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New Fracturing Rules

For US operators, new regulations from the federal government regarding hydraulic fracturing practices could not have come at a worse time. Already battling the economic fallout from sharply lower oil prices, the rules seem especially ill-timed for smaller operators that fear the requirements could have a long-lasting impact on how they do business.

The new regulations proposed by the US Department of the Interior are designed especially to address public concerns about the safety of drinking water. The rules

  • Require companies to disclose the chemicals they use in hydraulic fracturing operations. The chemical additives are to be listed on the FracFocus website, which many states already use for disclosure requirements.
  • Set standards for the integrity of oil and gas wells, including using strong cement barriers between the wellbore and water zones. Elsewhere in this issue, hydraulic fracturing expert George King of Apache discusses well construction in a Beyond the Headlines column.
  • Force companies that are operating on federal lands to store waste water in surface tanks instead of lined pits.
  • Require pre- and post-drilling inspections and additional reporting requirements.

The Interior Department estimates that the regulations will add approximately USD 45 million annually to operations costs on federal lands. But for oil and gas companies, the big concern is the precedent it could set for operations outside of federal lands, opening the door to additional regulation. The Independent Petroleum Association of America (IPAA) and the Western Energy Alliance, both trade associations representing oil and gas producers, have sued the federal government over the rules, claiming that they interfere with individual state’s rights to govern their land. Some states have also responded negatively, including Wyoming and North Dakota, indicating they may join the lawsuit. The interior secretary has said she hopes the rules will serve as guidelines for states desiring to regulate oil and gas activity.

The lawsuit states the federal government standards were “a reaction to unsubstantiated concerns” and claims that “there is no factual, scientific, or engineering ­evidence necessary to sustain” the rules. “At a time when the oil and natural gas industry faces incredible cost uncertainties, these so-called baseline standards will ­threaten America’s economic upturn while further deterring energy development on federal lands,” said IPAA President and Chief Executive Officer Barry Russell.

To the trade associations, the regulations represent a more aggressive stance on hydraulic fracturing from the federal government, which up to now has largely left that oversight to the states. Some local governments have banned outright or put limits on hydraulic fracturing. The Interior Department maintains that it tried to strike a balance among the concerns of the industry, those of environmentalists, many of whom would like to see further restrictions or an outright ban on fracturing, and the public. The new standards can be found on the Interior Department’s website at www.doi.gov.

New Fracturing Rules

John Donnelly, JPT Editor

01 May 2015

Volume: 67 | Issue: 5

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