Emily Myers
Patricia Poole
Baker & Hostetler LLP
Cleveland, Ohio
The rapid growth in oil and gas production from shale and tight oil formations in the US is generating a boom in a related industry: frac sand. Sand is frequently used as a proppant in hydraulic fracturing.
One of the most sought-after proppants is high-purity quartz sand. This durable sand has spherical grains and is crush resistant, with the ability to withstand pressures of 6,000-14,000 psi. It is most commonly found in Wisconsin, though a spike in demand has motivated production in other states as well. According to Geology.com, some of the best geological formations to produce frac sand in the US are the St. Peter sandstone, Jordan sandstone, Oil Creek sandstone, and Hickory sandstone. Wisconsin and Minnesota are the biggest frac sand suppliers, and together have 164 active frac sand facilities, with another 20 proposed.
Producers are discovering that increasing the volume of frac sand used in hydraulic fracturing can increase initial production rates. A Forbes Magazine article said that hydraulic fracturing operations used around 2,500 tons of sand/well just a year ago. Today, new hydraulic fracturing techniques call for as much as 8,000 tons of sand/well. To illustrate, 8,000 tons of sand would fill 75-100 railcars. A report by energy consulting firm PacWest Consulting Partners found producers will use nearly 95 billion lbs of sand this year, a nearly 30% increase from 2013, and a 50% increase from forecasts made by the firm 1 year ago.
Public concern increases
As the frac sand industry grows, so too does public concern about its effects on health and the environment. Boston Action Research, an environmental group sponsored by the Civil Society Institute, issued a report in September that calls for action by state and local governments to address potential health and environmental risks posed by frac sand mining. Heather White, executive director of the Environmental Working Group, a cosponsor of the report, said in a release that, "None of the states at the center of the current frac sand mining boom have adopted air quality standards for silica that will adequately protect the tens of thousands of people living or working near the scores of recently opened or proposed mining sites."
Hesitations about frac sand mining in Wyoming were highlighted in October when Alpine Sand, a frac sand and mining company with operations in Trempealeau County, was issued an $80,000 fine by the Wisconsin Department of Justice. Regulators said the company did not take adequate measures to prevent storm water from running off into a tributary of a waterway.
Some parts of the US have banned frac sand mining all together. In Houston County, Wis., residents are clamoring to extend a frac sand mining moratorium enacted in 2012 beyond its 2015 expiration date.
Public concern about frac sand stems from a 2012 alert issued by the National Institute for Occupational Safety and Health (NIOSH). The report identified exposure to airborne silica as a health hazard for hydraulic fracturing workers. Likewise, the Occupational Safety and Health Administration (OSHA) has found that workers who are exposed to high levels of respirable crystalline silica during hydraulic fracturing are at risk for developing silicosis. Silica sand mining operations are subject regulatory oversight from OSHA and NIOSH.
Proposed rule advances
In August 2013, OSHA announced a proposed rule aimed at curbing disease related to silica exposure. The proposal was published in the Federal Register on Sept. 12, 2013. A public comment period ended in Dec. 2013, and public hearings for the rule wrapped up in Apr. 2014.
The proposed rule calls for a permissible exposure limit (PEL) of 50 micrograms of respirable crystalline silica per cubic meter of air during an 8-hr workday. The new PEL would be standardized for all industries covered by the rule.
The rule includes provisions for measuring worker silica exposure, limiting access to areas with high respirable silica levels, utilizing exposure reduction methods, providing medical exams to workers with high silica exposures, and worker training on limiting exposure to silica-related hazards. Lowering silica exposure to meet these standards will require using common dust control methods, such as wetting down work operations to keep silica-containing dust from becoming airborne, enclosing an operation, or using a vacuum to collect dust before it can be inhaled.
While the proposed rule would protect workers, it comes with a cost. According to an OSHA fact sheet, entitled "OSHA'S Proposed Crystalline Silica Rule: Overview," the rule is expected to result in costs of about $1,242/yr for the average workplace covered by the rule. The cost to a firm with fewer than 20 employees is expected to be less, averaging about $550/yr. But, the agency added, the rule is also expected to provide an average, net economic benefit of about $2.8 to $4.7 billion/yr over the next 60 yr.
David Michaels, assistant secretary of Labor for OSHA said in a statement that "exposure to silica can be deadly, and limiting that exposure is essential. Every year, exposed workers not only lose their ability to work, but also to breathe. This proposal is expected to prevent thousands of deaths from silicosis-an incurable and progressive disease-as well as lung cancer, other respiratory diseases and kidney disease."
The proposed rule resulted from a review of scientific and technical evidence, consideration of current industry consensus standards, and OSHA stakeholder outreach-including public stakeholder meetings, conferences, and meetings with employer and employee organizations.
A NIOSH study monitored worker exposure to respirable crystalline silica for 3 consecutive days at 11 hydraulic fracturing sites in five US states, and found that the concentration of silica in the air exceeded the permissible exposure limits set by OSHA. In some cases, personal breathing zone samples exceeded OSHA limits by a factor of 10 or more. The study was published in May 2013 in the Journal of Occupational and Environmental Hygiene.
"To our knowledge, this represents the first systematic study of work crew exposures to crystalline silica during hydraulic fracturing. Companies that conduct hydraulic fracturing using silica sand should evaluate their operations to determine the potential for worker exposure to respirable crystalline silica and implement controls as necessary to protect workers," the study said.
Researchers went on to say: "Occupational exposure to respirable crystalline silica is a well-established hazard in mining, sandblasting, foundry work, agriculture and construction, but not for oil and gas extraction work, which includes hydraulic fracturing."
Responding to regulations
OSHA's proposed silica rulemaking includes two separate standards-one for general industry and maritime employment, and one for construction. Oil and gas employers will be required to comply with the general industry standard. The proposed rule includes a new exposure limit for respirable crystalline silica and details widely used methods for controlling worker exposure, conducting medical surveillance, training workers about silica-related hazards, and recordkeeping measures.
Frac sand-specific air quality standards, OSHA's proposed silica rule, and other regulations could have a significant impact on the growing frac sand mining industry and the oil and gas industry it serves. Industry advocates should be aware of the impact these regulations and legislation may have, and strive to be active participants in the rule-making process, working toward the safest and fairest outcomes.
The rulemaking process can be tracked at www.osha.gov/silica/#2B.
The authors
Emily Myers ([email protected]) is an associate at Baker & Hostler's Cleveland office, specializing in general litigation and corporate matters. She is also a contributor to the firm's North American Shale Blog. During law school, she was a senior editor of The Case Western Reserve Law Review, in which her note "Worse Than Spilled Milk: A Cry for Casualty Loss Reform in the Wake of the Deepwater Horizon Disaster," was published.
Patricia Poole ([email protected]) is a partner at Baker & Hostetler's Cleveland office. She concentrates her legal practice in the areas of regulatory compliance and litigation, including occupational safety and health, toxic tort, and workers' compensation.
