On Friday the Obama Administration released what the U.S. Department of Interior deemed the “Final Rule to Support Safe, Responsible Hydraulic Fracturing Activities on Public and Tribal Lands.” The new regulations primarily address well integrity, water protection and the long-awaited detailing of chemical disclosure. While many environmental organizations claim the new standards are merely paper tigers, numerous voices, including congressional representatives and the American Petroleum Institute (API), claim the standards are redundant, costly and burdensome to the oil and gas industry.
The floodgates of disapproval
“Despite the renaissance on state and private lands, energy production on federal lands has fallen, and this rule is just one more barrier to growth,” said API Director of Upstream and Industry Operations Erik Milito. The API spokesperson praised the strong environmental stewardship of state regulators which has guided fracking and horizontal drilling efforts to a prosperous era.
“Increased production and use of natural gas has helped cut U.S. carbon emissions to a nearly 20-year low, and this decision only stands in the way of further progress,” Milito stated. According to the API, onshore natural gas development on federal lands has declined 21.6 percent since 2009.
However, Assistant Secretary for Land and Minerals Management Janice Schneider has stated that the new rules would be implemented in the most efficient way possible to avoid duplication or unnecessary activities by industry, other regulators, or the U.S. Bureau of Land Management (BLM) staff.
“We know how important it is to get this right.” Schneider stated. “This rule will protect public health and the environment during and after hydraulic fracturing operations at a modest cost while both respecting the work previously done by the industry, the states and the tribes and promoting the adoption of more protective standards across the country.”
After the official release of the new regulations, Kevin Cramer (R-ND) said that he hoped the new rules would give adequate deference to states, like North Dakota, who have been effectively regulating oil and gas production for decades. Cramer claimed that states like North Dakota have regulated the energy industry in a safe and environmentally friendly manner and that this policy should not “let misguided bureaucrats under the influence of extreme environmentalists derail the energy security fracking has brought to the United States.”
Right out the gate, the Independent Petroleum Association of America (IPAA) and Western Energy Alliance filed a lawsuit against the U.S. Secretary of the Interior and the U.S. Bureau of Land Management, challenging the BLM’s issuance of regulations related to hydraulic fracturing on federal and Indian lands. The Complaint, filed in federal district court in Wyoming, characterizes BLM’s rulemaking as “a reaction to unsubstantiated concerns” and requests the regulations be set aside because the administrative record lacks the factual, scientific, or engineering evidence necessary to sustain the agency’s action.
“From California to Pennsylvania, the oil and natural gas industry has played a critical role in reviving America’s economy and hydraulic fracturing has been the key to this revival,” said Barry Russell, President and CEO of the IPAA. Russell again added that new regulation at a time when oil and natural gas faces incredible cost uncertainties is far from common sense.
The technological innovation of hydraulic fracturing and horizontal drilling, however, are why many feel the rules are necessary. According to government records, federal well-drilling regulations haven’t been updated in over 30 years. “They simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” said Secretary of the Interior Sally Jewell.
So what prominent changes are actually included in the overhaul of federal land regulation? According to the U.S. Department of Interior, within 90 days, the following key components of the ruling will take place:
- Provisions for ensuring the protection of groundwater supplies by requiring a validation of well integrity and strong cement barriers between the wellbore and water zones through which the wellbore passes;
- Increased transparency by requiring companies to publicly disclose chemicals used in hydraulic fracturing to the Bureau of Land Management through the website FracFocus, within 30 days of completing fracturing operations;
- Higher standards for interim storage of recovered waste fluids from hydraulic fracturing to mitigate risks to air, water and wildlife;
- Measures to lower the risk of cross-well contamination with chemicals and fluids used in the fracturing operation, by requiring companies to submit more detailed information on the geology, depth, and location of preexisting wells to afford the BLM an opportunity to better evaluate and manage unique site characteristics.
According to the Interior Department, there are more than 100,000 oil and gas wells on federally managed lands. Of wells currently being drilled, over 90 percent use hydraulic fracturing. And to be honest, from previous reports the industry could use a helping hand in environmental regulation. Last June, the BLM released a study that found that from 2009 to 2012, 40 percent of high pollution risk wells found on federal and Native American land were not inspected at the most important drilling stages, the only time that a well’s construction can be adequately inspected. Some statistics go even higher, estimating around 57 percent of wells were not inspected. Nonetheless, the BLM report specified that 1401 oil and gas wells from 13 states went without safety checks in their drilling phases of development within the given time frame.
In 2014, BLM officials in New Mexico stated that the number of high-priority oil and natural gas wells on federal and tribal land in New Mexico nearly doubled over the previous two years. The same issue was found in North Dakota, where land management works were swamped with well inspections. BLM records stated that 116 of 696 high-priority wells drilled from fiscal year 2009 to 2012 in North Dakota and one of two in South Dakota were not inspected during that period although they have since been checked.
Perhaps the low inspection rates were simply a consequences of exponential drilling activity during the prime years of the boom. It’s obvious the industry is facing a slowdown, so the workload for government inspectors could lighten. Therefore, maybe the rules are too little too late. Moreover, no one is hiding the fact that the new regulations are similar to the state laws they resemble. In many instances, provisions in the new rules are similar to or based on existing state or tribal rules and industry best practices. However, the rule creates uniformity that hopefully makes the oil and gas industry a little more transparent for the public’s gaze.