Oil and Gas:

Information on Shale Resources, Development, and Environmental and Public Health Risks

GAO-12-732: Published: Sep 5, 2012. Publicly Released: Oct 9, 2012.

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What GAO Found

Estimates of the size of shale oil and gas resources in the United States by the Energy Information Administration (EIA), U.S. Geological Survey (USGS), and the Potential Gas Committee--three organizations that estimate the size of these resources--have increased over the last 5 years, which could mean an increase in the nation's energy portfolio. For example, in 2012, EIA estimated that the amount of technically recoverable shale gas in the United States was 482 trillion cubic feet--an increase of 280 percent from EIA's 2008 estimate. However, according to EIA and USGS officials, estimates of the size of shale oil and gas resources in the United States are highly dependent on the data, methodologies, model structures, and assumptions used to develop them. In addition, less is known about the amount of technically recoverable shale oil than shale gas, in part because large-scale production of shale oil has been under way for only the past few years. Estimates are based on data available at a given point in time and will change as additional information becomes available. In addition, domestic shale oil and gas production has experienced substantial growth; shale oil production increased more than fivefold from 2007 to 2011, and shale gas production increased more than fourfold from 2007 to 2011.

Oil and gas development, whether conventional or shale oil and gas, pose inherent environmental and public health risks, but the extent of these risks associated with shale oil and gas development is unknown, in part, because the studies GAO reviewed do not generally take into account the potential long-term, cumulative effects. For example, according to a number of studies and publications GAO reviewed, shale oil and gas development poses risks to air quality, generally as the result of (1) engine exhaust from increased truck traffic, (2) emissions from diesel-powered pumps used to power equipment, (3) gas that is flared (burned) or vented (released directly into the atmosphere) for operational reasons, and (4) unintentional emissions of pollutants from faulty equipment or impoundments--temporary storage areas. Similarly, a number of studies and publications GAO reviewed indicate that shale oil and gas development poses risks to water quality from contamination of surface water and groundwater as a result of erosion from ground disturbances, spills and releases of chemicals and other fluids, or underground migration of gases and chemicals. For example, tanks storing toxic chemicals or hoses and pipes used to convey wastes to the tanks could leak, or impoundments containing wastes could overflow as a result of extensive rainfall. According to the New York Department of Environmental Conservation's 2011 Supplemental Generic Environmental Impact Statement, spilled, leaked, or released chemicals or wastes could flow to a surface water body or infiltrate the ground, reaching and contaminating subsurface soils and aquifers. In addition, shale oil and gas development poses a risk to land resources and wildlife habitat as a result of constructing, operating, and maintaining the infrastructure necessary to develop oil and gas; using toxic chemicals; and injecting fluids underground. However, the extent of these risks is unknown. Further, the extent and severity of environmental and public health risks identified in the studies and publications GAO reviewed may vary significantly across shale basins and also within basins because of location- and process-specific factors, including the location and rate of development; geological characteristics, such as permeability, thickness, and porosity of the formations; climatic conditions; business practices; and regulatory and enforcement activities.

Why GAO Did This Study

New applications of horizontal drilling techniques and hydraulic fracturing--in which water, sand, and chemical additives are injected under high pressure to create and maintain fractures in underground formations--allow oil and natural gas from shale formations (known as "shale oil" and "shale gas") to be developed. As exploration and development of shale oil and gas have increased--including in areas of the country without a history of oil and natural gas development--questions have been raised about the estimates of the size of these resources, as well as the processes used to extract them.

GAO was asked to determine what is known about the (1) size of shale oil and gas resources and the amount produced from 2007 through 2011 and (2) environmental and public health risks associated with the development of shale oil and gas. GAO reviewed estimates and data from federal and nongovernmental organizations on the size and production of shale oil and gas resources. GAO also interviewed federal and state regulatory officials, representatives from industry and environmental organizations, oil and gas operators, and researchers from academic institutions.

GAO is not making any recommendations in this report. We provided a draft of this report to the Department of Energy, the Department of the Interior, and the Environmental Protection Agency for review. The Department of the Interior and the Environmental Protection Agency provided technical comments, which we incorporated as appropriate. The Department of Energy did not provide comments.

For more information, contact Frank Rusco at (202) 512-3841 or ruscof@gao.gov.

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