Fracking Rules Expected to Be Unveiled by Obama Administration Friday

Fracking the Bakken Formation in North DakotaThe Obama administration on Friday is expected to issue long-awaited regulations setting new standards for hydraulic fracturing in the oil and natural-gas industries, people familiar with the matter said.

The drilling technology, commonly known as fracking, has been key to unlocking vast reserves of oil and gas across the U.S., but qualms about its environmental impact have made it controversial.

The regulations will set standards for wells and disposal of wastewater, and will require disclosure of chemicals used, Interior Secretary Sally Jewell said Tuesday in a speech in Washington.

“The rule will include measures to protect our nation’s groundwater—requiring operators to construct sound wells, to disclose the chemicals they use, and to safely recover and handle fluids used in the process,” Ms. Jewell said. “Some have already labeled these baseline, proven standards as overly burdensome to industry; I think most Americans would call them common sense.”

The regulations, in the works since 2012, apply only to drilling on federal lands, which account for 11% of the natural gas and 5% of the oil the U.S. consumes, according to Interior Department data. Drilling on private or state-owned lands won’t be subject to the regulations.

Many states already regulate fracking, including those leading the domestic energy boom such as Colorado, North Dakota, Pennsylvania and Texas. Part of the federal government’s goal is to create a national standard for hydraulic fracturing that states and companies can adopt.

“The responsibility for developing this energy safely must now be taken up in state capitals, engineering labs, and board rooms all across the country,” Ms. Jewell said.

Hydraulic fracturing is a drilling technique of injecting water and chemicals deep into shale rock formations to crack open pockets of natural gas and oil. Companies have done it for decades, but the practice has come under scrutiny in recent years as its use skyrocketed and triggered the U.S. oil and gas boom. New York, which has natural-gas deposits, banned fracking last year.

Roughly 90% of new land-based wells in the U.S. are drilled using the technology, the government said.

The government, in a May 2013 draft proposal, said it expected the rules to add industrywide costs of between $12 million and $20 million a year. Some analysts said the rules won’t be overly burdensome. “We expect the direct effect will be minimal on the industry, as the associated cost increases will likely represent [less than] 0.5% of average well costs,” investment bank FBR Capital Markets said in a research note on Wednesday.

The regulations represent one of the first steps by the Obama administration on fracking, which some environmental groups say is unsafe and should be banned. Administration officials say it can be done safely, though industry and congressional Republicans say no federal regulation is needed.

James Inhofe (R., Okla.), chairman of the Senate Environment and Public Works Committee, introduced legislation Thursday that would prohibit the federal regulation of fracking and instead give states the regulatory responsibility. The bill has support from all Senate Republicans but is unlikely to become law.

Thanks in large part to the combination of fracking and horizontal drilling, U.S. oil and natural gas production has surged. Oil production has risen 85% since 2008, to reach 9.4 million barrels of oil a day in February, and natural gas production has risen more than 30% over the same stretch, the U.S. Energy Information Administration said.


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    When a well declines in production, drillers can add more horizontal runs to revive output of that well. Saves tons of money and has minimal impact at the site.


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