By Dan Ervin
6:00 AM EDT, July 22, 2013
The production of natural gas from the Marcellus shale formations has many positive aspects for the Mid-Atlantic region. It has changed, and will continue to change, how electricity is generated through economic market forces. Also, natural gas is an important input to many industrial processes and products and is one of the few bright spots in our regional economy. Furthermore, America is the fastest-growing energy producer, and this change is rippling throughout global markets.
Opponents to hydraulic fracturing, or "fracking," continue to question the safety of this extraction technology. Much of their concern is centered on aquifers used for drinking water and irrigation and how to manage the substantial amounts of wastewater produced during this process.
Many natural gas wells have been drilled in the Mid-Atlantic — more than 6,000 in Pennsylvania alone. A study by Duke University researchers provides evidence of increased levels of methane in groundwater in northeastern Pennsylvania, and the levels increased with proximity to gas wells. Although there is disagreement among experts concerning the results of this study, it is in the best interest of the industry and the country to be sure fracking is as safe as possible. Douglas Sandalow, a shale-gas expert and former acting undersecretary at the U.S. Department of Energy, said a global backlash against shale production could have severe results for the industry if fracking contaminates groundwater aquifers.
I believe oil and gas companies could learn some important lessons from the U.S. nuclear industry, which has made the safe operation of nuclear plants its most important task. After the Three Mile Island accident in 1979, the nuclear industry adopted the axiom, "An accident anywhere is an accident everywhere," reflecting its concern that one major local accident could derail nuclear power worldwide. It instituted a strong safety culture, rooted in benchmarking with stringent safety and performance standards, continuous learning, information sharing among nuclear companies, and constant training of power-plant operators. To put all of this into practice, the industry created the Institute of Nuclear Power Operations (INPO).
INPO's inspection teams conduct regular evaluations of nuclear plants, and it sets industry-wide performance goals. Last year, in several key areas, U.S. nuclear plants either matched or improved upon levels of performance from previous years. For example, there were 62 unplanned automatic or manual reactor shutdowns, matching a record low set in 2011. And the industrial accident rate of 0.05 accidents per 200,000 worker-hours is well below the 2015 goal of 0.1. This rate demonstrates that it is safer to work at a nuclear plant than in the manufacturing or even the leisure and hospitality sectors. In fact, there has not been a serious accident at a U.S. nuclear plant since Three Mile Island.
During this period, the average capacity factor at nuclear plants — a measure of availability — rose from 56.3 percent in 1980 to nearly 90 percent last year. This indicates that these plants now produce their designed full output of electricity about 90 percent of the time. It is this kind of safety and performance culture that the oil and gas industry needs to emulate.
Eleven fracking companies and nonprofit groups have established the Center for Sustainable Shale Development (CSSD). The CSSD has developed a set of 15 standards for fracking and certifying companies that voluntarily comply with these standards. This represents a good start, and perhaps it will lead to on-site inspections of fracking operations like those that INPO conducts at nuclear plants.
There is an essential lesson to be learned: Energy exploration and production and environmental protection are not mutually exclusive. Reasonable environmental regulations do not counteract the great advantages of hydraulic fracturing, such as creating a domestic fuel source for decades to come that is economical, abundant and reliable.
Dan Ervin is a professor of finance at Salisbury University's Perdue School of Business. His email is firstname.lastname@example.org. This article does not represent the official position or views of Salisbury University.
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