A decision by the Department of Interior’s Bureau of Land Management (BLM) to set aside its original federal hydraulic fracturing (fracking) proposal has drawn plaudits from associations representing major oil and natural gas producers.
The BLM intends to publish a new draft rule before the end of March and will seek additional comments, an Interior Department spokesman said. Once comments on the updated draft have been collected and analyzed, the BLM said it expects to issue a final rule The department has delayed the draft rule because of the “scope of the changes that it wants to make,” said Lee Fuller, vice president for government relations for the Independent Petroleum Association of America.
Since the close of the public comment period on the current draft (September 2012), BLM said it has been making revisions to the draft rule that are responsive to concerns raised by industry and other parties. The revisions will be submitted to the Office of Management and Budget this week [starting Jan. 28) for review. Once that process is finished, the new draft will be available for review and comment by the public.
The updated draft rule will maintain the three main components of the initial fracking proposal: requiring operators to disclose the chemicals they use in fracturing activities on public lands; improving assurances on well-bore integrity to verify that fluids used in wells during fracturing operations are not escaping; and confirming that oil and gas operators have a water management plan in place for handling fracturing fluids that flow back to the surface.
The American Petroleum Institute (API) “welcome[s] this move as a positive first step,” said API President Jack Gerard. “However, the real test will be in the substance of the re-proposal. We hope the administration will recognize the strong oversight provided by existing state and federal regulations and take sufficient time to review the many thoughtful comments provided by the oil and natural gas industry and others.”
Oil and gas companies, and Republicans, generally oppose federal fracking regulation, while Democrats and environmentalists support it, saying that it is a threat to water and air quality. “Effective regulation of hydraulic fracturing already exists in the states. Conflicting or duplicative federal requirements [in states where BLM lands are located] would delay development of abundant domestic oil and natural gas,” Gerard said.
In comments filed in June 2012, the API requested extensive changes to the final fracking rule to make it workable. “The shale energy is reshaping America’s energy future. We need to be smart about regulating it,” API said. Acknowledging the states’ existing authority of shale energy development, departing Environmental Protection Agency Administrator Lisa Jackson said, “You can’t start to talk about a federal role without acknowledging the very strong state role.”
“The BLM has wisely resisted political pressure to rush through a highly complex and controversial rule,” said Western Energy Alliance (WEA) Vice President Kathleen Sgamnma, who directs government and public affairs from Denver. “We continue to believe a federal [fracking] rule is not necessary, as states have been effectively regulating for decades with an exemplary health, safety and environmental record.”
The WEA has reported that the draft fracking regulations would add more than $250,000 to the cost of each new well, for an aggregate annual cost of $1.5 billion. “We hope BLM’s next steps include a thorough cost assessment to balance the regulatory burden with the impact on jobs and economic growth. A true assessment would reveal that BLM should not usurp state regulatory authority at a time of overwhelming federal debt and declining budgets.”
Last year Interior issued a draft fracking rule that would require producers to disclose chemicals used during fracking operations on public and Native lands, but only after the operations have been completed (see NGI, May 7, 2012). The rule includes appropriate protections for disclosing proprietary fracking chemicals, but producers will have to meet a “very high bar” for their chemicals to be deemed proprietary, according to BLM.
In addition to requiring the reporting of fracking chemicals, the proposed rule 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. Producers also would need to confirm that they have a water management plan in place for handling fluids that flow back to the surface following drilling operations.
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