New federal rules on fracking are issued, draw wide opposition

04 May 2012 20:51  [Source: ICIS news]

WASHINGTON (ICIS)--The US Interior Department on Friday proposed new rules on hydraulic fracturing in oil and gas wells on federal lands, but the regulations came under broad opposition from energy industry officials, the chemicals sector and members of Congress.

The department said that it was proposing new rules to regulate hydraulic fracturing, called fracking, in the interest of expanding responsible oil and gas production on some 700m acres (284m ha) that are under federal control. 

As proposed, the rules would require drillers to disclose the chemicals used in fracking operations, set mandatory standards for well-bore integrity and establish requirements for handling fracking fluids that flow back to the surface during production.

The rules will be subject to a 60-day period for public comment, and the final regulations are expected by September this year.

In announcing the new requirements, Interior Secretary Ken Salazar said the rules are common-sense measures that will “support the continued development of America’s abundant oil and gas resources on federal and Indian lands”.

He said the regulations would advance US energy development by “taking steps to ensure public confidence in well stimulation techniques and technologies, including hydraulic fracturing”.

But energy industry officials and others were quick to condemn the move, charging that the regulations are yet another element of what some regard as an Obama administration war on fossil fuels and arguing that the requirements will further reduce production in federal territories.

The American Natural Gas Alliance (ANGA) joined others in noting that state officials have been regulating fracking operations for 60 years, charging that the proposed rules are an unnecessary and complicating duplication of longstanding state regulations.

“The proposal as drafted would create reporting requirements, regulatory impediments and certifications that could substantially affect the ability to produce resources” on federal lands, the alliance said.

The Independent Petroleum Association of America (IPAA) warned that the Interior Department’s new rules are redundant and “will undoubtedly insert an unnecessary layer of rigidity into the permitting and development process”.

The association said that “independent oil and natural gas producers are already having a tough time obtaining permits to develop federal lands”.

The Western Energy Alliance (WEA) charged that the rules “will slow western energy development, further disadvantage public and tribal lands and divert much-needed jobs, revenue and economic activity away from western states and local communities”.

Most federal lands covered by the Interior Department proposal are in western states.

“Since nearly every well drilled in the west requires the use of fracking,” said the alliance, “these unnecessary new rules will only discourage the production of American energy.”

The American Petroleum Institute (API) warned that energy production, job creation and royalty revenues to state governments “could be stifled by a federal regulatory programme that duplicates existing state regulations”.

“This could have a chilling effect on investment and jobs,” said API’s upstream director Erik Milito.

The Institute for Energy Research (IER), an energy industry think-tank, was more harsh, charging that the new Interior Department rules “are but the latest component of the administration’s war on fossil fuels”.

American Chemistry Council (ACC) president Cal Dooley noted that President Barack Obama has himself said that state governments are the primary regulators of onshore oil and gas production, and he said the council would review the new Interior Department rules to see if they duplicate existing state regulations.

Such duplication, he said, “would create additional barriers that slow permitting and raise production costs”.

“Higher energy costs would discourage US investment and prevent new job creation in our industry,” Dooley added. The US chemicals industry is heavily dependent on natural gas as its primary feedstock and an energy fuel.

Bill Allmond, vice president for government and public relations at the Society of Chemical Manufacturers and Affiliates (SOCMA), said that specialty chemicals producers are not against disclosure. “But when information about chemicals used [in fracking] already exists, there is no reason why manufacturers should be required to give up the most proprietary information about their products,” he said.

He said that specialty chemicals companies who produce the chemical additives used in fracking “would be the hardest hit by public disclosure rules that would give away their trade secrets”.

The National Association of Manufacturers (NAM) said that the administration’s actions against energy development are in contrast to White House statements.

“White House officials previously indicated that they understand the game-changing opportunity for manufacturers,” said NAM president Jay Timmons, referring to the recent development of abundant shale gas resources.

“But it is clear that they truly don’t get it,” said Timmons.

“The new regulations out of the administration today will unnecessarily slow down an affordable source that is driving growth,” he said.

Senator James Inhofe of Oklahoma, a longstanding critic of Obama administration energy and environmental policies and senior Republican on the Senate Environment Committee, said the Interior Department proposal was “yet another rule designed to strangle American energy production”.

Representative Doc Hastings (Republican-Washington), chairman of the House Natural Resources Committee, said that “the Obama administration is imposing more regulation and more red tape, and the result will be less American jobs and less American energy”.

But John Podesta, chairman of the Center for American Progress (CAP) and a former top aide to Obama, said the proposed rules do not go far enough and leave too much discretion to energy companies.

He said the proposed disclosure rules are inadequate and will jeopardise public health and deny public participation in energy development decisions.

The new Interior Department rules follow by three weeks new requirements on fracking issued by the Environmental Protection Agency (EPA).

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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