. horizontal
as well as vertical drilling) to access natural gas resources that were
previously considered technically inaccessible or uneconomic to
produce. While this brief focuses on UGD from shales, many of
the briefs risk governance recommendations are also relevant to
gas development from tight gas sands and coal seams.
UGD could potentially provide a variety of benefits. Specifically:
Provide affordable energy to businesses and consumers in the
industrial, residential and transportation sectors;
Create direct and indirect employment and economic prosperity;
Contribute to a countrys energy security by lowering
dependence on imported energy;
Provide a basis for a new export industry, since many countries
seek to import natural gas;
Generate fewer greenhouse gas (GHG) emissions than coal
and oil;
Diminish damage to local environmental quality by replacing
some uses of coal and oil with a cleaner alternative;
Provide a backup energy source to solar and wind renewables;
and
Enhance the competitiveness of a countrys manufacturing
sector, especially subsectors (e.g. chemicals, steel, plastic
and forest products) that use natural gas as a key input to
production.
UGD also potentially poses a variety of risks. Possible threats
to human health, safety and the environment are prominent
concerns, especially if effective risk management practices are
not implemented. Potential threats include:
Degradation of local air quality and water resources;
Consumption of potentially scarce water supplies;
Habitat fragmentation and ecosystem damage;
Community stress and economic instability;
Induced seismic events;
Exacerbation of global climate change by triggering more
emissions of methane, which is a potent, climate-changing
gas; and
Slowing the rate of investment in more sustainable energy
systems.
While there are a series of both known and inferred potential
benefits as well as threats associated with the development of
this resource, there also may exist other impacts, both positive or
negative, that might occur in either the short and long term, which
are not yet fully understood.
In this report, IRGC examines the risks and benefits of UGD
and offers some risk governance recommendations to guide
the deliberations of policymakers, regulators, inve