	Background

This section includes (1) an overview of oil and natural gas, (2) the shale  oil and gas development process, (3) the regulatory framework, (4) the  location of shale oil and gas in the United States, and (5) information on  estimating the size of these resources. In contrast, to extract shale oil and gas from  the rock, fluids and proppants (usually sand or ceramic beads used to  hold fractures open in the formation) are injected under high pressure to  create and maintain fractures to increase permeability, thus allowing oil or  gas to be extracted. Domestic Shale Oil and Gas Estimates and Production

Estimates of the size of shale oil and gas resources in the United States  have increased over time as has the amount of such resources produced  from 2007 through 2011. In addition, domestic shale oil and gas production  has experienced substantial growth in recent years. Estimates of Technically Recoverable Shale Oil and Gas Resources

EIA, USGS, and the Potential Gas Committee have increased their  estimates of the amount of technically recoverable shale oil and gas over  the last 5 years, which could mean an increase in the nation’s energy  portfolio; however, 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. As these  estimates are based on data available at a given point in time, they may  change as additional information becomes available. Their estimates  were as follows:  In 2012, EIA estimated the amount of technically recoverable shale  gas in the United States at 482 trillion cubic feet.increase of 280 percent from EIA’s 2008 estimate. Shale Oil and Gas Development Pose Environmental and Public Health Risks, but the Extent is Unknown and Depends on Many Factors

Developing oil and gas resources—whether conventional or from shale  formations—poses inherent environmental and public health risks, but the  extent of risks associated with shale oil and gas development is unknown,  in part, because the studies we reviewed do not generally take into  account potential long-term, cumulative effects. According to a number of studies and publications we reviewed, shale oil  and gas development pose risks to air quality. These risks are generally  the result of engine exhaust from increased truck traffic, emissions from  diesel-powered pumps used to power equipment, intentional flaring or  venting of gas for operational reasons, and unintentional emissions of  pollutants from faulty equipment or impoundments. According to a number of studies and publications we reviewed, shale oil  and gas development pose risks to water quality from contamination of  surface water and groundwater as a result of spills and releases of  produced water, chemicals, and drill cuttings; erosion from ground  disturbances; 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 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. Oil and gas development, whether conventional or shale oil and gas,  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 waste products  underground. Extent of Risks Is Unknown and Depends on Many Factors

The extent and severity of environmental and public health risks identified  in the studies and publications we 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 in the basin; climatic conditions; business practices; and  regulatory and enforcement activities. United States Department of the Interior and United States Department of Agriculture. Agency Comments

We provided a draft of this report to the Department of Energy, the  Department of the Interior, and the Environmental Protection Agency for  review and comment. Appendix I: Scope and Methodology

Our objectives for this review were to determine what is known about (1)  the size of shale oil and gas resources in the United States and the  amount produced from 2007 through 2011—the years for which data  were available—and (2) the environmental and public health risks  associated with development of shale oil and gas. Specifically, to determine  what is known about the size of these resources, we obtained information  for technically recoverable and proved reserves estimates for shale oil  and gas from the Energy Information Administration (EIA), the U.S.  Geological Survey (USGS), and the Potential Gas Committee––a  nongovernmental organization composed of academic and industry  officials.
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.

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.