Federal frac rules could lead to national standards, Salazar says

US Sec. of the Interior Ken Salazar told the US House Natural Resources Committee that regulations covering hydraulic fracturing on federal lands are necessary, and will be developed after full consultations with state and Indian tribal governments. Proposals will go through a full federal rule-making process and possibly could provide a template for national standards, he suggested.

Federal onshore fracing regulations are necessary because 99% of gas wells now being drilled on public lands use fracing and horizontal drilling, he said during an appearance to discuss Interior’s fiscal 2013 budget request.

“There also are many in the industry who have spoken to me that they’d rather have a standard they can follow from state-to-state,” he continued. “I always hear from them that they don’t like to deal with a patchwork of regulations. Ours will deal only with the federal estate, but it could provide a template for possible national standards.”

Federal onshore regulatory proposals that have been circulated the past couple of weeks were from a very early US Bureau of Land Management draft, Deputy US Interior Sec. David J. Hayes noted. Interior wants to make certain that information about ingredients used in the process is readily available, but it also does not want to duplicate what several states already have done as well as the Interstate Oil & Gas Compact Commission and Groundwater Water Protection Council’s Frac-Focus voluntary registry, he said.

“We support gas development. The administration has included it as a high priority from Day 1,” Salazar said. “We have supported leasing to produce gas from public lands, but we also need to address public’s concerns that fracing can be done safely. There will be commonsense rules that, at the end of the day, will support gas development.”

OCS, oil shale

Committee Republicans also raised questions about DOI’s draft proposed 2012-17 US Outer Continental Shelf program, and the draft programmatic impact statement it issued on Feb. 3 for federally administered oil shale and tar sands acreage in Colorado, Utah, and Wyoming. They called for reconsideration of both.

“The administration's [proposed OCS] plan effectively reinstates the drilling moratoriums that were lifted in 2008 by Congress and the president when gasoline prices soared to over $4/gal,” committee chairman Doc Hastings (R-Wash.) said in his opening statement. “By locking up the Atlantic, Pacific, and parts of the Arctic, the Obama administration is forfeiting the production of new American energy, the creation of over a million new American jobs and the generation of new revenue.”

Salazar said the current 5-year OCS draft proposal would involve 75% of currently available OCS acreage, and warned that trying to expand leasing into new areas to fund bridge and highway repairs, as a House bill proposes, would create “a phantom revenue source” because money would not be available for several years if it went forward.

When committee member Rob Bishop (R-Utah) said claims that technology does not exist to produce oil from oil shale ignore the fact that Estonia has been doing it for 100 years, Salazar said that the technology does not exist to produce it in the three US states while protecting scarce water resources.

“When I look at how water supplies are declining, the reality is that if billions of acre-feet are required to develop oil shale, there’s no certainty that [the water] will be there,” the secretary said. “I think we need to determine it will be before we engage in a giveaway to major oil companies.” The draft programmatic EIS did not affect research and development activity, but simply withdrew land for commercial leasing until the right technology can be developed, he added.

Contact Nick Snow at nicks@pennwell.com.

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