Managing the Risks of Hydraulic Fracturing

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Title: Managing the Risks of Hydraulic Fracturing

Author: Kenneth P. Green

Publisher: Fraser Institute

Date: December 2014

Full Text Article

Summary:

Hydraulic fracturing (fracking) is a relatively new application of several old technologies used in oil and gas extraction that has made it possible to unlock large quantities of natural gas and liquid hydrocarbons—fuels that can be used to access new and significant quantities of unconventional gas with consequent economic benefit to Canadians.

There is no question that the technology poses risks to water quality, air quality, and ecosystem health. Few large-scale human activities are entirely free of such risks. Hydraulic fracturing also poses a risk of increasing greenhouse gas emissions, and even a risk to seismic stability. Other issues which are real but not discussed here are water consumption (which is primarily a problem in water-stressed areas) and worker-safety issues related to engaging in hydraulic fracturing, which generally falls under its own set of laws, regulatory frameworks, and policy-development processes.

The literature on hydraulic fracturing risks, while increasing in volume, is not terribly conclusive and is sometimes contradictory: the most authoritative studies by governmental academies and agencies observe that robust data is sparse, and that vastly more information needs to be gathered. The reports considered in this bulletin—limited primarily to those of large-scale review panels or national laboratories—judge the risks to be modest and manageable with existing technologies.

The province of Alberta has been aggressive in the regulation of hydraulic fracturing, and the industry itself has also adopted voluntary self-regulation practices that should ensure safe operations. There is more to be done, and policy options that could further ensure responsible performance by industry include ensuring adequate levels of insurance, developing tracking technology that would allow for strict liability for companies that cause environmental damage, and development of independent certifying organizations that can exert public pressure to encourage responsible behavior. Obtaining such third-party verification could be required by government to attain permission to operate.

It goes without saying that little new knowledge is gained without experimentation; thus, bans and moratoria would seem to cut against the recommendation of gathering knowledge. By contrast, continuing to allow hydraulic fracturing while improving on the current system of governmental and industry self-regulation would seem to be indicated.

The call for bans and moratoria are passionate, and no doubt heartfelt by those who fear the technology and/or oppose the product of that technology (hydrocarbons), but policymakers should ignore the siren song of the simplistic solution. Bans and moratoria may make it seem like one is taking action against risk, but they simply defer those risks to a later date, when activity invariably resumes. And to the extent that learning is foregone as well as hydraulic fracturing during a moratorium, bans may increase future risks rather than mitigate them.

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