About Air and Water

Wednesday, July 14, 2010

Energy needs to provide industry leadership in Barnett Shale

By MITCHELL SCHNURMAN - Fort Worth Star Telegram - July 14, 2010

Devon Energy Corp. works the Barnett Shale the right way. It's the biggest natural gas producer in the region and at the same time has become an industry leader on the environment.

With several initiatives, Devon, based in Oklahoma City, has cut greenhouse gases, limited emissions and recycled more than 400 million gallons of water used in "fracking" wells. Over the past decade, it has won numerous awards for its efforts, which boosted the bottom line as well as the environment.

On older wells, Devon is replacing one part -- a valve about the size of a pinkie finger -- that costs $300 and lets the company capture more gas and rack up carbon credits. One valve cuts methane emissions by 90 percent, which is the equivalent of taking 16 cars off the road.

No one doubts that Devon is a big believer in such initiatives. But last month, Devon wrote the state comptroller to oppose a bill that would require the valve replacements.

Devon also opposed a proposal for "green" well completions, even though it uses the technique on the vast majority of its Barnett Shale wells -- and the process generated $38 million in extra revenue in 2007.

Devon also shot down a call for vapor recovery units for storage tanks and the prospect of replacing combustion engines with electric motors.

The big hang-up? Devon wants the changes to be voluntary , not mandatory.

"There are spots where the technology works and spots where it doesn't," says Darren Smith, a manager of Devon's environmental, health and safety department. "Mandate these activities, and there can be a real business disruption."

In its letter, Devon said the mandates on emissions would ultimately hurt capital investment. It warned of fewer wells and jobs, lower taxes for cities, smaller royalties for residents and the risk that gas companies would shift operations.

Reciting that litany of unintended consequences is a business reflex whenever government proposes more regulation. But it's dismaying that Devon is falling back on that playbook, because right now, the industry needs leaders that will set the bar high -- not just for their companies but for every player.

After the BP spill in the Gulf of Mexico, everybody knows that you can't rely on voluntary compliance for anything. Before that, we had the meltdown on Wall Street, the mortgage lending debacle, the never-ending buildup of housing inventory. All drove home a message that no less an economic authority than Alan Greenspan later articulated: Companies will sacrifice a lot, even their future, for a quick buck.

Closer to home, in the Barnett Shale, there have been reasons to lose faith, too -- or at least to insist that any trust be verified. Several communities, led by the small town of Dish, have said residents are suffering ill effects from the gas business.

Yet state regulators consistently say all is well. This year, the Texas Commission on Environmental Quality lost much of its credibility when it told the Fort Worth City Council that the air was safe -- and failed to disclose that it later learned that three air samples scored high for benzene, a cancer-causing agent.

Follow-up tests showed that contaminant levels fell, but the commission never shared the complete information with city or state leaders. The test results came to light because of an internal complaint and fraud investigation, which was revealed by Forrest Wilder at the Texas Observer.

The disclosure enraged state Sen. Wendy Davis, D-Fort Worth, who had met with the commission's top officials repeatedly and never heard a hint about a discrepancy. Now she may introduce a bill to make it a crime for public officials to withhold information that affects public health.

Fort Worth and Dish are pursuing their own air quality tests because residents don't have confidence in the state's results. Meanwhile, the Environmental Protection Agency is also wading in. Wilder reported that environmentalists had pleaded with the EPA to intervene in Texas issues because the state agency was far too cozy with industry.

The clash between the state and the feds was on display last week when the EPA held a huge public meeting in Fort Worth to hear residents' stories about gas drilling. An EPA study is focusing on water issues in fracking, but the EPA's Dallas office is also looking into air quality.

The day before, Gov. Rick Perry pre-empted the EPA event by launching a Texas initiative on energy. He's pulling together university programs and experts to study the Gulf, gas drilling and more. Perry wants industry to underwrite the program, unbothered by the conflict that creates.

How low is the trust factor in the Barnett Shale? It says a lot when separate government entities -- the environmental commission, the EPA and individual cities -- are spending taxpayer money on the same thing.

In this setting, gas companies can't hew to the "voluntary, not mandatory" line, not if they hope to win public support. Devon may have the money and wherewithal to adopt eco-friendly policies, but others don't.

The solution is not to let companies off the hook. Force them to figure out ways to meet higher standards.

"What Devon does is not the norm in the industry," says Ramon Alvarez, senior scientist at the Environmental Defense Fund in Austin. "That's why regulations are worth having -- to bring the whole industry along."

By design, Devon avoided drilling in Pennsylvania, New York and Colorado, where opposition emerged with a vengeance. That was a savvy business move, but the controversy has come home now.

So why not champion the solutions?

Mitchell Schnurman's column appears Sundays and Wednesdays. 817-390-7821

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