The Department of Interior, which is weighing new chemical disclosure rules for drillers operating on public lands, last week signaled support for the natural gas industry's shale boom, which has been "stimulated" by hydraulic fracturing (fracking) technology.
"From our point of view, there is a bright future for natural gas," Interior Secretary Ken Salazar said Tuesday. Industry and state regulatory officials came together in a forum convened by the Interior Department focused on whether fracking chemicals should be federally regulated.
Fracking chemicals, combined with new drilling techniques, have worked phenomenally well in forcing natural gas from underground shale and tight gas formations. However, the drilling process has resulted in a huge backlash from opponents who claim the chemicals pose dangers to the nation's water supplies.
Interior's Bureau of Land Management (BLM) currently has leased 12 million onshore acres of its total 250 million acres for drilling. About 12,000 of the 48,000 leases issued by BLM are currently producing natural gas -- 11% of the nation's supply -- and 90% of the gas wells are drilled using fracking techniques.
Interior for now has not indicated whether more regulations are in the pipe. Whether to proceed with a national policy about fracking on public lands could be announced in weeks or it could take months, Salazar said.
"First, natural gas is, in fact, an abundant resource that we control here in the United States of America," he said. Obama "is also concerned about what we do on climate change, and when you compare the emissions caused by natural gas to other forms of energy you know that it is a cleaner fuel."
However, fracking is a "hot and very difficult issue...So the question is really in my mind how we move forward in a way that can reassure the American public that what we are doing is in fact safe," he said.
White House energy czar Carol Browner reiterated that "natural gas offers a tremendous opportunity for our country," and she called on the opposing sides to set aside their differences and find common ground.
Most onshore wells (90%) are stimulated through fracking, said BLM Deputy Director Marcilynn Burke. However, "BLM's current regulations of hydraulic fracturing operations are limited. In fact there are only a few regulations with respect to hydraulic fracturing, and even those regulations may not be as salient today as when we first promulgated them," she said.
"For example, the regulations specify different requirements for routine operations versus non routine operations. If an operator is performing a routine hydraulic fracturing of a well, the operator must simply notify and report to the BLM within 30 days of that activity." For a non routine activity, prior approval from BLM is required before the activity may begin. Current regulations, however, do not define what is routine versus what is non routine, Burke said.
Under BLM rules, operators "at all times" are responsible for protecting freshwater-bearing zones from drilling-related activities, explained BLM's Steve Salzman, the division chief of fluid minerals. said. BLM, which manages 700 million acres of subsurface mineral estate, also has regulations in place that cover produced water in workover pits. However, there are no requirements on the books to disclose the chemicals used to fracture wells.
There is no dispute in the results from fracking wells.
Frack technology "has single-handedly turned the United States from a nation of declining natural gas reserves to one of natural gas abundance," Anadarko Petroleum Corp.'s Jim Kleckner, vice president of Operations, told the forum. He explained how the producer uses chemicals in its "world-class" gas operations in the Greater Natural Buttes in northeastern Utah.
Anadarko plans to drill more than 3,600 new gas wells in the Greater Natural Buttes area over the next 10 years, with 760 miles of new roads, 820 miles of buried pipelines, 587 miles of surface pipelines and seven miles of electric power lines. BLM estimates that 12,658 acres of the 162,911 acres would be disturbed under the plan. However, Kleckner explained that Anadarko is meticulous in protecting water, including using cemented steel casings in its wells.
State officials also assured regulators that their states' drillers are well supervised. Tom Doll, who has overseen the Wyoming Oil & Gas Conservation Commission since 2009, said 68% of the state's minerals are on federal land, which means there is a lot of drilling under way.
"Other than shallow coalbed methane wells primarily in northeastern Wyoming, 100% of all of the oil and natural gas wells are hydraulically fractured," Doll said. "If we weren't able to use hydraulic fracturing in the state of Wyoming, wells would not be economic by any stretch of the imagination."
