US chemical firms, other producers slam fracking rules

18 June 2012 23:02  [Source: ICIS news]

WASHINGTON (ICIS)--US chemical producers and other major manufacturers on Monday urged the Obama administration to abandon plans for regulation of a key shale gas drilling technology, saying that a federal role would impede development.

The Industrial Energy Consumers of America (IECA) said in a letter to Interior Department Secretary Ken Salazar that plans by his agency to regulate the drilling technique known as hydraulic fracturing (“fracking”) will further impede development of vast new natural gas resources.

Hydraulic fracturing involves the injection of water, sand and some chemicals under high pressure into deep shale rock formations to  fracture and free-up previously unrecoverable natgas resources. 

That technique, along with horizontal drilling, is credited for development of a new boom in US domestic gas production.  US chemicals production, which relies heavily on gas as a feedstock and energy fuel, has seen a renaissance in output and exports as a consequence.

As proposed in May this year, the Interior Department 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 final regulations are expected by September this year.

In announcing the new requirements, 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”.

But IECA said in its letter to Salazar that state governments have reliably regulated fracking for 50 years or more and that an additional federal involvement would impede development of the new gas resources.

“The manufacturing sector has directly benefited from greater use of hydraulic fracturing and low natural gas prices,” said IECA president Paul Cicio.

Cicio warned that Interior Department regulation of fracking “raises significant concerns that drilling permitting [on federal lands] will slow and that production rates will fall”.

“It is of great concern that [the department] provides no supporting scientific data on hydraulic fracturing, well stimulation incidents or problems that justify new overarching regulation,” Cicio added.

The Interior Department bid to regulate fracking operations on federal lands followed a recent and parallel move by the Environmental Protection Agency (EPA) to put regulations on fracking operations.

In addition to the Interior Department and EPA’s regulatory initiatives, at least eight other federal agencies are conducting a dozen or more inquiries into fracking with an eye to regulating the technology.

Environmentalists and others allege that fracking contaminates drinking water supplies and poses a risk to surface waterways in the disposal of “backflow” waters used to fracture deep shale formations.

Cicio noted that permitting delays by the Interior Department in the 2000-2005 period contributed to a sharp run-up in US natural gas prices, arguing that those delays contributed to skyrocketing gas prices and the loss of some 3m US manufacturing jobs.

In addition to chemicals producers, IECA members include automotive, foods, paper and construction supplies manufacturers, all of whom rely on natgas as either a feedstock or energy fuel or both.

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

By: Joe Kamalick
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