The $45 million cost of a proposed study of hydraulic fracturing (fracking) to be performed by the United States Geological Survey (USGS) should be paid by the oil and gas industry, according to Sen. Al Franken (D-MN).
"Oil and gas companies are making record profits. In fact, the big five oil companies combined made a record $137 billion in profits in 2011," Franken told Interior Secretary Ken Salazar during a Senate Energy and Natural Resources Committee hearing Tuesday on the department's proposed 2013 budget.
"I'm pleased that you've proposed a $4/acre fee on leases that are not being used...that creates incentive for them to drill on these leases. I'm also pleased that some of the permitting expenses have been transferred to the companies. In light of that, I would like to ask you whether the $45 million USGS fund that you intend to use to study shale gas development through hydrofracking, will that also be paid by companies engaged in this activity?"
Money in the 2013 federal budget currently dedicated to the USGS study would be better spent on other projects -- specifically, the Lewis and Clark regional water system in Minnesota, South Dakota and Iowa -- Franken said.
Salazar said Interior would continue to work with the Environmental Protection Agency to coordinate the federal government's study of fracking, but he did not offer an opinion on industry-funding of the study. "This money is part of our investment in understanding shale gas," Salazar said.
Salazar has said he hopes that federal government research into the shale gas practice will end "a lot of the hysteria" surrounding the well stimulation practice (see Shale Daily, Feb. 16). Interior's Bureau of Land Management is expected to soon issue regulations on fracking on public lands to ensure greater safety. The regulations, a draft of which was released earlier this month (see Shale Daily, Feb. 6), would require companies to submit information about the operations, including a report "that discloses all additives of the proposed stimulation fluid by additive trade name and purpose" and the "complete chemical makeup of all materials used in the proposed stimulation fluid."
ExxonMobil and Shell may be making record profits, but smaller independent oil and gas companies are far less likely to be able to afford paying for such a study, according to Sen. Mary Landrieu (D-LA). A study recently released by Greater New Orleans Inc. found that 41% of independent energy companies on the Gulf Coast were making no profit; 70% have lost significant cash reserves and 82% of business owners have lost personal savings as a result of the slowdown that followed the blowout of BP plc's Macondo well and the Obama administration's subsequent suspension of drilling in the GOM, she said.