Economic Analysis of Oil and Gas Brine Regulations
Publication: Journal of Energy Engineering
Volume 116, Issue 1
Abstract
Economic analysis can help estimate the benefits and costs of environmental regulations that affect energy industries. The usefulness of tools such as engineering economics, econometrics, and Leontief input‐output analysis is demonstrated by a study of the benefits to Ohio of a controversial brine‐disposal practice: annular disposal. Its direct benefits are the avoided costs of more expensive, but safer, disposal via deep‐well injection. Its indirect benefits include impact upon the region's employment and income. This impact was estimated by first constructing econometric models of oil and gas drilling and production in Ohio. Those models were then used to forecast drilling and production both with and without the added cost of deep‐well injection. The resulting changes in the industry's activity were then inserted in an input‐output model in order to calculate changes in employment and income. The analysis shows that in two areas of Ohio, the direct benefits alone are an order of magnitude larger than the expected cost of water supplies lost due to failure of annular disposal. However, health and policy considerations may still justify a ban of the practice.
Get full access to this article
View all available purchase options and get full access to this article.
References
1.
Beim, G., and Beeker, J. (1985). “Brine transport and disposal in the Upper Cuyahoga Watershed: An application of an optimization model.” Report, Northeast Ohio Areawide Coordinating Agency, Cleveland, Ohio.
2.
Bentkover, J. D., Covello, V. T., and Mumpower, J. (1986). Benefits assessment: The state of the art. D. Reidel, Amsterdam, The Netherlands.
3.
Brine disposal in northeast Ohio: A report on the problem and recommendations for action. (1984). Northeast Ohio Brine Disposal Task Force. Northeast Ohio Area‐wide Coordinating Agency, Cleveland, Ohio.
4.
Brine disposal in Ohio: An overview. (1983). Ohio Environment Council, Columbus, Ohio.
5.
DeBrosse, T. A. (1986). “Summary of Ohio oil and gas developments.” Winter Meeting of the Ohio Oil and Gas Assoc., Columbus, Ohio.
6.
Durbin, J. (1970). “Testing for serial correlation in least‐squares regression when some of the regressors are lagged dependent variables.” Econometrica, 38(3), 410–421.
7.
“Economic impact analysis of effluent limitations and standards for the petroleum refining industry.” (1982). EPA‐440/2‐82‐007, Office of Water Regulations and Standards, U.S. Environmental Protection Agency, Washington, D.C.
8.
Hobbs, B. F., et al. (1987). Risk‐benefit analysis of annular disposal of oil and gas brines, final report. Dept. Systems Engrg., Case Western Reserve Univ., Cleveland, Ohio.
9.
Hobbs, B. F., et al. (1988). “Risk analysis of aquifer contamination by brine.” J. Water Resour. Planning Mgmt., 114(6), 667–685.
10.
Insert to Debrosse. (1986). Ohio Oil and Gas Association, Granville, Ohio.
11.
Joint association survey on drilling costs. (1986). American Petroleum Institute, Washington, D.C.
12.
Miller, R. E., and Blair, P. D. (1985). Input‐output analysis: Foundations and extensions, Prentice‐Hall, Englewood Cliffs, N.J.
13.
Pindyck, R. S., and Rubinfeld, D. L. (1981). Econometric models and economic forecasting, 2nd Ed., McGraw‐Hill, New York, N.Y.
14.
Report to the State of Ohio Oil and Gas Regulatory Review Commission. (1987). Ohio Oil and Gas Regulatory Review Commission, Columbus, Ohio.
15.
Sassone, P. G., and Schaffer, W. A. (1978). Cost‐benefit analysis: A handbook, Academic Press, New York, N.Y.
16.
“A standard procedure for cost analysis of pollution control operations.” (1976). EP 1.2:p 76/16/v1 & v2, Industrial Envir. Res. Lab., U.S. Environmental Protection Agency, Washington, D.C.
17.
Swartzman, D., Liroff, R. A., and Croke, K. G. (1982), Cost‐benefit analysis and environmental regulations: Politics, ethics, methods. Conservation Foundation, Washington, D.C.
18.
Young, K. R., et al. (1985). “Environmental Regulation and Regional Economic Growth: An Input‐Output Analysis of the Ohio Coal Mining Region,” Res. Bulletin 1170, Ohio Agr. Res. and Development Center, Ohio State Univ., Columbus, Ohio.
Information & Authors
Information
Published In
Journal of Energy Engineering
Volume 116 • Issue 1 • April 1990
Pages: 51 - 70
Copyright
Copyright © 1990 ASCE.
History
Published online: Apr 1, 1990
Published in print: Apr 1990
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.