The Arkansas Public Policy Panel (APPP) issued a report Wednesday urging state lawmakers to strengthen regulation of oil and gas development in the Fayetteville Shale and encouraged them to use moratoria as needed.

APPP Executive Director Bill Kopsky presented the 43-page report, "Model Oil and Gas Laws, Regulations and Ordinances," at the state Capitol along with five lawmakers, two of whom are sponsoring legislation that would affect oil and gas development in the Fayetteville.

"There are a lot of people in the state that are concerned about environmental and health issues, but also about the economic engine that the gas industry provides and wanting to make sure that it doesn't get closed," Kopsky told NGI's Shale Daily on Thursday. "We're not out to banish the industry from the state -- that would be a huge mistake. What we wanted to do is find reasonable solutions that are proven to work elsewhere and see if some of those might not make sense to try in Arkansas."

Kelly Robbins, spokesman for Arkansas Independent Producers & Royalty Owners, said the organization was taking the report very seriously.

"Arkansans, especially those who live in the areas where natural gas has developed and is harvested, should know and be confident that the natural gas production community takes its stewardship of this important and valuable resource very seriously," Robbins said Thursday. "We are reviewing the report and its various statements at this time."

Some of the recommendations in the APPP report are contained in a series of bills currently under consideration by the state House of Representatives. Among these are bills calling for gas wells to be inspected at least once a year; requiring gas drilling operators to post bonds sufficient to cover gas well closure and site remediation costs; measures to protect air quality and water resources, and requiring a full disclosure of the chemicals used in hydraulic fracturing. Additional bills would require additional disclosures from oil and gas companies and put noise limits on gas fields (see Shale Daily, Feb. 17).

State Reps. Kathy Webb (D-Little Rock) and Bobby Pierce (D-Sheridan) are the bills' sponsors and attended Wednesday's presentation by Kopsky.

The APPP report also urges Arkansas lawmakers and regulators to "continue to use moratoria as needed to pause oil and gas permitting, exploration and production activities in order to understand, and prevent or minimize impacts of development."

Oklahoma City-based Chesapeake Operating Inc. and Little Rock, AR-based Clarita Operating LLC voluntarily agreed on March 4 to halt drilling at two disposal wells in Faulkner County on concerns of a potential link between injection activities and several small earthquakes in the region. This week researchers said that although the earthquakes have since tapered off, it would be weeks before any link between the wells and the seismic activity could be determined (see Shale Daily, March 17).

Chesapeake and Clarita agreed to halt drilling at the wells on the same day that the Arkansas Oil and Gas Commission (AOGC) unanimously approved an emergency order for the drilling to be stopped. Although the companies did not agree that a potential link exists between the wells and the earthquakes, they plan to discuss the matter with the AOGC at its next regular meeting on March 29 (see Shale Daily, March 8; March 4).

Meanwhile, the AOGC extended a moratorium on drilling new disposal wells in the Fayetteville Shale play until July 28, giving the commission more time to compile seismic data (see Shale Daily, Feb. 1).

The APPP released a separate report on Feb. 23, "Arkansas in the Balance: Managing the Risks of Shale Gas Development in the Natural State," outlining what the panel believes are risks from shale gas development and making several recommendations to minimize them. The report was penned by Debbie Doss, a long-time conservationist and chair of the Arkansas Conservation Coalition (see Shale Daily, Feb. 24).

The Fayetteville Shale stretches across north and central Arkansas. Production from the play continues to ramp up, according to data from the Arkansas Oil and Gas Commission. Production has climbed from less that 0.24 Bcf/d during 1Q2007 to approximately 2.25 Bcf/d during 3Q2010.