When Frackers Disappoint

According to legal and energy experts, the fracking landscape has been permanently changed by the verdict of the “first fracking trial,” a recent court ruling that finds small independent operator Aruba Petroleum accountable for $3 million in damages for pollution related to hydraulic fracturing activities. This outcome presents an opportunity for both industry and government to reexamine current regulatory structures and safety priorities in a way that balances interests of environmental and human health with continued production and energy security. First, the circumstances of the case itself. Robert and Lisa Parr are residents of Wise County, located in the middle of Texas’ Barnett shale. The couple sued Aruba in 2011, contending that operations near their land had contaminated air and water, causing damage to their health and property. While it is not the first instance of claims being brought against oil and gas companies for damages related to hydraulic fracturing, this is the first suit that was not resolved in an out-of-court settlement. The outcome is a sobering reminder that sloppy behavior or ignorance of best practices from a few bad apples has the potential to derail and impose unnecessary consequences on the domestic energy boom. The symptoms described by the Parrs are fairly troubling. According to court documents, the problems began around November of 2008 when Lisa Parr, a stay-at-home mom, began experiencing nausea, blinding headaches, and a “mysterious rash” all over her body including open sores that would not heal.  While Mrs. Parrs symptoms were most troubling, and she happened to be the person who spent the most time in the house, Mr. Parrs and the couple’s daughter also suffered bizarre symptoms such as horrible nosebleeds and gaps in memory. The family’s livestock and pets also suffered mysterious birth defects and deaths. Eight different doctors were unable to diagnose the problem, and the cause remained a mystery until the Parrs neighbors, also suffering mysterious ailments, ordered a specialist to test the local air quality. Findings revealed high levels of BTEX: benzene, toluene, ethyl benzene, and xylenes, volatile organic compounds found in petroleum derivatives. In April 2010, an environmental medical specialist found more than 20 toxic chemicals in Mrs. Parrs’ blood, and the family was advised by a number of medical professionals to relocate immediately. Court documents suggest that these issues can likely be traced to drilling operations (fugitive emissions, venting, and flaring), as well as Aruba’s condensate tanks. Condensate is a semi-gaseous semi-liquid hydrocarbon produced with natural gas extraction that is gaseous in the ground but becomes liquid through the extraction process. Condensate, while valuable, is known to consist of aromatic hydrocarbons and BTEX. While OSHA sets strict guidelines on BTEX exposure, the court case demonstrated that the defendants were exposed to high concentrations of condensate fumes on a daily basis. Other residents of the region brought suits against Aruba and other producers operating in the area, but their charges only included alleged property damage, not health issues—the Parrs were the only ones to allege that drilling and fracking had given them demonstrable health problems. The other companies sued by the Parrs settled out of court. The attorney representing the family described the outcome as a “wake up call” to the industry, and argued it could embolden other families to come forward. Aruba maintains that the facts of the case do not support the verdict, and is looking into an appeal. To be clear, the consequences suffered by the Parrs—while terrible—should be understood within a number of contexts. First, while we don’t know how stringently Aruba Petroleum’s operations follow industry best practices, we do know that Aruba Petroleum is a small, independent producer. According to the Unconventional Oil and Gas Center, around 60 companies are operating in the Barnett shale. Of those 60 companies, anecdotal evidence reported in news stories and elsewhere online suggests that Aruba Petroleum might not have had the best reputation—a number of videos online show various fugitive emissions and gas leaks. This incident is not Aruba’s first citation. According to the Fort Worth Star Telegram, the company paid a $35,500 fine to the Texas Commission on Environmental Quality for emissions violations in 2011. In a separate incident, the company was sued by the Texas attorney general’s office over other emissions violation, as well as by another couple residing in Wise County, but the suit was resolved in a confidential settlement. Building on that thought, a second consideration is that in the absence of comprehensive federal regulations, states need to take the lead on implementing appropriate rules. As we explained a few weeks ago in a discussion of fracking related earthquakes, public confidence must be built and maintained when it comes to the practice of hydraulic fracturing. Erosion of public confidence will lead regulators to restrict access to shale resources, and states can lead the way by actively reviewing and improving regulatory programs to adopt best practices, and by holding operators accountable. Some states, such as Colorado, have risen to the occasion. Colorado requires testing of surface and ground water before and after fracking by nationally accredited labs, has strict disposal guidelines for both liquid and solid waste, and was the first state to clamp down on fugitive methane emissions. North Dakota, Ohio, and Pennsylvania also have various testing requirements and disposal guidelines. In May of 2013, the Texas Railroad Commission (which regulates fracking) created new rules that:
  • Add new requirements for well control and blowout preventers
  • Clarify standards for drilling, casing and cementing of wells
  • Require cement across and above all zones permitted for injection
  • Require pressure testing of surface casing and casing strings with advance notice to the Texas Railroad Commission office.
  • Add a new well category for minimum separation wells requiring special review and consideration for drilling, cementing and completions.
  • Clarify requirements for wells with completions that include hydraulic fracturing treatments.
The rules were praised by both the Texas Oil and Gas Association and the Sierra Club’s Texas chapter, suggesting a helpful compromise between industry and environmentalists. Unfortunately, they went into effect in January 1, 2014—years after the damage experienced by the Parrs family. It’s unclear to what extent the rules currently in place in Texas would have prevented the air and water pollution in Wise County, but the most important thing to remember is that what happened to the Parrs family was highly preventable. According to the Wall Street Journal, 15 million Americans live within a one mile radius of a fracked well. Given the severity of the conditions experienced by the Parrs, clearly the vast majority of these households are not having similar experiences. However, even a small number of incidents can stoke public fears.