Not allowing operators to fracture their wells "would be a negative impact on Wyoming's economy. We gain tax revenue from the severance tax...My agency is completely funded by the industry with the conservation tax. Wyoming has no income tax and a low sales tax. Fracking is a reality and it means something to each individual in the state of Wyoming."
Wyoming earlier this year enacted the first chemical disclosure rules for the energy industry (see NGI, Sept. 6).The only hitch to date in implementing the new rules has been related to proprietary information for some of the chemical companies, Doll said.
"We've had an interesting time with installation of the rules. We found out that the secondary chemical market had not been contemplated when we were addressing disclosure...There are chemical suppliers that all of the sudden learned that Wyoming had a disclosure requirement...
"We don't have provisions to protect proprietary chemistry or information, but we can protect trade secrets," said Doll. "We have, on about 11 occasions to this point, issued a trade secret exemption to our disclosure requirement. I don't expect that there's going to be massive flood of requests, but we do have those requests weekly from various, different chemical suppliers and manufacturers." Since the 1950s, when the state began tracking oil and gas drilling "there have been no confirmed cases of groundwater contamination in state of Wyoming."
Following the forum, House Republicans asked Salazar for more information about possible new fracking rules.
Rep. Doc Hastings (R-WA), who is expected to chair the House Natural Resources Committee beginning next year, asked Salazar in a letter on Wednesday to testify before the committee about the potential rules.
"It is requested that before taking action to unilaterally implement this policy as secretary, that you appear before the House Natural Resources Committee in the 112th Congress to provide testimony and answer questions from committee members," Hastings wrote. "It is important for the department to carefully consult and consider guidance from the House Natural Resources Committee on policies that will impact technological innovation and competitiveness on federal lands."
On Friday a three-page letter was sent to Salazar by Rep. Joe Barton (R-TX), now the ranking member of the Energy and Commerce Committee, and Fred Upton (R-MI), the ranking member of the Subcommittee on Energy and Environment.
Salazar was asked by the House members to respond to a series of questions by Dec. 17 "regarding the administration's intentions, and any hydraulic fracturing-related policy or regulatory proposals that may be forthcoming" from Interior.
"Safe drilling practices are of critical importance," said Barton and Upton. "Because hydraulic fracturing is already a regulated practice, however, we believe that it is essential that [Interior] focus on understanding the universe of existing federal and state regulations on hydraulic fracturing, water quality for underground sources of drinking water, emergency planning and reporting, and waste disposal requirements, and the expertise already being brought to bear on these activities before placing regulatory requirements on natural gas exploration and production."
A "rush to regulate" by Interior and the Obama administration, they wrote, "will chill domestic oil and gas development and would negatively impact our efforts to increase energy security and to provide for a reliable and affordable energy supply..."
A scientific study on fracking chemicals is under way by the Environmental Protection Agency (EPA), and the agency also is reviewing chemical data from major national and regional fracking service providers (see NGI, Nov. 22; Nov. 15). Initial results of the congressionally mandated study, which is expected by the end of 2012, is looking at the potential adverse impact of the practice on drinking water and public health (see NGI, March 23).
To perhaps head off additional regulations, the industry is encouraging transparency. In October the national Ground Water Protection Council (GWPC) unanimously called for a complete disclosure of fracking chemicals (see NGI, Oct. 4), and later that month GWPC and the Interstate Oil and Gas Compact Commission announced they would create a state-based system to disclose chemicals on a public registry .
With many of its members already disclosing fracking chemicals used to state officials, last week America's Natural Gas Alliance (ANGA), the Independent Petroleum Association of America and the American Exploration & Production Council said they support efforts to disseminate the chemical information.
"The natural gas community is committed to the safe and responsible development of this clean energy resource," said ANGA CEO Regina Hopper. "That commitment means being responsive to the questions raised in communities where we work. It is our hope that with this greater transparency will come greater public confidence in the safety of the hydraulic fracturing process."
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