US oil, gas production said threatened by new bill

09 June 2009 22:28  [Source: ICIS news]

WASHINGTON (ICIS news)--US energy industry leaders warned on Tuesday that proposed legislation giving federal environmental officials authority to regulate hydraulic fracturing would sharply reduce the nation’s oil and gas production.

Hydraulic fracturing involves high-pressure injection of water and chemical additives underground to free oil and natural gas from deep rock formations.

The American Petroleum Institute (API) and other energy industry lobbyists said that legislation introduced on Tuesday in the US Senate and House - the Fracturing Responsibility and Awareness of Chemicals (FRAC) Act - could cut US oil production by 8% and gas output by 22% by 2014.

The legislation would require energy exploration and development companies to report to the Environmental Protection Agency (EPA) the chemical additives used in their fracturing operations and obtain EPA permits to proceed.

“Hydraulic fracturing is a safe, proven, 50-year-old technology that is critical to developing the natural gas used to heat homes, generate electricity and create basic materials for fertilizers and plastics,” said API president Jack Gerard.

Gerard noted that more than 1m US oil and gas wells have been completed with hydraulic fracturing.  Along with horizontal drilling, hydraulic fracturing is essential to development of vast US fields of shale gas.

The US petrochemical industry and downstream chemical producers are heavily dependent on natural gas as a feedstock and energy fuel.

API and other industry representatives contend that hydraulic fracturing has long been regulated and monitored by state governments and that transferring that authority to EPA would put broad impediments in the way of oil and gas development.

Senator Bob Casey (Democrat-Pennsylvania), Senate sponsor of the bill, said the legislation is needed because private water wells in his state and elsewhere have been contaminated by natural gas and chemical additives used in fracturing.

However, Energy In Depth, an oil and gas industry coalition, argued that in more than a half-century of hydraulic fracturing, “not a single case of hydraulic fracturing-related contamination has been documented by federal or state government analyses”.

Chris Tucker, a spokesman for Energy In Depth, cited EPA’s own 2004 study that found that fracturing posed no threat to underground water supplies.

Representative Diana DeGette (Democrat-Colorado), principal sponsor of the bill in the House, is said to want to attach the FRAC Act to the broader energy and climate control bill now pending in Congress.

DeGette charged that hydraulic fracturing uses diesel fuel and benzene in the water mix. But Tucker contends that diesel fuel and benzene have not been used in the process in many years and that the additive chiefly used now is guar, an emulsifier also found in ice cream and peanut butter.

The chemical additives used in fracturing increase the viscosity of water, making it more gel-like, and comprise as little as 0.1% of the water and sand mixture injected into wells.

Tucker said that if passed, the legislation essentially would shut down much of US domestic oil and gas production while EPA added staff and wrote regulations to initiate an enforcement role over hydraulic fracturing.

He said the process is used in 90% of oil and gas wells with thousands of injections every month.

“EPA does not have the staffing or regulatory capability to even accept - much less review and process - what would be thousands of [hydraulic fracturing] applications each month,” Tucker said, “so the result would be to shelve hydraulic fracturing for a couple of years.

Long term, he said, the delays and uncertainty involved in an EPA permitting process for fracturing would chill investment in US domestic oil and gas development.

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By: Joe Kamalick
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