Shale Daily / NGI All News Access

Industrials Ask Salazar to Reconsider BLM Regulation of Fracking

A group of industrial energy consumers have urged Interior Secretary Ken Salazar not to impose "duplicative" regulations on hydraulic fracturing (fracking) of oil and natural gas wells on public lands.

"Instead we urge you to consult with the relevant states and their regulatory agencies before advancing new hydraulic fracturing-related regulation. The manufacturing sector has directly benefited from greater use of hydraulic fracturing and low natural gas prices. BLM [Interior's Bureau of Land Management] regulation of hydraulic fracturing raises significant concerns that drilling permitting will slow and that production rates will fall," wrote Paul N. Cicio, president of the Industrial Energy Consumers of America (IECA), in a letter Friday to Salazar.

In early May BLM issued a proposed rule that would require producers to disclose chemicals used in fracking operations on public and Native American lands only after the operations have been completed. Salazar came under attack mostly from environmentalists for the department's decision not to require advance disclosure of fracking chemicals from producers. "We will achieve our objective with the rule that allows the disclosure to be made after the hydraulic fracturing because the chemicals will be posted on fracfocus.org, which is open to the public," he said at the time.

In addition to requiring the reporting of fracking chemicals, the proposed rules would require operators to assure the BLM of wellbore integrity -- that chemicals used in their wells during fracking operations are not escaping. Specifically it would require a producer to conduct a cementing bond log to ensure that cement is adhering solidly to the outside of the wellbore casing, thus ensuring wellbore integrity.

IECA members, which include manufacturing companies with annual sales of $700 billion, "have good reason to be concerned about regulatory burdens on natural gas and oil production on federal lands," Cicio told Salazar.

"From 2000 to 2005, natural gas prices doubled and tripled because demand exceeded supply. We recall that BLM's permitting system, heavy with increased bureaucracy and inadequate staffing, resulted in thousands of permit backlogs. As a result, wells were not drilled, natural gas and oil were not produced and the manufacturing sector and economy as a whole suffered," Cicio said.

"The manufacturing sector lost three million jobs from 2000 to 2005 and a great number of these jobs were directly related to the high price of natural gas. Thousands of chemical, plastics, fertilizer, steel, paper, glass and aluminum plants shut down. We cannot and should not let this happen again."

From a statistical standpoint, changes in the real price of natural gas at the Henry Hub (with 2005 being the base year) have explained 45% of the variability in manufacturing employment in the United States since 1990.

The BLM " lacks the knowledge, experience and judgment on cost-effective hydraulic fracturing or well stimulation best practices when compared with the states. In fact, existing BLM permitting processes already suffer from extraordinary delay. It will take unnecessary time and resources to bring the federal bureaucracy up to current state levels of technical proficiency," Cicio said.

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