Thursday, January 26, 2012

Student Post: Controversy Over Regulation of Hydraulic Fracturing

A current controversy regarding the petroleum industry in our state and across the country, is the environmental impact of hydraulic fracturing, referred to as “fracking” in the industry. Fracking is used to maximize oil and natural gas extraction in well drilling in shale formations. Once a well is drilled, millions of gallons of water, sand, and proprietary chemicals are injected under high pressure into the well. The pressure fractures open the shale and props open fissures that enable natural gas and oil to flow more freely out of a well.  
 
Fracking is used to increase well production and extend the life of a well. For each well, between 80-300 tons of fracking water, sand, and chemicals will be injected into a well and then disposed of in flowback pits. Presently, the gas industry is not required under Federal law to disclose the chemicals used. In 2005, the Bush/Cheney Energy Bill exempted companies from disclosing the chemicals used during hydraulic fracturing to the Environmental Protection Agency. This is now commonly referred to as the “Halliburton Loophole”. However, scientists in independent testing have identified volatile organic compounds such as benzene, toluene, ethylbenzene and xylene in fracking fluid. Volatile organic compounds are considered highly hazardous to human and animal health. They are categorized as carcinogens and linked to a host of medical illnesses and death. 
 
A controversial documentary regarding potential impact on the environment, well water, and human health from hydraulic fracturing came out in 2010, called Gasland. Groups of concerned citizens have been raising alarms throughout the country, pushing state legislators to require disclosure of fracking chemicals. Petroleum companies argue that the chemical compositions used in fracking are covered by trade secret and they are already required to disclose any spills and carry bonds intended to cover cleanup costs. Texas was the first state in the nation to pass a 2011 law requiring disclosure of chemicals in fracking. Currently, Arkansas, Montana, Wyoming, and Texas require companies to disclose the chemicals in fracking fluid but not their concentrations. Colorado requires companies to disclose concentrations of all chemicals in hydraulic fracturing and also asks drillers to make public some information about ingredients considered trade secrets. Louisiana and New Mexico require disclosure of some chemicals deemed workplace hazards by the Occupational Safety and Health Administration. Other states, including Michigan and Pennsylvania, have proposed similar regulations. In New York, environmental groups have been rallying at their capital for a legislative ban on hydraulic fracturing of natural gas wells, saying no amount of regulation can adequately safeguard water supplies from contamination.
 
On November 9, 2011, the North Dakota Industrial Commission proposed new rules governing the practice of hydraulic fracturing that require the disclosure of fracking chemicals within 60 days of completing fracking on a well. The proposed rules on chemical disclosure state:

           "After the hydraulic fracture stimulation is performed the owner,             operator, or service company shall post on the FracFocus             Chemical Disclosure Registry the following stimulation detail:

Fracture date, state, county, American petroleum institute number, operator name, well name and number, longitude, latitude, longitude/latitude projection, production type, true vertical depth, total water volume, and hydraulic fracturing fluid composition as follows:

(1) Trade name

(2) Supplier

(3) Purpose

(4) Ingredients

(5) Chemical abstract number

(6) Maximum ingredient concentration in additive

(7) Maximum ingredient concentration in hydraulic fracturing fluid
If during the stimulation, the pressure in the intermediate casing-surface casing annulus
exceeds three hundred fifty pounds per square inch [2413 kilopascals] gauge, the owner or operator shall verbally notify the director as soon as practicable but no later than twenty-four hours following the incident…."[1]

After much debate, these rules were approved by the North Dakota Industrial Commission on Monday, January 23, 2012, but still face review by a legislative oversight committee. Lynn Helms, director of the Department of Mineral Resources, expects the new rules to be in place by June 2012. 
 
In my personal interaction with Bakken workers on oil and workover rigs, I have heard more than a few times that oil has to stay above $60/barrel and ‘fracking’ has to be available to harvest oil, otherwise the cost of production will be too high to make it economically feasible to capture Bakken oil. There is a roar in the oil patch insisting the state better not crack down on fracking too much, or the golden goose will fly away. The Director of North Dakota’s Department of Mineral Resources has gone on record asserting the Environmental Protection Agency may halt fracking in the oil patch, causing public paranoia and visions of thousands of workers unemployed overnight, houses being abandoned, businesses shuttering their doors, and bustling oil towns from Williston to Belfield emptying out.[2] The EPA is currently in the process of conducting a Congressionally-ordered study of hydraulic fracturing, but says that fears of a moratorium on fracking are unfounded.
 My personal opinion is petroleum companies should be willing to invest more money into safety measures and take precautions to limit well water contamination and environmental destruction up front, rather than waiting for a disaster to happen and facing government crackdown. I would like to see a more proactive approach in the energy industry, rather than reactive. Regardless, as a future attorney in western North Dakota and eastern Montana, large portions of my future income could arise from fracking torts in the next decade.
Below are links to articles, if anyone would like to read more information about the controversy.

·       Bakken Watch, a group site for concerned citizens, who have videos asserting air quality is unhealthy near ‘fracking’ sites, photos documenting truckers leaking chemicals, and spills occurring from flowback pits: http://www.bakkenwatch.org/
·       MSNBC article, EPA: Fracking Likely Polluted Town’s Water, available at:http://usnews.msnbc.msn.com/_news/2011/12/08/9302971-epa-fracking-likely-polluted-towns-water
·       Recently proposed NDCC regulations on ‘fracking’:https://www.dmr.nd.gov/oilgas/rules2012changes.pdf
·       FracFocus Chemical Disclosure Registry: http://fracfocus.org/
·       Businessweek article, Obama Pushes Natural-Gas Fracking to Create 600,000 Jobs, available at:http://www.businessweek.com/news/2012-01-25/obama-pushes-natural-gas-fracking-to-create-600-000-jobs.html
·       Link to EPA’s study of hydraulic fracturing and its impact on drinking water:http://www.epa.gov/hfstudy/index.html


[1] N.D.C.C. § 43-02-03-27.1(2)(i); N.D.C.C. §43-02-03-27.1(3)
[2] Lauren Donovan, Helms Says EPA Could Halt fracking in Oil Patch, Bismarck Tribune, Nov. 29, 2011,available at: http://bismarcktribune.com/news/state-and-regional/helms-says-epa-could-halt-fracking-in-oil-patch/article_fe9a3284-18b9-11e1-ba39-001cc4c03286.html.

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