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Shale Plays Could be Crippled by Hydrofrac Restrictions, Industry Asserts

Excessive federal regulation, including restrictions on hydraulic fracturing, could shut down production from the country's prolific shale plays, according to testimony heard Thursday by the House Subcommittee on Energy and Mineral Resources in Washington, DC.

"Hydraulic fracturing is absolutely essential to the development of the [Barnett, Fayetteville, Haynesville and Marcellus] plays," said Mike John, Chesapeake Energy Corp. vice president of corporate development and government relations. "We would not be able to produce natural gas without being able to frac those wells."

Federal regulation of hydraulic fracturing could once again become part of the Safe Drinking Water Act (SWDA) if some in Congress have their way. Those supporting the idea say hydrofrac'ing needs to be closely monitored to protect drinking water from being contaminated by chemicals used in the process. Hydrofrac'ing was covered by the 1974 Safe Drinking Water Act, but Congress lifted the restrictions from hydrofrac'ing in 2005.

A bill introduced last year by Rep. Diana DeGette (D-CO) and apparently ready to be reintroduced this year would require producers using hydrofrac'ing to comply with SWDA underground injection control provisions -- and would add an estimated $150,000 of compliance costs to every well, according to the American Petroleum Institute (API). If approved, the legislation would add a layer of unnecessary regulation and reduce drilling, the API said in testimony before the subcommittee.

"Despite allegations to the contrary, there is no confirmed evidence that hydraulic fracturing has resulted in the contamination of drinking water supplies," the API said.

Current state regulatory programs for water and environmental resource protection vary in scope and specificity, but they invariably have common elements in place to ensure oil and natural gas resources are developed in a way designed to protect water resources, the Ground Water Protection Council (GWPC) said.

GWPC, whose members consist of state and federal groundwater agencies, industry representatives, environmentalists and concerned citizens, asserted there are adequate rules in place, and instead of a complete overhaul, regulators should review their water protection regulations and tweak their drilling regulations as needed.

"Some have suggested that the dual responsibilities of resource conservation and environmental protection are incompatible and that an oil and gas agency may be more interested in the production of petroleum resources than in environmental protection," according to a recent GWPC report. "This perception may have had some validity until the 1960s but is no longer true, as the progression of water protection regulations implemented during the past 50 years demonstrates.

"In reality, resource conservation laws led to the development of regulations that were rooted in practical, implementable actions. This understanding of conservation regulation was instrumental in the development of environmental requirements that are tied to practical rather than theoretical concepts."

The GWPC reviewed the regulations for 27 oil and gas producing states that directly impact water resources: permitting, well construction, hydraulic fracturing, temporary abandonment, well plugging, tanks, pits and waste hauling and spills. The report did not evaluate the state programs but rather the state regulations.

Each of the states covered in the study was given the opportunity to review the findings of the report and provide any updated information concerning regulations. Responses were received from 13 states and incorporated into the final report.

"A small number of potential fracture fluid additives such as benzene, ethylene glycol and naphthalene has been linked to negative health affects at certain exposure levels," the GWPC noted. "However, most additives contained in fracture fluids, including sodium chloride, potassium chloride and diluted acids, present low to very low risks to human health and the environment."

The best way to eliminate concern would be to use additives that are not associated with human health effects, the study noted. Regardless, said the authors, since a study by the U.S. Environmental Protection Agency in 2004 "found no confirmed cases of contamination from the relatively shallow hydraulic fracturing of coalbed methane reservoirs, it is not unreasonable to conclude that the risk of fracture fluid intrusion into ground water from the hydraulic fracturing of deeper conventional and unconventional oil and gas zones could be considered very low..."

But according to infrastructure and environmental consultant Albert Appleton, some of the chemicals used in the hydrofrac'ing process must be closely monitored because they are not biodegradable and could eventually make their way into drinking water supplies.

"Once they're in the environment, they're in the environment to stay," Appleton said. "We have learned through long and bitter experience that the only way to protect the environment from these types of materials is to keep them out of it."

Just last month concerns that gas drilling in the Marcellus Shale could damage the region's water quality prompted the Delaware River Basin Commission to require, pending a review, commission approval before energy companies drill in the drainage area of the basin's special protection waters (see NGI, June 1).

Increased regulation and expense is the biggest concern facing producers working the shale plays, John said.

"It's clear that hydraulic fracturing is required to cause these plays to be viable in order to extract gas," John said. "I would also emphasize that we're confident that the existing regulatory framework is adequate for the protection that needs to be in place to allow that fracturing to occur...We as an industry are confident that we're poised to develop these large plays. Our biggest concern would be that there wouldn't be any negative changes in the [regulatory] environment that would preclude us or hinder us from going forward with the development of the plays."

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