The Obama administration on Friday unveiled its first major standards for oil companies that frack on federal lands, including beefed-up safety measures to protect groundwater, prompting industry complaints they will be a barrier to growth.
The rules require energy companies to reinforce boreholes and otherwise prevent leakage and provide data on the cocktail of chemicals that helps extract crude oil and gas out of the ground. The rules will add transparency to the practice, long shrouded by companies reluctant to reveal “trade secrets.”
Hydraulic fracturing, or fracking, a controversial process that involves pumping water, sand and chemicals into a well to extract oil or gas. Environmentalists say fracking poses health risks.
Although only about 10 per cent of fracking occurs on federal lands, the Obama administration is hoping the new rules will become a model for industry standards elsewhere, especially in states that do not have fracking rules.
Here’s a diagram showing roughly how fracking works. This example shows drilling for natural gas:
Interior Secretary Sally Jewell said the standards are a long-overdue update to decades-old U.S. rules for drilling on federal lands that preceded the widespread emergence of horizontal drilling.
The new regulations “will move our nation forward as we ensure responsible development while protecting public land resources. That is good for the public and good for industry,” Jewell said.
The Interior Department’s Bureau of Land Management (BLM) received comments from over 1.5 million groups and individuals, Jewell said.
The standards have been in the works for nearly four years and gone through several drafts, with environmentalists and the energy industry fighting over its scope.
The new BLM standards will require companies to submit detailed information about the proposed operation, including the location of faults and fractures, the depths of all usable water and the depth of estimated volume of fluid to be used.
Industry groups were quick to criticise the proposal before its official release, warning it will slow down the U.S. “energy renaissance.”
“A duplicative layer of new federal regulation is unnecessary, and we urge the BLM to work carefully with the states to minimize costs and delays created by the new rules to ensure that public lands can still be a source of job creation and economic growth,” said Eric Milito, a director at the American Petroleum Institute.
This may be true, although the market is softening on its own. The prices of both oil and natural gas have fallen in the last year, as have the rig counts for oil and gas rigs in use to drill new wells, according to data from the Energy Information Administration. Oil companies have shed jobs without these new regulations, according to Reuters.
Environmental groups said the Obama administration had made progress in trying to hold oil and gas firms accountable for the environmental impact of drilling, but would have preferred bolder moves.
“The only true way to protect communities from fracking is to not frack at all,” said Dan Chu, a senior director for the Sierra Club.
(Reporting by Valerie Volcovici; Additional reporting by Timothy Gardner; Editing by Jeffrey Benkoe)