There is probably no more contentious issue at the crossroads of politics and technology than hydraulic fracturing, or fracking. The process, where oil and gas drillers chew up rock deep in the earth, is responsible for the major oil boom that produced so much oil it collapsed into the current bust – with very low oil prices. It also creates a lot of environmental damage and, as a relatively new technology, is remarkably unregulated.
New rules were introduced for fracking on federal land on Friday by the Bureau of Land Management (BLM). Eagerly awaiting them were the drilling industry and environmentalists, both of which had a big stake in the regulations. If you are a long time follower of these procedures, or simply a cynic, it might come as no surprise that both sides are unhappy.
The new regulations cover only wells sunk on federal land. This is still a big deal because the cover the majority of new holes in the ground, given that most private land was tapped long ago. It is unclear if they will become a standard for the whole industry as a result, but they could if the Environmental Protection Agency (EPA) gets into it.
What has been handed down for regulation is a very simply standard based primarily on disclosure. Each well has to list what has been put into the ground in the process of fracking. There are really no new limits placed on what can be used or how the fracking is done.
Interior Secretary Sally Jewell introduced the new rules. “Current federal well-drilling regulations are more than 30 years old and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” Secretary Jewell said. “This updated and strengthened rule provides a framework of safeguards and disclosure protocols that will allow for the continued responsible development of our federal oil and gas resources. As we continue to offer millions of acres of public lands for conventional and renewable energy production, it is absolutely critical the public have confidence that transparent and effective safety and environmental protections are in place.”
The Western Energy Alliance and the Independent Petroleum Association immediately sued to block these new rules. They claim that it will add $97k to the cost of each well, even through the BLM puts the tab at $5.5k. The difference is vast.
According to the suit, “BLM’s final rule is both substantively meritless and the product of a procedurally deficient rulemaking process.” It details how the BLM’s proposal does not attempt to govern any aspect of the hydraulic fracturing process. It also claims that the rules do include new regulations imposing administrative impediments that the plaintiffs claim will complicate and frustrate oil and gas production on federal lands.
Environmental groups were hoping for a lot more. “We owe it to our future generations to protect the land that was put aside for the public good,” said Congressman Mark Pocan. (D-WI) “Regulating fracking still risks accidental spills, water contamination, methane leaks, earthquakes and habitat destruction. The only way to mediate these risks is to not allow fracking in the first place.”
Why is fracking so bad? It has three major problems. The first is that a slurry of materials designed to lubricate the cutting in very acidic conditions is injected into the ground. The second problem is that disturbing the rock often puts oil deposits in contact with ground water and sometimes even getting natural gas into the water – resulting in the famous “flaming taps” in some places. Lastly, the water comes out of the ground, often in greater volume than the oil, is heavily contaminated and must be processed. The new rules really do not address any of these concerns.
Existing state laws do cover the release of water and the quality of ground water, but vary dramatically. Environmental groups, when not calling for a complete end to fracking, would like to at least see tough standards applied nationally.
If the new rules are so weak, why is the industry so opposed to them? In the course of the lawsuit they will have to document why they think the cost of compliance is so much higher than the BLM does, so that remains open at this time. I personally believe there is more to it. As a new technology, fracking has an air of “trade secrets” in the content of the fracturing fluid used by each operator. A disclosure based standard, like the one introduced, requires them to tell the world just what they are using, which may reveal things they don’t want the world to know.
That’s not because they are evil and uncaring, it’s because they think they have a technological edge over the competition.
Can fracking be done safely and cleanly? Major improvements have been made in regulation that have put an end to the “flaming tap” problem and held drillers accountable for that damage. The waste water can be cleaned up before being released. While the new rules don’t regulate the chemicals used to in the fracking process, they are a step towards understanding what is used a bit better overall.
All of this will make fracking more expensive, for sure. Just how expensive will be discovered through a lawsuit. But given that federal land that may not be an issue.
Wells drilled on federal land come after a bidding process, where drillers pay the government for the right to operate. If the cost goes up, the value of the well goes down, and logically the bids should drop as well. It should come out in the laundry – outside of how hungry small operators with a belief that they have an edge are and how wells staked they are with the cash necessary to make it happen.
The new regulations, which pleased no one, are far from a big change in fracking. But as this plays out we may yet learn a lot more about how fracking is done and how it can be regulated. As always, good regulation starts with a disclosure standard first. The BLM may be catching flak over their frack, but this is a good start. It’s a process, not an event.