COALBED METHANE:

Energy bill could yield reg relief to Ala. gas producers

Alabama's coalbed methane industry could receive a gift from Congress if lawmakers pass a provision exempting a controversial gas recovery practice from federal drinking water rules with the energy bill.

The exemption, embedded in the House-passed energy bill and expected to be included in the Senate legislation, would lift Safe Drinking Water Act rules on hydraulic fracturing -- a process that involves pumping water, sand and other fluids deep underground to create a fissure, or "frac," in a coal seam. Once fractured, coal seams can yield millions of cubic feet of methane gas, which is collected, processed and sold as natural gas.

With rich coal deposits in the state's Warrior and Cahaba river basins, Alabama's coalbed methane industry is one of the nation's most robust, with average annual production of 116.5 billion cubic feet over the past five years. To maintain those production numbers, methane producers "frac" thousands of coal seams annually, according to the Alabama State Oil and Gas Board.

"In Alabama, without hydraulic fracturing in our coal seams, our wells would not be economic producers," said Dennis Lathem, executive director of the Coalbed Methane Association of Alabama.

Yet despite recent flush years, with record production and soaring profits, the industry remains unhappy with what it views as an unfair and unwarranted federal regulation pertaining to hydraulic fracturing.

Alabama is the only state where the practice is subject to U.S. EPA's drinking water act regulations. The rules were enacted after a federal appeals court ruled in 1997 that hydraulic fracturing meets the SDWA's definition for "underground injection" of a foreign substance into drinking water reserves.

The lawsuit was one of two brought by the Legal Environmental Assistance Foundation, or LEAF, on behalf of an Alabama homeowner who alleged that gelatin-like fracturing fluids -- used to pry open coalbed seams after an initial "frac" -- had leached into a local water well and was being piped into the home.

The state's methane industry strongly denied the charge, insisting the globular substance was not fracturing fluid but a form of natural bacteria from iron accumulation in drinking water wells. North Alabama's subsurface minerals are loaded with iron, which along with coal helped the state become a major steel producer in the 20th century.

Enviros find EPA enforcement lax on fracturing

To comply with the court's ruling, EPA ordered the state Oil and Gas Board to revise its coalbed methane regulations to protect drinking water wells from hydraulic fracturing operations, and since 1999 the state has grudgingly done so under its underground injection control (UIC) program.

"We're the one who had to fall on the sword," said Oil and Gas Board supervisor Dave Bolin. "We have said all along that we did not think it was necessary [to have such regulation], and it did not add any enhancement to environmental safeguards."

Few question that Alabama is required to do more than any other state in monitoring an activity that environmentalists have said is a significant threat to groundwater.

Last month, the Colorado-based Oil and Gas Accountability Project issued a report criticizing EPA's lax enforcement of hydraulic fracturing, especially in the coalbed methane-rich West (Greenwire, April 15).

The environmental group argued that a 2004 EPA report finding little evidence of groundwater contamination from hydraulic fracturing was based on inadequate data and scientifically unsound research. EPA based its findings on earlier research and did not undertake new field research for the report.

"Given the dearth of information, it is irresponsible to conclude that hydraulic fracturing of coal beds or any other geologic formations does not pose a risk to drinking water and human health," the report says.

But in Alabama, officials say such claims go against 60 years of evidence accumulated by the industry and the Oil and Gas Board.

Since 1945, when state regulation of drilling began, Bolin said Alabama has "never had a case of groundwater contamination as a result of a hydraulic fracturing operation in any kind of oil and gas well, including coalbed methane."

In the few cases where groundwater has mingled with nonpotable substances, he said the conditions were created by other causes, such as "wildcat" drilling of water wells or using improper construction techniques when lining a well.

Alabama drillers decry multiple layers of regulation

Nevertheless, since 1999 the state Oil and Gas Board has required that every hydraulic fracture -- sometimes a driller will "frac" three or more times per well -- must be thoroughly reviewed before going forward. To win approval, firms must certify that process water pumped underground meets SDWA requirements and that no other fluids used to "frac" a coal seam are toxic or pose a risk to human health.

Regulators do even more work, including ground surveys, when hydraulic fracturing is proposed for wells of 750 feet or less. And the state prohibits any fracturing at depths of less than 300 feet, where the potential for interference with drinking water resources is greater. Most water wells in Alabama reach maximum depths of 100 to 150 feet, though there are some exceptions, Bolin said.

"If we think there's potential for a problem, then certainly we will do whatever we think is necessary to provide adequate protection of the environment," he said.

Lathem, of the state methane group, said the industry has a solid environmental track record, adding that coalbed methane operations are regulated under multiple federal laws. "It's a cradle-to-grave type of permitting," he said. "The very same water that's in those coal seams, the minute you get it to the surface it has to be treated and discharged under the Clean Water Act.

"Our discharges are probably some of the most heavily regulated in the world," he added.

Environmentalists remain unconvinced, however, that hydraulic fracturing is as benign as Alabama's regulators and the coalbed methane industry say it is. Moreover, by removing the oil and gas industry from SDWA regulation in Alabama, Congress is taking a backward step rather than a forward step in protecting the public from risks associated with drilling and underground injection of fracturing fluids.

LEAF attorney David Letter, who led the legal challenges to Alabama's hydraulic fracturing regulation, said even with the new standards, the state has come up short in protecting public health.

That is because the regulations require only that drillers certify their fluids do not contain specific toxic substances identified by SDWA, rather than requiring companies to list all of the substances they are injecting into the ground.

"There are many chemicals used in hydraulic fracturing for which there are now [SDWA] standards," Letter said. He specifically mentioned diesel fuel and ethleyne glycol, an additive in antifreeze, which can be used to crack coal seams.

Officials in Alabama said neither of those substances are used for fracturing in the state, noting that water constitutes 98 percent of what is injected into the ground. Lathem said the remaining 2 percent consists of biodegradable water thickeners, foaming agents or nitrogen gas to push sand into coal fractures.

After the fracture work is completed, Lathem said all of the injected substances are pumped back out of the well. "That's part of the physics to get the gas out," he said.

But even if Congress exempts the industry from the Safe Drinking Water Act provisions, state regulators say they would continue to regulate coalbed methane wells under current rules until EPA formally rescinds its directive to Alabama.

"It's not just a given that as soon as this [energy bill] passes all of this goes away," Bolin said. "I don't know what EPA's response will be.

"I feel certain that the same people who forced the issue before would be standing there objecting strongly about it."

Southeast reporter Daniel Cusick is based in Atlanta.