The Senate Energy and Natural Resources Committee put the spotlight on two important shale policy issues during its third and final forum on natural gas Thursday: the FracFocus chemical registry and whether a middle ground can be found in the dispute between the states and federal government over regulation of hydraulic fracturing (fracking).
The discussion was on how the FracFocus.org web registry, operated by the Ground Water Protection Council (GWPC) and the Interstate Oil and Gas Compact Commission (IOGCC), can be improved. Companies can voluntarily submit data on chemicals used to fracture natural gas and oil wells. But already a number of states, such as Texas, are requiring operators to post chemical use data on the website.
Environmental groups testifying at the hearing complained that the information that is submitted to FracFocus is unverifiable. "Who is verifying the data" that is submitted by oil and gas operators, asked Deb Nardone, director of the Beyond Natural Gas Campaign for the Sierra Club.
Several of the oil and gas operators -- XTO Energy Inc., Noble Energy and Anadarko Petroleum -- said they supported auditing of the fluid data by the states. It "makes a great deal of sense," said Clay Bretches, vice president of exploration and production services and minerals for Anadarko.
He suggested that the federal government provide funding to carry this out. "We're short on money," for that, quipped Sen. John Hoeven (R-ND).
The audit function is essential, but "it still isn't [being done by] a public entity," said Nardone. The "states [who receive the data] are government," Stan Belieu reminded her. Belieu is the deputy director of the Nebraska Oil and Gas Conservation Commission, president of the Ground Water Protection Council (GWPC) and a member of the Interstate Oil and Gas Compact Commission.
"I think FracFocus is a constructive effort," and efforts should be made to improve it, Committee Chairman Ron Wyden (D-OR) said. "On the disclosure issue, I have said a number of times that it needs to be done prior to drilling and it needs to be as full and complete as possible."
To solve the controversy over state versus federal regulation of fracking, he suggested that states might be given a "wide berth" to regulate fracking while at the same time the federal government would have a minimum backstop standard in place. The federal government could provide "some flexibility" to those states that take the lead on fracking regulations, Hoeven said.
Noble Energy CEO Charles Davidson proposed that there be increased involvement by the federal government in existing stakeholder organizations, such as the GWPC, the State Review of Oil and Natural Gas Environmental Regulations program and the IOGCC, to validate industry operating practices and gain the public's trust and confidence.
"To be clear, this is not a call for new or expanded regulations, but rather a validation of industry operating practices to ensure that they are fit...for particular regions of the country where development is occurring," he said.
Texas "is the appropriate arbiter of rules affecting the oil and gas industry in our state," rather than the federal government, Barry Smitherman, chairman of the Railroad Commission of Texas (RRC), told the Senate panel. The commission recently passed two rules and plans to pass two more this year that address best practices and environmental concerns relating to shale gas development. And in December 2011, the state passed one of the the nation's most comprehensive chemical disclosure rules for fracking fluids (see Shale Daily, Dec. 14, 2011).
In March, the RRC passed a rule dealing with the recycling of flowback water in the fracking process, and it expects to pass Friday a rule that will focus on well integrity, according to Smitherman. A final rule being considered will establish best practices for disposal wells, which are increasing in number as shale development continues to increase, he said.
Sen. John Barrasso (R-WY) asked for an assurance that the new rule on fracking, which was issued by the Bureau of Land Management last week, will not push oil and gas operators off of public and Indian lands (see Shale Daily, May 17).
"I'm not sure [that] I can make that particular assurance," said Tim Spisak, deputy assistant director of BLM minerals and realty management.
The BLM draft rule on fracking was widely opposed by producers, environmentalists and lawmakers. "I...question the need for these regulations and instead support strong state-based regulatory systems for natural gas development," said Sen. Lisa Murkowski of Alaska, the ranking Republican on the Senate Energy Committee.
The BLM's draft rule is "fundamentally flawed" and is "even weaker" than the proposal that came out last year, said Amy Mall, senior policy analyst with the Natural Resources Defense Council.
Wyden questioned industry panelists about when the problems associated with gas flaring would be resolved. It will "fix itself over time," said Jack Williams president of XTO Energy. The flaring is primarily occurring in the Bakken Shale play. Industry currently is investing $4 billion to process that gas.
Industry is working to bring infrastructure into the basin to capture the flared gas, said Charles Davidson, CEO of Noble Energy.