See No Evil, Hear No Evil Approach to Regulating Hydraulic Fracturing Shale Gas Extraction

On June 4, 2009 the House Committee on Natural Resources Subcommittee on Energy and Minerals held a hearing on the topic of shale gas development through the technique of hydraulic fracturing. While spending a couple of hours this morning listening to a somewhat testy exchange of opinions and positions, I learned that the Energy Policy Act of 2005 was the vehicle by which the natural gas industry obtained a unique exemption from the 1974 Safe Drinking Water Act, that a compact of 30 states involved in the production of oil and gas had regulatory schemes with varying, but somewhat coordinated rules, and that a non-profit organization had developed a review process to determine the strength and adequacy of the regulations.

I also found out that claims of “never a problem with hydraulic fracturing” were carefully stated to ensure that the claim was applicable only to a portion of the full process and did not include the potential for human or mechanical errors during drilling through aquifers, or the potential for surface water contamination. The witnesses that claimed that there was no evidence of contamination from hydraulic fracturing admitted that some parts of the complete process of extracting gas from shale formation had historically caused some issues of contamination or property damage, but the “fracking” process itself had not yet been proven to be the cause of any incidents. (One witness dismissed the reports of previous problems by stating that they were “legacy” issues that have already been corrected through state legislation and/or regulatory changes.)

Though the natural gas industry is adamant that additional regulations will cause it undue financial burdens and limit its ability to supply the abundant, cheap fuel that it claims is a “game changer”, it appears evident that the practice of drilling for unconventional gas requires consistently applied regulations set at the federal level, perhaps with some assistance from state agencies that have proven capabilities as the local enforcement arm. As described by the witness from the US Geological Survey, the formations being developed are spread over large areas that do not respect state lines. The potentially affected air and water resources also do not recognize the politically determined boundaries of existing states.

In many cases, notably the newly developing Marcellus shale formation, the continuous gas reservoirs are deep under the surface of states that have little existing regulatory infrastructure and little experience in deep underground drilling. It is disingenuous for the oil/gas industry and the states that have experience to dig in their heels on a states rights basis when it is clear that the implications of developing this large and important resource in a responsible manner will require multi-state cooperation with legal enforcement of required practices and should not be dependent on voluntary compliance with vaguely defined ”best practices”.

It is also clear that some of the current state regulators do not understand the need to keep historical records or the ease with which computer data bases can be established and searched. During the hearing one such regulator (Lynn Helms from North Dakota) dismissed the need add a requirement to file Safe Drinking Water compliance reports by talking about “reams of paper”. He also claimed that workplace safety rules established by the Occupational Safety and Health Administration (OSHA) already require drillers to have documentation of the chemicals in use during the fracturing process. What he failed to mention was that OSHA rules for Material Safety Data Sheets do not apply once the formation has been tapped and the workforce has departed, so any leaks or seeps that occur later would have no way of being traced to the polluter.

It is hard for a nuke like me to fail to contrast the ease with which some regulators and legislators dismiss the need to monitor, keep records and provide oversight for an activity – like pumping known toxic materials into deep wells at pressures that sometimes exceed 9,000 pounds per square inch – that has the real potential of causing immediate harm to living people against the incredible level of detailed study required of the nuclear industry to prove that its left overs will not harm the postulated drinking water supply of people living 100,000 to 1,000,000 years from now.

I am not an advocate of adding excessive regulatory burdens on the natural gas industry just because they have been added to the nuclear industry, but I do believe that it is a legitimate function of the federal government to set consistent, enforceable standards to protect a fragile shared resource from an industry with a history of socializing its costs and privatizing its profits.

Interesting note – according to the industry representative on the panel, from my favorite independent gas driller, the going forward price for natural gas needed to keep unconventional gas supplies increasing under CURRENT rules (with the exemption from the Safe Drinking Water Act) is $6-8 per million BTU. While new nuclear plants might have a difficult time competing with $4 gas, it gets easier when the competition is $6-8 per million BTU gas and would be a slam dunk if the cost of gas was higher than that.

If you have a couple of hours, you might want to listen to the hearing for yourself.

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