Research Articles: The Decision to Use Acidic Coal-Mine Drainage for Hydraulic Fracturing of Unconventional Shale-Gas Wells

Abstract

Coal-mining activities in the Appalachian Basin have left behind an environmental legacy of acid mine drainage (AMD), which collectively discharges more than 1.2 billion liters of low-pH contaminated water per day into freshwater streams. Meanwhile, concerns over the use of freshwater for hydraulic fracturing applications in the Appalachian Basin are rising, where an average daily withdrawal of freshwater for hydraulic fracturing may approach 60 million liters per day. The use of AMD as a substitute for freshwater has the joint advantages of mitigating existing environmental damage to surface waters and relieving some pressures on freshwater withdrawals, but the practice faces technical, economic, and regulatory hurdles. To reduce sulfate levels, coal-mine drainage that is currently treated to meet Clean Water Act standards may need additional treatment for hydraulic fracturing applications. Reducing sulfate levels without the use of additional freshwater may involve costs of several dollars per barrel versus less than one dollar per barrel for freshwater purchased directly. The cost of treatment to remove sulfates would need to decline by perhaps a factor of 4 in order to be cost-competitive with the purchase of fresh water. So-called abandoned (untreated) mine drainage poses a larger environmental challenge, but treatment and transportation costs may be orders of magnitude larger. Issues regarding handling liability and storage costs for abandoned-mine waters in particular represent significant regulatory barriers. We find that treatment, transportation, and storage costs are the most important factors affecting water-utilization decisions in shale-gas development. While Pennsylvania has proposed policy reforms to address environmental liability issues associated with AMD use, implementation itself will likely raise costs for its use in hydraulic fracturing as compared to the use of freshwater. AMD use may become cost-competitive with the development and use of low-cost AMD treatment technologies in centralized locations designed for long-term use, along with efficient water transfer and storage facilities.

Acknowledgments

A preliminary version of the economic analysis contained in this article was presented at a RAND Corporation workshop, “Feasibility and Challenges of Using Acid Mine Drainage for Marcellus Shale Natural Gas Extraction,” held in Pittsburgh, PA, in December 2011. The authors thank the RAND Corporation and workshop attendees for helpful comments and suggestions.

Notes

Notes

1. According to data from the Pennsylvania Department of Environmental Protection, 1,920 Marcellus wells were drilled in 2011. We note that 1,037 new wells were brought on line in 2011 to estimate water usage.

2. The relevant statute in Pennsylvania is the Clean Streams Law, §391.316. RAND (2012) has noted that this is likely the most broad law of its kind in the United States.