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House Energy Panel Scrutinizes Hydrofracing

The House Energy and Commerce Committee last Thursday said it opened an inquiry into the potential health and environmental risks associated with hydraulic fracturing (hydrofracing) of unconventional natural gas resources.

Committee Chairman Henry Waxman (D-CA) and Rep. Edward Markey (D-MA) sent letters to eight companies engaged in hydrofracing around the country -- Halliburton, BJ Services and Schlumberger, as well as Frac Tech Services, Superior Well Services, Universal Well Services, Sanjel Corp. and Calfrac Well Services -- asking them to identify the types and quantities of chemicals used in hydrofracing fluids.

The House lawmakers also asked the companies to respond to whether they injected these fluids in, near or below an underground source of drinking water, and to provide documents responding to allegations that hydrofracing causes harm to human health or the environment. Moreover, the panel requested information on the chemical contents of water produced from hydrofracing operations and how the companies dispose of the waste.

"Hydraulic fracturing could help us unlock vast domestic natural gas reserves once thought unattainable, strengthening America's energy independence and reducing carbon emissions," Waxman said. But "as we use this [hydrofracing] technology in more parts of the country on a much larger scale, we must ensure that we are not creating new environmental and public health concerns. This investigation will help us better understand the potential risks this technology poses to drinking water supplies and the environment, and whether Congress needs to act to minimize those risks."

Markey echoed the sentiment. "Natural gas can play a very important role in our clean energy future, provided that it is produced in a safe and sustainable way. By getting more information from the industry about hydraulic fracturing practices, Congress can help ensure that development of this import resource moves forward in a manner that does not harm the environment," he said.

While the purpose of the investigation is couched in terms that appear to be somewhat supportive of the oil and gas industry, Waxman and Markey are known for their anti-producer views.

There are several bills pending in Congress to regulate hydrofracing at the federal level under the Safe Drinking Water Act (SDWA). The oil and gas industry is the only industry exempted from the SDWA. Presently hydrofracing activities are regulated by the states (see NGI, June 15, 2009).

Hydrofracing, which is used in almost all oil and gas wells, is a process where fluids are injected at high pressure into underground rock formations to blast them open and increase the flow of fossil fuels. Some chemicals that are known to have been used in hydrofracing include diesel fuel, benzene and industrial solvents.

"Environmental organizations, public health groups and local communities have expressed concerns about the potential impact of the injection of hydraulic fracturing fluids in wells located in or near underground sources of drinking water. Others have raised concerns about the quantity of water needed to hydraulically fracture oil and gas wells and the disposal of contaminated wastewater from fracturing operations," Waxman said in a memorandum to members of the committee's energy and environmental subcommittee, which is chaired by Markey.

The closest thing that the federal government has had to oversight of hydrofracing activities was a 2003 memorandum of agreement (MOA) between the Environmental Protection Agency (EPA) and the three largest hydrofracing companies -- Halliburton, BJ Services and Schlumberger, he said. But Halliburton and BJ Services reported that they used diesel fuel as a hydrofracing fluid between 2005 and 2007 in violation of the MOA, according to data that Waxman requested and received when he chaired the House Oversight and Government Reform Committee in the last Congress.

Legislation restricting hydrofracing could shut down production from the country's prolific shale plays, including the Barnett, Fayetteville, Haynesville and Marcellus plays, producers told Congress last year (see NGI, June 8, 2009).

But William Hederman, senior vice president of Concept Capital's Washington Research Group, Friday said he doubts the inquiry will result in legislation that would threaten shale development and the proposed merger between ExxonMobil and XTO Energy Inc.

In January ExxonMobil CEO Rex W. Tillerson told a House Energy and Commerce subcommittee that its pending $41 billion merger with unconventional gas powerhouse XTO Energy would be called off if Congress took any action to limit or restrict the use of hydrofracing in the prolific shale gas plays (see NGI, Jan. 25). "We see no danger to the [ExxonMobil-XTO] deal now in progress, which does have an 'out' clause for [ExxonMobil] if legislation were to harm shale gas production economics," Hederman said.

"Based on conversations with industry experts familiar with this technology and industry practices, we do not expect this investigation to reveal some major problems. It is our understanding that no company uses diesel fuel [in hydrofracing] at this time" or "other dangerous hydrocarbons," he said.

Because diesel is no longer common practice, "this would indicate to us that any proposed legislative restrictions would not harm development or the economics of shale production. In fact, if any legislative proposal appears to pose the danger of harming shale gas development, we would expect the Republicans to aggressively oppose it and be effective in this opposition," Hederman said. Rep. Joe Barton of Texas, the ranking Republican on the House energy panel, is a strong proponent of the oil and gas industry.

"The only legislation that might be successful might restrict diesel, benzene, etc. use and/or require reporting of fluid contents. This may affect some companies, but given that at least major player Schlumberger is reported to be comfortable with such a provision, we see no danger to development of this resource," he noted.

Hederman cautioned that there is a "potential headline risk" for any company that refuses to cooperate with the House committee.

"To the extent the committee's inquiry into the process helps clear up some of the misconceptions that have come to be associated with it [hydrofracing], it's a study we look forward to contributing to," said the Independent Petroleum Association of America (IPAA), which represents independent oil and gas producers.

"In our view, the committee would benefit enormously if it focused more on learning about the procedures, practices and regulations in place to safeguard underground sources of drinking water -- and, in particular, the steps that are taken at every well site in America to ensure the proper casing and cementing acts as an effective barrier between the inside of the wellbore and the environment outside it. These actions have been and continue to be the effective regulatory actions that prevent damage to groundwater resources," the IPAA noted.

"If responsible development of shale gas represents a potential game-changer for the United States, hydraulic fracturing represents a nonnegotiable tool needed to leverage that potential into reality," the group said.

The American Petroleum Institute (API) called hydrofracing a "safe technology" that is critical to developing the nation's gas resources. It said the practice has been in use for over 60 years in more than one million domestic wells "without a single confirmed instance of groundwater contamination."

The director of the EPA's Drinking Water Protection Division "recently stated that he hadn't seen any documented cases of contamination as a result of hydraulic fracturing," API said.

"The EPA, Ground Water Protection Council, IOGCC [Interstate Oil and Gas Compact Commission] and others have examined the process and found it to be safe. Congress also has asked the EPA to do a follow-on review," said Regina Hopper, president of the America's Natural Gas Alliance.

"Our industry understands that with this extraordinary opportunity comes the responsibility to be good neighbors and good stewards of the land. And we are committed to working with all interested stakeholders to raise awareness of the safety of this long-standing practice," she said.

Contrary to producer groups' claims, the EPA in August 2009 said in a preliminary report that at least three contaminated water wells near Pavillion, WY, contained hydrofrac chemicals used by natural gas drillers (see NGI, Aug. 31, 2009). Traces of other contaminants, including gas, oil and metals, were reportedly found in 11 of 39 wells tested since March in the Wind River Basin area.

And in September 2009 the Pennsylvania Department of Environmental Protection (DEP) Friday ordered Cabot Oil & Gas Corp. to stop using hydrofracing fluids on its natural gas shale wells in Susquehanna County. The order followed three spills last year of a hydrofrac lubricant at a Cabot drilling site (see NGI, Sept. 28, 2009).

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