The natural gas industry is moving to disclose information about chemicals used in controversial extraction technologies in the wake of spills at drilling sites in Pennsylvania and as New York is proposing new regulations.
Leaders of two gas producers and a service company have proclaimed their willingness to make public details about hydraulic fracturing, also know as "fracking." Such disclosures -- which companies have battled to keep secret -- would be required under pending federal and state legislation.
"We as an industry need to demystify [hydraulic fracturing]," Aubrey McClendon, CEO and chairman of gas-production giant Chesapeake Energy Corp., told an energy conference last week, according to Reuters. "We need to disclose the chemicals that we are using and search for alternatives to the chemicals we are using."
Such disclosures, environmentalists say, are overdue.
"If you buy a can of Coke, you don't know the secret formula -- that's locked away in a vault somewhere -- but you know the ingredients on the can," said Amy Mall, a senior policy analyst for the Natural Resources Defense Council. "That's how we look at this issue. The ingredients are not proprietary. How much of what's used is proprietary."
A typical "frac job" involves blasting a mix of water, chemicals and sand or plastic beads into compressed rock to open cracks and release gas. The process has been used for decades to improve production of countless wells, but it has recently been used to make feasible the tapping of unconventional shale reservoirs, such as the Barnett in Texas, Marcellus in Appalachia and Haynesville in Louisiana.
Environmentalists worry that fracturing chemicals can and have contaminated water supplies. They are pushing for federal oversight.
Industry has battled against federal regulation. Companies say there is no documentation of contamination from fracturing and federal involvement would force a cutback in drilling, reduce energy supplies and damage the U.S. economy. They say regulation should be left to states.
But the industry of late has budged on the transparency issue -- based on reported statements by McClendon and officials at two other companies, Range Resources Corp. and Schlumberger Ltd.
John Pinkerton, Range's CEO, whose company was an early entrant at the Marcellus play, has criticized service companies' confidentiality requirements about the contents of fracturing fluids.
"We're under confidentiality contracts with the service companies," Pinkerton said, according to Reuters. "I've basically told them that this is not acceptable. It's a little silly to be honest."
Meanwhile, Schlumberger is pressing its suppliers for permission to disclose chemicals used in drilling, Bloomberg has reported.
"McClendon is right that it needs to be demystified," Steve Rhoads, president of the Pennsylvania Oil and Gas Association, said in an interview. "Once you've looked at this stuff, it's nothing mysterious. There's nothing frightening about it."
Rhoads added that drillers in his state are taking an additional step to address another environmental concern by testing flowback water -- the sand, water and chemicals that flow from a well after the mix has been used to break the rock -- for contaminants.
About 30 Pennsylvania gas operators are sharing data with the state Department of Environmental Protection from tests of flowback water to determine whether harmful chemicals are present in the fluid.
Critics of fracturing are cautiously welcoming the industry's growing receptiveness to disclosures.
"We're glad that they're willing to disclose the chemicals, but it shows two things: that it's not so burdensome as originally contended and that they agree the communities have a right to know," said Kristofer Eisenla, a spokesman for Rep. Diana DeGette (D-Colo.), who has introduced legislation that would regulate the technique under the Safe Drinking Water Act.
Eisenla added, "Disclosure doesn't mean it's verifiable."
DeGette introduced her legislation, H.R. 2766, in June, and the Senate came out with companion legislation, S. 1215, the same day. Neither bill has moved out of committee, but Eisnela said DeGette plans to continue pushing for her measure.
NRDC's Mall agreed that industry's moves toward transparency were promising, but she still has some reservations.
"Just disclosing ingredients of the fracking fluid," she said, "is not enough to protect people's drinking water."
The industry's expressed willingness to disclose information about fracturing began in the wake of three surface spills of a gel-like lubricant at Cabot Oil & Gas Corp.'s drilling site in Susquehanna County, Pa.
Cabot reported the spills of approximately 8,400 gallons of fracturing fluid to the Pennsylvania Department of Environmental Protection, which suspended the company's operations in Susquehanna County. The suspension will remain until Cabot writes a new pollution-prevention and contingency plan and conducts a study of fracturing equipment and work practices.
"What happened with Cabot was truly unfortunate and more likely unnecessary," said Rhoads, of the gas-trade group. "But I don't believe it will have an impact on the overall operations of Cabot. This is a housekeeping issue, and they will take care of it."
But NRDC's Mall said the spills highlight why people are concerned about drilling operations.
"People have lost confidence in their state regulators," Mall said. "[DEP] did not shut down operations after the first incident, or the second one. After the third incident, they said, 'No more fracking, but keep drilling.'"
She added, "We want to know if the problem has ... been remedied. We do need federal regulation, and we need to know that there are minimum standards in any state for fracking, toxic waste, air emissions."
Yesterday, New York regulators released a draft environmental impact statement proposing safety measures, protection standards and mitigation strategies for gas developers seeking drilling permits in the state, which has vast swaths of the Marcellus Shale.
New York officials are concerned about the volume of water required to break apart rock layers, drilling's impact on New York City's water supplies and whether the state's nearly 20-year-old generic environmental impact statement on oil and gas could address issues raised by the combination of horizontal drilling and high-volume hydraulic fracturing (Land Letter, Oct. 9, 2008).
"We've said all along that we'd like to see New York set the standard with its drilling regulations -- not play catch-up," Earthjustice's managing attorney, Deborah Goldberg, said in a statement. "We've seen far too much drilling-related contamination right next door in Pennsylvania -- and elsewhere in the country -- where regulatory programs are plainly inadequate to prevent sometimes irreversible environmental and public health catastrophes."
The New York regulations would be among the most stringent in the nation and would require drillers to disclose the chemicals used at each well. They would require buffers around reservoirs and aqueducts, but would not outright ban drilling near waterways.
Wells drilled near tunnels that carry drinking water to New York City would require special approval and could require state inspectors to be present during operations, the proposal says.
"We have begun a review of the [supplemental generic environmental impact statement] and remain hopeful that the state [Department of Environmental Conservation] has found a balance that continues to protect New York's environment and allows responsible exploration for natural gas in the Marcellus shale," Brad Gill, executive director of the Independent Oil and Gas Association of New York, said in a statement.
"A regulatory structure that is tough but fair will allow this state to realize this tremendous opportunity," Gill said.