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Energy industry urged to take more initiative on environmental fears

John Deutch, a former director of the Central Intelligence Agency who is now chairman of an advisory board to the Energy Department, urged the oil and gas industry to “get more proactive” on environmental issues.

“The industry has to be much more aggressive” in meeting community and government concerns about the effects on air and water from hydraulic fracturing, Deutch said. Otherwise, the future of shale oil and gas production “is in doubt,” he said, as cities and states consider restrictions on fracking.

Deutch is professor emeritus of chemistry at the Massachusetts Institute of Technology and has served in a number of positions in the Energy and Defense departments. He made his comments Wednesday during a panel discussion on shale gas and the environment at the IHS CERAWeek energy conference in Houston.

Several sessions addressed energy production’s effects on water and air and other environmental concerns.

Fred Krupp, president of the Environmental Defense Fund, said methane emissions account for a sizable share of global warming and need to be limited. The good news, he said, is that about 40 percent of those can be eliminated at a cost of about 1 cent per 1,000 cubic feet of gas.

“As far as buying a license to operate, it’s a damn good deal,” Krupp said.

Christopher Smith, a Fort Worth native who is now assistant secretary for oil and gas at the Energy Department, said both industry and government need “to demonstrate we’re taking their concerns seriously.” He cited greenhouse gas emissions, water use and quality, and human-induced seismic activity as areas of high interest.

Smith said the Energy Department’s fiscal 2015 budget includes $25 million to study the potential for sequestering carbon dioxide produced by natural-gas-fired power plants and $35 million in natural gas research. The agency is also studying water recycling, the use of lower-quality water in hydraulic fracturing, and improvements in the casing and cementing of oil and gas wells, the most common cause of groundwater contamination.

In Colorado, environmental groups are working to put a referendum on the fall ballot to ban fracking, a move Deutch said “will be an absolute catastrophe for this great technology.”

Colorado Gov. John Hickenlooper, who also spoke Wednesday, said he can’t foresee such a measure passing statewide. But localities might very well act, he said.

Last month, the state became the first to expressly regulate methane emissions from oil and gas production. Hickenlooper said that was the result of more than two years of collaboration among the state, environmental interests and large energy producers.

Krupp said that on large well sites, Colorado’s new rules call for monthly inspections. The state has put the tab for industry compliance to the stricter air rules at about $40 million a year.

Hickenlooper said that while Colorado acted on its own, groups of states could devise rules tailored for their areas. “A rigorous set of regulations from the Western states” could make more sense than imposing a single federal standard, he said.

Others said a federal standard could simplify regulations for companies operating across state lines.

Bill Lawson, vice president of corporate development for Williams Cos., a pipeline operator, said its Gulf of Mexico operations deal with a single federal regulator — “a strict one, but just one.” In contrast, he said, a pipeline project in Pennsylvania involved 33 authorities, escalating costs.

“It is tremendously complicated,” the Energy Department’s Smith said. “We have 32 different producing states and the patchwork of different standards can appear confusing.”

Deutch said one of his principal concerns “has to do with water quality as it proceeds through the water cycle,” from its initial use for fracking to its handling as it flows back to the surface with oil and gas, including its underground disposal.

But again, “we don’t have a comprehensive set of regulations” governing water use in energy production, he said.