Opponents of hydraulic fracturing (hydrofracing) who worry that the practice will contaminate drinking water thousands of feet underground should be more focused on what goes on above ground at natural gas drilling sites. There is a greater threat to water and the environment on the surface if proper safety practices are not followed, according to a new study of hydrofracing and gas shale plays.

The study report quotes a Pennsylvania regulator: "We don't have a problem with hydraulic fracturing -- we don't see it as a problem. We do see a problem with spills."

The 65-page report "Frac Attack: Risk, Hype and Financial Reality of Hydraulic Fracturing in the Shale Plays," reiterates the gas industry assertion that there have been no documented cases of groundwater contamination due to the 60-year-old practice of hydrofracing and notes that "any drilling has the potential to contaminate groundwater if the well is drilled and cemented improperly." The report was prepared by Reservoir Research Partners and Tudor, Pickering, Holt & Co.

An Environmental Protection Agency study of fracing is just beginning (see related story). However, the practice is unlikely to be banned, the report says, noting that the resulting job losses, higher energy prices and challenges from landowners are an effective deterrent to a ban, as is producing states' reliance on royalties, particularly in Pennsylvania.

However, new federal oversight could be in the offing, particularly following the disastrous blowout of the BP plc Macondo well in the Gulf of Mexico. "If you think no one will connect deepwater oil to onshore shale, think again," the report warns. "Both the oil spill and recent gas drilling accidents [see Daily GPI, June 11a; June 11b] spotlight the inherently difficult nature of the oil and gas business and have tarnished industry credibility. Groups opposed to fracing have wasted no time making connections between the two."

This became apparent recently when local lawmakers in New York and Pennsylvania sought holds on gas drilling, some while citing the BP disaster as well as the independent film Gasland, which attacks the safety of hydrofracing (see Daily GPI, June 24).

But if citizens and their representatives want to worry about gas drilling, they should focus on the handling of produced and flowback water as well as chemicals at drilling sites. "We believe waste disposal and safe materials-handling pose among the biggest challenges to gas producers," the report says. "Simply put, fracing chemicals and drilling waste are more hazardous above ground than several miles underground."

Drilling "opponents get more traction by attacking underground fracturing, but the everyday risks of shale drilling center more on surface disturbance."

Some producers would welcome stiffer rules at the state level, the report says, as these would weed out "bad actors whose sometimes haphazard efforts help run environmentalists' campaigns for them." And these producers are seeing the wisdom of spending more on precautionary measures.

"In Pennsylvania, where the economy is already transformed by the drilling boom, producers told us it is simply worth it financially to go up against a wall of opposition to drill a well," the report says. "Even in some regions of New York, we believe companies with strong nerves and a willingness to control their environmental footprint will drill profitable leases -- eventually. (It just won't be in the New York City watershed.)"

If there is no federal regulation of fracing, additional well costs just from producer responsiveness to community and lawmaker concerns could add $200,000 to $500,000 to the cost of each well, for which current costs range $2.5 million to $10 million, the study says. "Bigger ticket items include extra well casing, more rigorous cementing and water treatment.

"If Congress does mandate EPA oversight of fracing, the industry predicts further costs of $125,000 to $250,000 per well. We think costs could be less than that given changes companies are making voluntarily."

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