BP, others push against federal regulation of fracturing

BP America Inc. and two other oil and gas companies are lobbying for the new Senate climate and energy bill to recommend against federal regulation of hydraulic fracturing.

And their efforts may be successful. The latest draft of the climate and energy bill being written by Sens. John Kerry (D-Mass.), Lindsey Graham (R-S.C.) and Joe Lieberman (I-Conn.) reportedly includes language saying U.S. EPA would not regulate the oil and gas drilling technique.

In a "discussion draft" obtained by E&E, the oil and gas firms propose adding language that says regulation should be left to the states.

"States with existing oil and gas regulatory programs have the authority to and are best situated to continue regulating hydraulic fracturing processes and procedures," the document reads.

The draft also recommends against public disclosure of the chemicals in fracturing fluid, deeming it "trade secret information." Public disclosure is a central component of environmental groups' drive to regulate the practice.


The industry proposal would recommend that states require disclosure of the chemicals used by physicians and health professionals, along with state regulators. But fracturing companies consider their fracturing fluid ingredients to be proprietary, and most have fought public disclosure. Environmentalists say the chemicals should be publicly disclosed so that neighbors of the drill sites will know what they might be exposed to.

A Senate aide confirmed that the draft proposal came from BP, and that Kerry, Graham and Lieberman are considering it with a wide variety of other proposals. An industry source said two other major oil companies shared in the drafting of the document and that Senate staff requested the proposal. Attempts to confirm the identity of the other two companies were not successful last night.

But the language tracks with an outline of the Kerry, Graham, Lieberman bill that was shared with industry leaders last week.

According to sources on and off Capitol Hill, the draft said U.S. EPA would not regulate fracturing, which uses chemicals and huge volumes of water pumped into well bores at high pressure to pry loose gas from rock (E&E Daily, March 19).

Environmental groups have charged that the process can contaminate groundwater, and EPA last week formally announced plans for a study of fracturing activities (Greenwire, March 18). But the oil and gas industry defends the practice as perfectly safe.

BP spokesman Scott Dean declined to comment on the proposal.

Amy Mall of the Natural Resources Defense Council sees the proposal as an attempt to use a climate change bill to head off the drive in Congress to regulate fracturing.

"It's still essential to have federal oversight and a minimal regulatory floor," Mall said. "Communities across the country have completely lost trust in state regulators to protect their drinking water."

But the language would be nonbinding "sense of the Senate" language with no real legal impact. That prompted some to wonder why the three senators would want to risk the wrath of an environmental community that already is irked at being asked to give in on offshore drilling, nuclear and other issues.

"You're right at the tipping point. That might be enough to push them over the edge," said a Democratic aide. "And if you're pro-fracturing, why settle for 'sense of the Senate'?"

An industry group that focuses on fracturing said the language simply restates existing law.

"This language seems to be a restatement and endorsement of policies and procedures the industry has been following for decades, as mandated by federal, state and local laws," said Brian Kennedy, a spokesman for Energy In Depth. "To the extent the language helps clarify the existing framework and highlight its overwhelming success to date, it could be a valuable educational tool moving forward."

Fracturing has been used in oil and gas drilling for decades, but its use has moved closer to heavily populated areas in the past few years with the discovery of vast stores of gas in shale formations under Pennsylvania and New York.

Fracturing is essential to releasing the gas from the shale rock. The amount of gas involved is huge. The shale discoveries in the Northeast, Texas and Louisiana have doubled the discovered gas resources of North America and could provide 100 years of supply to a country that a few years ago was planning a host of new terminals to import liquefied natural gas, or LNG. Shale gas now accounts for 20 percent of the country's gas supply, up from 1 percent in 2000.

The shale boom has prompted concerns in many communities that the chemicals used in fracturing could contaminate their groundwater. In addition to the EPA study, House Energy and Commerce Chairman Henry Waxman (D-Calif.) and Rep. Ed Markey (D-Mass.) last month announced an investigation into the safety of fracturing.

Reps. Diana DeGette (D-Colo.) and Maurice Hinchey (D-N.Y.) have introduced legislation (H.R. 2766) that would remove the fracturing exemption from the Safe Drinking Water Act and require drilling companies to disclose the chemicals used in their fracturing fluids. Sen. Bob Casey (D-Pa.) has introduced companion legislation in the Senate.

DeGette has said she is not trying to ban the technique, but her proposal has run into staunch opposition from the industry, which maintains that the drilling practice is perfectly safe and fairly regulated by the states.

Click here to read the discussion draft.

Senior reporter Darren Samuelsohn contributed.

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