NATURAL GAS:

Dems, industry negotiating fracking disclosure plan

Rep. Diana DeGette and the natural gas industry are actively negotiating a plan to require public disclosure of the sometimes toxic chemicals that drillers use to flush gas out of the ground, according to sources on both sides of the talks.

The Colorado Democrat has authored a much tougher bill calling on U.S. EPA to regulate fracturing. Now she is trying to hammer out a deal with industry representatives, but the industry is reported to be split about whether to cut a deal with Democrats or hope that Republican gains in November's midterm elections will stamp out any regulatory efforts.

"There is an ongoing dialogue about disclosure that would be kept within the parameters of the states," said Jason Hutt, an energy lawyer with Bracewell & Giuliani representing gas producers.

One version of the legislation in circulation on Capitol Hill would require companies to disclose to state regulators the chemicals that they put in their fracturing fluid, but not the formula of how they are mixed, which companies consider a trade secret. States would be required to post the ingredients on the Internet. If a state did not have a program to accomplish that, U.S. EPA would handle the disclosure.

The negotiations are taking place against the backdrop of the BP oil spill, which could erode the public's faith in industry assurances that oil and gas production is safe. And the industry is closely monitoring the well-publicized release of "Gasland," an HBO documentary that lambastes the industry, saying fracturing is fouling groundwater across the country.

In fracturing, crews inject tanker-loads of water and sand into gas wells to blow apart the rock and release the gas. A small fraction of that concoction is a mixture of chemicals as mundane as ice cream thickener and as toxic as benzene. In 2005, the Republican Congress and George W. Bush administration exempted fracturing from EPA regulation under the Safe Drinking Water Act, heading off an appellate court ruling that had said the law should cover fracturing.

Since then, fears have grown among environmentalists, community groups and some Democratic lawmakers that the chemicals used could contaminate groundwater. But fracturing has also become even more vital to U.S. natural gas production. Vast shale formations under Pennsylvania, Texas and Louisiana have doubled U.S. gas reserves by some measures -- but they can be tapped only with fracturing.

Industry groups like the Independent Petroleum Association of America say that fracturing is safe and state regulation is sufficient. They maintain there has never been a proven case of groundwater contamination from the injection process.

On the other side, DeGette, Rep. Maurice Hinchey (D-N.Y.) and Sen. Bob Casey (D-Pa.) introduced legislation to strip out the exemption and order public disclosure.

The industry has vehemently fought EPA regulation, fearing that the agency would shut down production while it developed rules that could clamp down on gas production. There has been some give on disclosure, with some in the industry worried that some form of regulation is inevitable and they want to be involved in crafting it.

"We're interested in finding a solution on disclosure," said an industry source familiar with the negotiations.

Gas producers like Chesapeake Energy Corp. Chairman and CEO Aubrey McClendon have called for more transparency about what chemicals are used. Range Resources Corp. has posted the chemicals it uses in fracturing, along with the amount used in the process.

Still, many drillers are adamant that there should be no compromise on the industry's ability to access a resource that contributes to the country's energy independence.

DeGette is seeking to attach a compromise plan to the reauthorization of the Safe Drinking Water Act, which passed out of the Energy and Commerce Committee by a 45-1 vote last month (E&E Daily, May 27). But Democratic leaders have labored to avoid Republican objections to the bill, and they are likely to balk at adding controversial amendments that might bog the bill down. So DeGette would need agreement from Republicans and industry to add the amendment. In committee, DeGette introduced her amendment, then withdrew it, saying she wanted to negotiate a compromise with industry.

"I think we're close to an agreement," said a House Democratic leadership aide. "I'm optimistic."

The proposal making the rounds in the House would largely keep EPA out of the process and require disclosure beyond the "material safety data sheets" that many in industry have insisted are sufficient. Critics say that the documents, designed for worker safety rather than groundwater protection, lack important details about the chemicals in fracturing fluid.

In the Senate, the climate and energy bill sponsored by Sens. John Kerry (D-Mass.) and Joe Lieberman (I-Conn.) includes a provision requiring the documents to be posted on the Internet. But with the entire Senate energy bill in flux, it would presumably be up to Majority Leader Harry Reid (D-Nev.) to determine whether to strengthen the fracturing provision, keep it as is or drop it from the bill.

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