U.S. Lawmakers Seek Regulation of Drilling Practice

U.S. lawmakers expect to introduce legislation next week that would reverse a Bush era law exempting a controversial drilling practice from federal oversight, possibly driving up costs and curtailing the development of vast amounts of unconventional energy.

Democratic Representatives Diana DeGette of Colorado and Maurice Hinchey of New York plan to offer a bill that would repeal a measure in a 2005 energy bill that excluded the method of hydraulic fracturing from regulation under the Safe Drinking Water Act.

“This is a very serious issue. If it is not addressed, large numbers of people are very likely to suffer,” Hinchey told Reuters. “Their water will be contaminated. Their houses will no longer be livable.”

Hydraulic fracturing, or “fracking,” injects a mixture of water, sand and chemicals into rock formations at high pressure to force out oil and natural gas. The practice has been used for decades to stimulate production in old wells, but is now also used to tap oil and gas trapped in sedimentary shale beds across North America.

Fracking is essential to shale gas production, which has significantly boosted U.S. gas output. The Energy Information Administration estimates these unconventional resources could make the United States virtually self sufficient in natural gas supply by 2030.

Removing the exemption for fracking would open the door to Environmental Protection Agency supervision of the practice. Industry groups are concerned the law will lead to a cumbersome federal standard that may require more permitting, higher water quality for fracking fluid and additional testing.

Richard Ranger, senior policy advisor for the American Petroleum Institute, said new requirements could cost as much as $100,000 per well, a significant burden for drillers.

In areas where companies are still exploring, Ranger said “that $100,000 price tag when added to other things can lead companies to say ‘No, we’re not going to drill here.”‘

Environmentalists and local groups say rampant fracking without a national safety standard is endangering human health by contaminating ground water. Residents in gas drilling areas have complained that their well water has become discolored or foul-smelling and that children have experienced diarrhea and vomiting.

DeGette and Hinchey’s bill would also force companies such as Halliburton Co and Schlumberger Ltd to reveal what chemicals they use to produce hydraulic fracturing fluid, information protected by the companies as trade secrets.

“When it comes to public health, it is not unreasonable to require companies to disclose the chemicals they use in our communities, especially near our water sources,” DeGette said.

Industry groups say the criticisms are completely unfounded and that gas drilling is done thousands of feet below ground, much deeper than most water resources. Also, they say officials have not linked any public health incidents to hydraulic fracturing.

“(Fracking critics) want to restrict our ability to produce natural gas, so they’ve created this sense of chaos and fear in order to produce that outcome,” said Lee Fuller of the Independent Petroleum Association of America.

The stakes are high for U.S. shale producers, such as Range Resources Corp, Chesapeake Energy Corp and Anadarko Petroleum Corp. The 44-million-acre Marcellus shale located in the northeast may be able to supply the entire United States for 10 years.

“Investors are watching it very closely because if something was to change meaningfully the deployment of the shales for natural gas, it has the potential to dramatically change market conditions,” said Christine Tezak, senior energy policy analyst at Robert W. Baird and Co. (Reporting by Ayesha Rascoe; Editing by Lisa Shumaker)