When businesses, corporations, or entire industrial sectors focus on environmental, social, and corporate governance (ESG), there is a tendency to favor decarbonization and abstract commitments to environmental stewardship. Within the energy sector, emissions are critical to account for and mitigate, but perhaps more so are the leaks and spills of volatile, hazardous, or otherwise environmentally damaging liquids. An ESG focus in this market must keep all eyes on the ground, where products are extracted, transported, and stored.
The critical importance of this grounded focus is that there are more proximate risks and direct consequences from mistakes and failures on the ground. Attention to atmospheric emissions and gaseous releases are important, but the impact of carbon dioxide in the atmosphere is a slow, diffuse, and global impact, while spills on farmland are localized, acute, and potentially irreversible.
Today, an estimated 65 percent of U.S. oil and gas is produced from shale or unconventional formations. Utilizing hydraulic fracturing and horizontal drilling to access this tight oil allows operators to minimize their surface footprint and take advantage of underground formations. Yet it also requires additional materials and process that extracting from conventional reservoirs do not. When done safely, there are few or no consequences.
When consequences do arise, they can be catastrophic. Chemical-laden flow water is used to break apart rock to extract oil and gas, which after a matter of weeks gives way to naturally occurring water locked in the same formations. Produced water filled with brine, hydrocarbons, dissolved solids, and potentially radioactive liquid byproduct from the earth arises during the oil and gas extraction process and is highly potent. All of the liquids coming up from the well must be transported through pipes and held in tanks while in transit to or storage for eventual separation, refinement, permanent storage, or other application. Leaks and spills release these liquids into the land. While in many cases oil can be recaptured and its effects mitigated, an incident with produced water is not something that one cleans up, it is something that ruins generational land and permanently mars agricultural fields.
While this is likely not happening with great regularity, the severity that this outcome brings demands intentional planning, high quality materials, and robust data from the sector.
Safe produced water transport and storage is so critical because the oil and gas industry is intimately mingled with the agricultural sector. Wellheads are common on farm and ranch land or in adjacent tracts of land, where pipelines, storage tanks, and service roads transect. This means that perhaps the most potent product in the sector is handled, transported, and stored in the midst of the most vulnerable land in the country. The vulnerability goes beyond environmental concern over loss of habitat or dead crops, but loss of economic value forever and diminishment of U.S. agricultural reserves to produce crops, fuels, and livestock.
North Dakota presents an instructive case study, where over 12,000 well sites and 23,000 miles of gathering lines extract and transport oil and byproducts daily. In McKenzie County, ND alone, over 1,250 fracking wastewater incidents have occurred in the decade between 2011 and 2021. While 80 percent of losses were reportedly dammed, excavated, vacuumed, or otherwise contained, this still means tens of thousands of barrels of produced fluids contaminated land. Importantly, pipelines generally and in North Dakota specifically maintain an impeccable effectiveness record, but the high volumes transported mean that the rare and small percentage spilled leads to tangible losses.
For the 13 years between 2001 and 2014, pipelines in North Dakota spilled only 0.01 percent of product moved. In 2014, this meant 71,000 barrels of brine being spilled (a number not representative of prior years before the fracking boom). Analysis from this period shows that several root causes of spills and leaks were related to pipeline products and their installation and handling. Factors such as line strikes, poor workmanship, lack of inspection, and overall lack of standardization in installation and management make pipelines susceptible to leak – and land vulnerable to harm.
Products alone are not the silver bullet to protecting the farm and ranch land, but are a critical piece. Equally so are trained personnel capable of installing and maintaining the pipeline well. The quality of the product and skill of the personnel – as well as reliance on the damage prevention process to avoid excavation damage – are at the heart of responsible stewardship and efficient management of operations.
The energy and transportation sectors must ensure they are using the products and techniques that makes sure incidents do not occur. Moreover, as they partner with farmers and ranchers, they must be able to demonstrate their commitment to protecting the land by utilizing safe and proven products, going above and beyond in personnel training, and meeting or exceeding regulatory requirements for the handling of the products they manage.
Throughout all of this, access to and evaluation of data is essential. Without a consistent metric for measuring successes and failures, it is difficult to know the extent of damage or the safety record for oil and gas or pipeline operators. With data, policymakers and industry leaders can chart a course for the future, avoiding burdensome regulation and bureaucratic involvement through transparency to the public, shareholders, and public officials. Databases of incident tracking would also instill confidence in landowners and strike more fruitful and robust partnerships going forward. This version of ESG goes much further than reducing emissions footprints or committing to renewable energy targets; it safeguards shareholder investments and protects the nation’s breadbasket – a truly invaluable asset.
Written by Benjamin Dierker, Director of Public Policy
The Alliance for Innovation and Infrastructure (Aii) is an independent, national research and educational organization. An innovative think tank, Aii explores the intersection of economics, law, and public policy in the areas of climate, damage prevention, energy, infrastructure, innovation, technology, and transportation.