Oil, Gas Companies Lobby White House To Block Hydraulic Fracturing Rule

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By Ari Natter

Oct. 15 — Representatives of Exxon Mobil Corp., Halliburton, Chesapeake Energy Corp. and other oil and gas producers met with White House officials and urged them to not to proceed with a final rule to regulate hydraulic fracturing on federal and Indian lands, online meeting records show.

The rule, which was proposed by the Interior Department's Bureau of Land Management and is being vetted by the White House Office of Management and Budget, will have a significant impacts on the industry, and its effects have not been adequately analyzed, according to an American Petroleum Institute handout distributed at the meeting.

“The BLM rule adds an unnecessary and duplicative layer of regulation on top of the already strong and stringent state regulation of hydraulic fracturing,” the document said. “This added layer will increase costs, delay permitting, and will slow domestic energy production all at the expense of the American taxpayer.”

The meeting, which was requested by the API and held Oct. 6, also included representatives from Hess Corp., Devon Energy, Occidental Petroleum and Marathon Oil, as well as officials from the White House Council on Environmental Quality, Interior Department and the Office of Management and Budget, according to meeting records.

The rule (RIN 1004-AE26) has been in the works since 2012 after increased use of fracking stoked fears of water pollution from oil and gas development. The regulation will focus on wellbore integrity, fracking fluid chemical disclosure and issues related to flowback water, which is the water that comes out of a well along with oil or natural gas.

The rule has been under review at OMB since late August.

$1 Million Per Well Increase

According to the API, a provision in the proposed regulation defining “usable” water “continues to be vague and overly broad” and compliance could increase costs by more than $1 million per well.

“These costs are ignored by BLM in its own analysis and calls into question the agency's entire cost analysis,” the API said in the handout.

A revised version of the rule, released by the Interior Department in May 2013, represents an improvement over the initial proposed rule in 2012, the API said, adding that aspects such as the use of the online database FracFocus.org to disclose chemicals used in fracking fluid should be retained in the final version.

Hydraulic fracturing, in which water, sand and chemicals are pumped under pressure to create cracks in layers of rock so that oil or gas can flow to a well, is the drilling technique that is responsible for the recent energy boom that has led the U.S. to become the largest gas producer in the world. U.S. oil production has increase by 65 percent in the past five years, according to Bloomberg News.

Environmental advocates and some congressional Democrats are opposed to its use, but API said more than 1 million oil and gas wells—including approximately 90 percent of those on federal and Indian lands—have been hydraulically fractured “without a single demonstrated instance of the fracturing process affecting ground water.”

To contact the reporter on this story: Ari Natter in Washington at anatter@bna.com

To contact the editor responsible for this story: Larry Pearl at lpearl@bna.com

The White House OMB meeting records are available at http://1.usa.gov/1Cnhu9U.

The API handout is available at http://op.bna.com/env.nsf/r?Open=smiy-9pwqr3.