The natural gas boom generated by advances in drilling technology making economic production of unconventional resources like shale gas possible has generated increasing public attention as environmental advocacy groups and the media continue to attack the process and point to hydraulic fracturing as the cause of everything from natural methane migration to earthquakes. These dramatic allegations take center stage in the documentary, Gasland, by director Josh Fox. With its recent academy award nomination, Gasland continues to push hydraulic fracturing issues into the national and international spotlight.
Hydraulic fracturing is an oil and gas production service that involves injecting a mixture — comprised primarily of water and sand — into a targeted geologic formation at pressures sufficient to create small fractures in the rock thousands of feet below ground. These fractures are held open by the sand or other “proppants” used in the fracturing fluid and allow the natural gas to more effectively flow out from the hard rock formation and into the wellbore. Small concentrations of chemical additives are used in fracturing fluids in enhance the fluid performance. Hydraulic fracturing is only one part of the exploration, drilling and production process. It occurs after the well is drilled but before the well is completed and begins production. Hydraulic fracturing has been labeled the “technological key” to recovery of unconventional oil and gas resources like shale, coalbed methane and tight sands. Experts estimate that 90% of all oil and gas wells utilize hydraulic fracturing. Without hydraulic fracturing, efficient and economic development of the nation’s vast shale gas reserves would be impossible.
In the past few years, hydraulic fracturing has seemingly become the target for all environmental and health impacts associated with exploration and production activities. In response to heightened public concern — particularly fears that the fluid mixtures used in hydraulic fracturing could seep or migrate upward into underground sources of potable water — the federal government began taking steps to increase its oversight and regulation of the process. The last Congress introduced bills in both the House and Senate to enact the Fracturing Responsibility and Awareness of Chemicals Act (the “FRAC Act”), which would have subjected hydraulic fracturing to federal regulation under the Safe Drinking Water Act Underground Injection Control (UIC) program and required full disclosure of chemicals used in hydraulic fracturing fluids. Whether proponents of the FRAC Act or other similar legislation will introduce such legislation in the 112th Congress remains unclear.
In the meantime, the U.S. Environmental Protection Agency (EPA) has taken several steps to increase its oversight of hydraulic fracturing. First, at the direction of Congress, EPA has initiated a study of hydraulic fracturing and drinking water resources. EPA recently announced its selection of experts for the study review panel, which notably excluded all experts nominated by industry or environmental advocacy groups, resulting in a purely academic review panel. The Agency plans to submit the draft study plan to the Science Advisory Board for peer review in early 2011 and expects to have initial study results by late 2012.
Second, the EPA announced by way of a website posting that it would regulate hydraulic fracturing utilizing diesel additives under the Safe Drinking Water Act. The website posting indicated that “Any service company that performs hydraulic fracturing using diesel fuel must receive prior authorization from the UIC program. Injection wells receiving diesel fuel as a hydraulic fracturing additive will be considered Class II wells by the UIC program.” Industry groups have challenged the website posting as an improper rulemaking without notice or comment.
Most recently, on December 7, 2010, EPA issued an Emergency Administrative Order (the “Order”) to a natural gas company to take measures intended to mitigate methane contamination in drinking water supplies in Parker County, Texas, near Fort Worth, in the Barnett Shale area. According to the Order's cover letter, EPA "ha[d] data to indicate" that at least two private drinking water wells were impacted by methane contamination "directly related to oil and gas production facilities." The Order was an unprecedented use of the “imminent and substantial endangerment” authority the Agency has under Section 1431 of the Safe Drinking Water Act, 42 U.S.C. § 300(i) and has been followed by a January 2011 suit to enforce the Order and an appeal of the Order by the company. The Order was issued while a concurrent investigation of the matter is still pending before the state agency charged with oversight of oil and gas operations in Texas. The company has maintained that there is no connection between its operations and the methane detected in the water wells. The outcome of EPA’s exercise of authority in the case remains uncertain.
In the midst of heightened attention on hydraulic fracturing and drilling operations from the federal government, state governments have moved quickly to amend, promulgate, enact or revise state laws and regulations on hydraulic fracturing in order to preempt the need for any federal regulation of oil and gas production operations, which traditionally have been primarily governed by state law. For example, the New York State Department of Environmental Conservation (NYSDEC) is currently in the process of completing a “Supplemental Generic Environmental Impact Statement on the Oil, Gas and Solution Mining Regulatory Program: Well Permit Issuance for Horizontal Drilling and High-Volume Hydraulic Fracturing to Develop the Marcellus Shale and Other Low-Permeability Gas Reservoirs” (“SGEIS”). After receiving extensive public comment on the initial draft SGEIS, the NYSDEC was ordered by then-Governor Paterson to issue a revised draft SGEIS on or about June 1, 2011 and conduct an additional public comment period. In the interim, the NYSDEC has taken the position that it may not issue any permits for horizontal drilling or high-volume hydraulic fracturing until the SGEIS is finalized — creating a de facto moratorium on Marcellus Shale developments in New York. Other states have moved forward in efforts to update their existing oil and gas regulations to address key issues such as well construction standards and hydraulic fracturing chemical disclosure requirements.
Some regulators and environmental groups have begun to better understand the science involved in defining the risk of environmental impacts associated with hydraulic fracturing. With this understanding, they have shifted their focus away from the idea of subsurface upward migration of fracturing fluids to surface spill prevention and well construction requirements. Nevertheless, the media frenzy and NGO campaign against hydraulic fracturing remains strong and will continue to place the process and the oil and gas industry in both the public and regulatory spotlight.