Oil and natural gas producers dodged a bullet Wednesday when Rep. Diana DeGette (D-CO) agreed to withdraw a controversial amendment that would have required service companies to publicly disclose the fluids used in hydraulic fracturing (hydrofracing), a technique used to stimulate production of natural gas from wells drilled in shale gas plays.

DeGette, who has been at the forefront of the movement in Congress to regulate hydrofracing, withdrew the amendment at the request of Chairman Henry Waxman (D-CA) of the House Energy and Commerce Committee (see Daily GPI, June 10, 2009). She sought to attach the measure to the Assistance, Quality and Affordable Act of 2010 (HR 5320).

Fortune smiled on service companies and producers because “it could have been very difficult to defeat her amendment,” given the black eye that the industry currently has, Lee O. Fuller, vice president of government relations for the Independent Petroleum Association of America (IPAA), told NGI.

Waxman asked DeGette to remove her proposal from consideration “at this time” while the House committee conducts its own inquiry into the potential health and environmental risks associated with hydrofracing of unconventional natural gas resources, and the Environmental Protection Agency (EPA) conducts a two-year study of hydrofracing’s effects on groundwater (see Daily GPI, March 19; Feb. 19).

While she agreed, DeGette told Waxman “we’re going to work with committee staff and with industry to have some compromise language by the time we go to the floor” with the bill. She said that “we have been contacted…in the last few days by several representatives of the oil and gas industry who believe that there is [room for] compromise” in this section of the bill.

The amendment proposes a rewrite of the Safe Drinking Water Act of 1974 (SDWA). Under the rewrite, “for states to maintain their [regulatory] primacy under the [SDWA], they would have to accept the disclosure requirements [for hydrofracing chemicals]. As part of those requirements, states would have to incur the costs of managing the data that would be generated for each fractured well and post that information on an Internet site.

“If they choose not to do that [maintain primacy], states would have to give up their regulatory responsibilities under SDWA and turn these functions over to the EPA. Not only would this burden EPA — since it is not staffed with the capabilities to undertake daily regulatory responsibilities — but it would also lead to duplicative [state-EPA] regulations,” Fuller said in a letter Tuesday to Waxman and Rep. Joe Barton of Texas, the ranking Republican on the House energy and commerce panel.

Barton said his biggest concern with the DeGette amendment is not that it requires disclosure of the chemical components used in hydrofracing, but that it gives the EPA a “regulatory foothold” over the hydrofracing process.

He noted that the Energy Policy Act of 2005 “made explicitly clear” that the EPA did not have authority over hydrofracing, but rather the authority rested at the state level. Barton said the states have done an “outstanding job.” But DeGette said only three states currently require the reporting of hydrofracing chemicals.

Hydrofracing, which is used to stimulate many oil and gas wells, is a process in which fluids are injected at high pressure into underground rock formations to fracture the rock and increase the flow of fossil fuels.

When he first saw the amendment, “I though it was a solution looking for a problem,” said Rep. Gene Green (D-TX). It “is literally jumping the gun” on the EPA study’s results.

IPAA’s Fuller agreed that the DeGette amendment should wait until the results of the EPA study are released. “Otherwise why should the time, energy and resources be spent on doing the study in the first place?” he asked.

For Green, the reporting of the hydrofracing fluids is not the issue. Rather he’s concerned about the possible disclosure of a service company’s proprietary information. And he fears that Congress may take its anger at the industry out on hydrofracing.

“The folks who do hydrofracing are not Big Oil,” Green said, adding that hydrofracing “has nothing to do with the disaster in the Gulf of Mexico.”

Rep. Mike Doyle (D-PA) said the DeGette amendment would have no impact in Pennsylvania because the state already requires the reporting of fluids used in hydrofracing in the Marcellus Shale play, but it does not require the disclosure of any proprietary information. “We’re not asking for the Coke or Pepsi formulas.”

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