API opposes efforts to federally regulate hydraulic fracturing

Proposed federal regulation of hydraulic fracturing under the Safe Drinking Water Act could add $150,000 to deep well costs and reduce drilling, American Petroleum Institute officials warned.

Proposed federal regulation of hydraulic fracturing under the Safe Drinking Water Act could add $150,000 to deep well costs and reduce drilling, American Petroleum Institute officials warned on June 3.

Requiring producers using hydraulic fracturing to comply with the SDWA's underground injection control provisions would add another regulatory layer that many states' water laws already cover, they told reporters in a teleconference.

"An estimated 60-80% of onshore wells drilled in the Lower 48 states involve hydraulic fracturing. It has played a significant part in the Bakken Shale oil play. Virtually all the wells extracting gas from shales in the Midcontinent and tight sands in the Intermountain West use it," said Richard L. Ranger, a senior policy advisor at API.

He said that the estimated $150,000 of additional regulatory compliance costs under legislation which Rep. Diana DeGette (D-Colo.) is apparently planning to introduce would include $100,000 for UIC regulations, $25,000 for stormwater permits, and $15,000 for waste permits under the federal Resource Conservation and Recovery Act.

DeGette introduced a bill, HR 7231, on Sept. 29, 2008 to repeal hydraulic fracturing's exemption under the SDWA. She has not reintroduced it this year, but plans to so soon, a spokesman told OGJ Washington Pulse on June 3. The House Natural Resources Committee's Energy and Mineral Resources Subcommittee will also probably examine hydraulic fracturing as part of its June 4 hearing on shale gas potential.

'A lot of work ahead'

"We're opposed to Rep. DeGette's bill that's being discussed now. We have a lot of work ahead of us to explain why. We see this as an education effort and part of what we do at API," said Ranger, who was joined in the teleconference by two other API senior policy advisors, Andy Radford and Stephanie Meadows.

States are better qualified to regulate oil and gas drilling because their agencies are better acquainted with each drilling site's unique characteristics, they explained. "Technical professionals at state agencies who have experience in each area's unique characteristics are the best qualified," said Ranger. Alaska's comprehensive regulations cover steps from the drilling engineer's blue-line drawings to well site operations, while Colorado recently changed its rules to provide more consultation among agencies but retained their strong technical history, he indicated.

UIC provisions under the SDWA aren't appropriate for hydraulic fracturing, Meadows said. "Producers aren't actually storing anything in the well, which UIC provisions cover. The water is being temporarily used and brought back to the surface with the oil or gas that's produced," she said.

State regulations also go beyond water, Ranger continued. "There really isn't any such thing as a clean vanilla drilling operation, nor would that necessarily be desirable. A drilling operation deals with unique conditions at each site under state regulations which try to assure that operations there are conducted with the utmost safety," he said.

"These commissions don't exist in a silo, but meet frequently depending on the amount of drilling that takes place in the state. In Texas, for instance, they meet twice yearly whereas in Ohio, where there's much less activity, they meet less frequently," Ranger said.

Questions raised

Other US House members share DeGette's view. During a May 19 House appropriations subcommittee hearing on the US Environmental Protection Agency's fiscal 2010 budget request, Rep. Maurice D. Hinchey (D-NY) asked EPA Administrator Lisa P. Jackson if she would have the agency review risks to drinking water posed by hydraulic fracturing. Jackson responded that EPA should review the matter in light of cases across the country that raised questions about the drilling technique's safety, Hinchey said following the hearing.

"It's imperative that we protect our drinking water supplies from harmful chemicals that are being pumped into the ground by oil and gas companies looking to produce on more and more land in New York and across the country," he declared.

"We are in a much stronger position to protect our drinking water now that we have an administration in place that is committed to environmental protection. While there is value in drilling for natural gas, it's imperative that we do so in a manner that doesn't have long-term environmental consequences on our drinking water, a resource that is critical to human health and survival," Hinchey said.

Ranger conceded during the teleconference that some landowners have complained that hydraulic fracturing nearby has damaged their property, but added: "We believe that the incidents that have been brought forward associated with contamination of soil and water have been associated with handling fluids on the surface and not with hydraulic fracturing underground. That does not excuse them, but they should not be used to condemn hydraulic fracturing."

Contact Nick Snow at nicks@pennwell.com

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