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BLM Regulation of Hydraulic Fracturing on Federal Lands
Key Provisions: A proposed rule would require detailed reporting of fracturing plans and results, including the chemicals used.
Potential Impact: The draft rule would impose an array of additional reporting obligations.
By Alan Kovski
The Interior Department unveiled its proposed rule May 4 for updated regulations governing hydraulic fracturing of oil and gas wells on federal and tribal lands, a proposal that includes a requirement for operators to disclose the chemicals they use in fracking.
Interior Secretary Ken Salazar described the proposal as a set of common sense rules that are needed to reassure the public of safe operations as the nation continues to develop its oil and gas resources.
The proposed rule, from Interior's Bureau of Land Management, will be published soon in the Federal Register. BLM Director Robert V. Abbey, joining Salazar in a telephone news conference, said BLM intends to issue a final rule by the end of the year.
Salazar stressed provisions for public disclosure of chemical additives in the fluids injected into wells during the process of creating fractures for the flow of oil or gas. “This will include appropriate protections for proprietary information,” Salazar said, adding that the regulations would set a high bar for claiming information is proprietary.
Most companies will not have a problem with disclosure, as evidenced by the details they post on the FracFocus disclosure website, Salazar said. He indicated Interior hopes to use that website for the disclosure it is requiring.
In a separate development, the Environmental Protection Agency released permitting guidance for fracking operations when diesel fuels are used as a fracturing fluid (see related story in this issue).
Interior released an economic analysis by BLM that projected annual costs to industry ranging from $37.3 million to just over $44 million for the proposed rule.
BLM concluded that net economic impacts would be positive, however, thanks primarily to avoided remediation costs. The net annual benefits would range from $25.6 million to $30.3 million, according to BLM.
The agency acknowledged that benefits are uncertain, leading it to rely on low-risk and high-risk scenarios of pollution in estimating benefits. Low-risk benefits were derived from the combined avoided cost of drilling a new water well and remediating a surface contamination. High-risk benefits were derived from the combined avoided cost of remediating a contaminated aquifer and remediating a larger surface contamination.
“Given the uncertainty in estimating these costs, the assumptions used err on the side of understating net benefits,” BLM said.
Federal officials have acknowledged that no confirmed case has yet occurred of a water well or drinking water aquifer being contaminated as a result of hydraulic fracturing. Industry officials have said that more than a million wells have been stimulated by fracturing over the course of more than 60 years.
BLM estimates that about 90 percent of wells drilled on federal and Indian lands are stimulated using fracturing. Industry spokesmen have said that 100 percent of shale gas and shale oil wells use fracturing.
Oil and gas industry groups reacted with statements of concern about regulations that may be redundant, given the fact that states already regulate drilling on federal lands within their borders (see related story in this issue).
Companies “are already having a tough time obtaining permits to develop federal lands,” the Independent Petroleum Association of America said. The proposed regulations from Interior's Bureau of Land Management “will undoubtedly insert an unnecessary layer of rigidity into the permitting and development process.”
Similar criticism came from the Western Energy Alliance, an industry group.
But those groups and the American Petroleum Institute also expressed approval of the idea of using the FracFocus site for chemical disclosures.
Sen. James Inhofe (R-Okla.) expressed even stronger disapproval. “Today President Obama released yet another rule designed to strangle American energy production,” Inhofe said. “Once again, his administration couched this rule in disingenuous rhetoric about increasing oil and natural gas development, all while rolling out just another duplicative and unnecessary bureaucratic roadblock designed to stall hydraulic fracturing.”
The Natural Resources Defense Council, an environmental advocacy group, issued a statement describing the draft regulations as “a critical first step.” But NRDC said that chemical disclosure should be required prior to fracturing, not just after, as BLM is proposing.
The same point about wanting chemical disclosure before fracturing was featured in statements from Earthjustice, the Wilderness Society, and Reps. Diana DeGette (D-Colo.), Maurice Hinchey (D-N.Y.), and Ed Markey (D-Mass.).
The Sierra Club released a statement saying it expected the administration to implement the toughest standards possible. The group said it “is deeply disappointing that fracking on sensitive public lands has been considered at all.”
The Sierra Club has been campaigning against expanded use of natural gas. “The natural gas industry is dirty, dangerous, and running amok,” the group said on its Beyond Natural Gas website, where it cites hydraulic fracturing as one of the reasons for wanting less gas use, not more.
The document spells out requirements for extensive information filings prior to drilling and reporting of what was done after the fracturing (84 DER A-25, 5/2/12).
The document says the rule “would require BLM's approval of all well stimulation activity.” That would supersede existing policy that says no prior approval is required for routine fracturing.
The company would be required to submit a drilling plan, including such elements as a detailed description of the well stimulation engineering design, for BLM approval. The company would need to submit the expected range of pressures to be used for fluid injection for fracturing.
A mechanical integrity test would be required to emulate the pressure conditions that would be seen in the planned fracturing activity.
The company would be required to submit the expected volume of fluid to be used, the expected fracture length and height, and the plans for recovery, handling, and disposal of fluids that emerge from the well.
The actual total volume of fluid used would have to be reported after the fracturing was performed. The company also would have to report the estimated length and height of the fractures accomplished and the actual handling and disposal of recovered fluids.
By Alan Kovski
The Bureau of Land Management's proposed rule on hydraulic fracturing is available at http://op.bna.com/env.nsf/r?Open=fwhe-8tymdq.
BLM's economic analysis for its proposed rule on hydraulic fracturing is available at http://op.bna.com/env.nsf/r?Open=fwhe-8tyqxq
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