May 1st, 2012
Econintersect: A draft rule being considered by the U.S. Department of the Interior would require drillers for natural gas on U.S. land to disclose what chemicals are used after drilling is completed. A proposed rule version in February would have required drillers to file a complete list of chemical formulations at least 30 days before work began. The Environmental Working Group, a public interest lobby based in Washington, said in February that some of the chemicals already disclosed by the companies are implicated in cancer and reproductive damage. The February version of the regulation has been protested by energy trade groups and Republican lawmakers.
Follow up:Bloomberg cites the problem specified by the Washington-based American Exploration and Production Council, other industry groups and GOP legislators:
They said it could slow energy production on federal lands.
Considering the glut of natural gas production that has recently driven prices down by more than 85% over the past six years (see Dee Gill article, GEI Investing), perhaps a slowing of production would not be a bad thing. The price of natural gas has been cut in half in just the last year alone. These dramatic price declines do not indicate a production shortage.
Republicans in the Senate have taken action to try to halt the imposition of more federal regulation. From Progress Ohio:
Senior Senate Republicans are floating legislation that would slam the brakes on Obama administration efforts to expand regulation of the controversial oil-and-gas drilling method called "hydraulic fracturing" on federal lands.
Sen. James Inhofe (Okla.), the ranking Republican on the Environment and Public Works Committee, is the lead sponsor, and the seven other backers include Sen. Lisa Murkowski (Alaska), the top GOP member on the Energy and Natural Resources Committee.
The bill is unlikely to advance but will provide Republicans another rallying point for allegations that President Obama's Interior Department and Environmental Protection Agency have an overzealous agenda that will stymie development.
The bill introduced Wednesday requires that only states may regulate hydraulic fracturing -- or "fracking" --- on federal lands within their borders.
"States better understand their unique geologies and interests," Inhofe said when introducing the measure.
There are plans to publicly post fracking information for public viewing. From Bloomberg:
The Obama administration plans to post the fracking information on a public website, possibly on FracFocus.org, according to the draft. FracFocus is managed by the Ground Water Protection Council and Interstate Oil and Gas CompactCommission.
The following is a statement from FracFocus.org:
Participating companies have agreed to post records of wells fractured after the later of the date they registered to participate or January 1, 2011. As of November 10, 2011 there were over 7,000 records in the system and 80 participating companies.
However, the list at FracFocus.org contains only 59 specific chemicals.
While disclosure of specific risks to regulators, environmental groups and land owners seems to be lacking, according to the Environmental Working Group, apparent fear of investor liability exposures have gas drillers disclosing to shareholders and prospective investors a ....
...daunting list of possible mishaps, including leaks, spills, explosions, bodily injury, limited insurance coverage - and death.
But the industry backed proposal now under consideration for "regulation" will only disclose the chemical risks after they have already been incurred and the driller moved on.
Editorial notes: A hat tip to Roger Erickson who has suggested the following interpretation for the latest draft regulation proposal:
Translation: all reporting of barn door manipulation to occur after the horse theft is concluded.
Erickson has asked if this is not just another form of legalized looting.
What is Fracking: The fracking process can be quickly understood at the highest level with the following diagramatic representation. Click on graphic for larger image.
- Drillers May Frack First, Disclose Later Under Draft Plan (Katarzyna Kilmasinska, Bloomberg, 1 May 2012)
- White House begins ‘fracking’ rule review (Ben Geman, The Hill, 16 February 2012)
- The Crippling Glut of Natural Gas (Dee Gill, GEI Investing, 30 April 2012)
- Senate Republicans Try To Halt Federal ‘Fracking’ Regulations (Dave, Progress Ohio, 2 April 2012)
- Frac Focus.org (Website)
- Environmental Working Group (Website)