All That's Trucking

Fracking continues to generate controversy amidst natural-gas boom

February 29, 2012

Boy, what to think of the world of fracking lately?

Tower for hydraulic fracturing of Marcellus Shale Formation for natural gas, Lycoming County, Pa.

No, not the favorite exclamation of "Battlestar Galactica" fans -- more correctly, hydraulic fracturing, the controversial process that has allowed the oil and gas industry to tap into previously inaccessible stores of domestic natural gas.

The natural gas industry is hailing a new study that says the fracking process that has made the U.S. natural-gas boom possible is not directly related to contaminated groundwater, but it's also worried about a raft of potential new government regulations. Meanwhile, an article in Rolling Stone compares the gas boom to the housing bubble.

Critics say this newly popular way of drilling for natural gas has caused natural gas and toxic chemicals to leak into water supplies, resulting in the ability to set fire to running tapwater, as seen in a number of YouTube videos and the award-winning documentary "Gasland."

But a study released recently contends that the hydraulic fracturing process itself is not to blame -- rather, it seems that the problems may be caused by mistakes in drilling, such as drilling pipe inadequately cased in concrete.

In hydraulic fracturing, a mixture of water, sand and chemicals is pumped into a well under high pressure to help release natural gas and oil from shale rock. Time magazine called it the biggest environmental issue of 2011.

The new study was conducted by the Energy Institute at the University of Texas at Austin, reports the San Antonio Express-News.

Many reports of contamination can be traced to above-ground spills or other mishandling of wastewater produced from shale drilling and not from hydraulic fracturing, Charles "Chip" Groat, an Energy Institute associate director who led the project, said in a statement.

"These problems are not unique to hydraulic fracturing," Groat said.

This tracks with a comment I heard natural-gas-promoter and energy tycoon T. Boone Pickens make during last fall's TMW TransForum in Dallas, Texas, where he blamed the problem on "amateurs:"

"I've fracked over 300,000 wells," he said. "I've never had any problem with fracking a well and damaging a [water] reservoir above it. Eastern Pennsylvania are amaterurs on fracking; if they'd study what's happened in Texas and Oklahoma, they'd realize hydraulic fracturing is not a problem."

What about regulations?

Critics of fracking have said the industry lacks federal oversight, and often point to the industry's exemption from clean water standards. As ProPublica reporter Abraham Lustgarten wrote in an article last summer: "With the help of then-Vice President Dick Cheney -- the former head of Halliburton -- President George W. Bush's landmark energy legislation, the 2005 Energy Policy Act, included a provision that prohibited the EPA from regulating fracking under the Safe Drinking Water Act. Regulation would be left to the states, many of which had underfunded agencies, looser standards and less manpower than the federal government."

Yet the industry is now worried about the potential for regulation from a plethora of national agencies.

The Obama administration appears to view the industry in a positive light. During President Obama's State of the Union address, he said, "We have a supply of natural gas that can last America nearly 100 years, and my administration will take every possible action to safely develop this energy," adding that fracking "could create more than 600,000 jobs by the end of the decade."

According to The Hill, EPA Administrator Lisa Jackson is defending the rigor of the agency's study of potential water contamination by fracking. From her testimony about EPA's proposed budget that was to be delivered to a congressional panel last week:

"As I've mentioned before, natural gas is an important resource which is abundant in the United States, but we must make sure that the ways we extract it do not risk the safety of public water supplies. This budget continues EPA's ongoing congressionally directed hydraulic fracturing study, which we have taken great steps to ensure is independent, peer reviewed and based on strong and scientifically defensible data."

According to the EPA's website, EPA is supposed to release initial study results in a 2012 report and an additional report at the end of 2014.

The overall fiscal 2013 federal budget plan also seeks a total of $45 million for new inter-agency collaboration to review the method, Jackson said.

The EPA also presented a webinar last week giving an update on the study. John Quigley, former secretary of the Pennsylvania Department of Conservation an Natural Resources, reports that the EPA started the presentation by revealing that natural gas wells account for only 30% of "fracked" wells in the United States. The remaining fracked wells are oil wells. Domestic oil production, the EPA said, has been dependent on hydraulic fracturing for years.

API concerned

Last week, the American Petroleum Institute told reporters that it was concerned about duplicative regulations and that they could hinder the growth of the industry.

There are 10 federal agencies studying or considering action on hydraulic fracturing, says API: Environmental Protection Agency, Department of Agriculture, Department of Energy, Department of the Interior, Department of Defense, Department of Transportation, Department of Health and Human Services, Department of Commerce, Securities Exchange Commission and the Department of State.

In addition, states are also imposing their own regulations. West Virginia recently passed regulations regarding shale development, as many of the practices such as horizontal drilling were not addressed prior to the rules passed just a few months ago.

API called for the Obama administration to take a "critical look" at the impacts of multiple agencies eyeing fracturing and urged the government to appoint a "lead agency" to coordinate regulations.

"To my knowledge, there's not a precedent for 10 [federal] agencies looking at a single issue like this," Kyle Isakower, API's vice president of regulatory and economic policy, said in a Mar. 1 teleconference with reporters.

That may even beat the trucking industry...

Gas bubble?

Meanwhile, Rolling Stone has a new article comparing Chesapeake Energy to a Ponzi scheme and saying the natural-gas boom could turn into a bust.

"Fracking, it turns out, is about producing cheap energy the same way the mortgage crisis was about helping realize the dreams of middle-class homeowners." Rolling Stone alleges that "for Chesapeake, the primary profit in fracking comes not from selling the gas itself, but from buying and flipping the land that contains the gas."

The article notes that a group affiliated with the Colorado School of Mines warns that there may be only 23 years' worth of economically recoverable gas left nationwide.

Then again, as the same article points out, "as recently as a decade ago, many energy experts believed that America