Proposed US regs could hinder natgas - petroleum institute

03 June 2009 23:20  [Source: ICIS news]

HOUSTON (ICIS news)--Proposed US regulation on a technique to extract natural gas could obstruct supply growth of the petrochemical feedstock, the American Petroleum Institute (API) said on Wednesday.

Anticipated federal regulation of hydraulic fracturing under the Safe Drinking Water Act (SDWA) is unnecessary and could add as much as $150,000 (€105,000) to drilling costs, hindering supply development, the oil and gas lobby group claimed.

Hydraulic fracturing is a technology that involves pumping a water-sand-chemical compound into rock formations where the oil or gas is trapped. The water pressure from the compound creates tiny fissures in the rock and the sand holds open the fissures, thus allowing the oil or gas to escape and flow up the well.

Addressing reporters a day prior to a US House subcommittee hearing regarding unconventional natural resources, the oil and gas lobby group argued against the proposed federal regulations.

“We just question the value of laying over another federal regulation program when we think drilling operations are being addressed effectively right now by the existing state regulations,” API senior policy advisor Richard Ranger said.

"An estimated 60-80% of onshore wells drilled in the lower 48 states involve hydraulic fracturing," said Ranger.

Domestic supply of natural gas has increased substantially due to the economic viability of deriving gas by hydraulic fracturing from shale deposits in Texas, Louisiana, West Virginia, Colorado and Pennsylvania.

Environmentalists have called for federal regulation of hydraulic fracturing, citing hazards posed by the chemicals used in the process as well as the amount of water required.

Democrat Colorado Representative Diana DeGette introduced a bill on 29 September to repeal hydraulic fracturing's exemption under the SDWA. DeGette was still pushing to for repeal, according to news reports.

In late May, the Groundwater Protection Council (GWPC) released a study on the regulation of oil and gas field activities saying that regulation of oil and gas field activities, including hydraulic fracturing, is best accomplished at the state level.

($1 = €0.70)

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By: Steven McGinn
+1 713 525 2653



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