Environment vs. industry Bill before Congress would add restrictions to oil and gas operations
Environment vs. industry Bill before Congress would add restrictions to oil and gas operations
By Vickie Welborn • vwelborn@gannett.com • June 14, 2009
The shale boom could go bust if proposed legislation before Congress passes, adding federal regulations that could be costly and time-consuming to the natural gas industry, including operators in the Haynesville Shale.
The new federal level of regulation — aimed at environmental concerns — could eventually impact consumers, who would ultimately bear the extra costs, opponents say.
"It would have tremendous impact on the Haynesville," said Don Briggs, president of the Louisiana Oil and Gas Association. "If this bill were to pass, it would increase the cost of overrides $100,000 a well. More importantly, the time to get a permit would take months to accomplish. ... Now it is a matter of weeks."
He later added, "Time is money in industry."
The bill is called The FRAC Act — Fracking Responsibility and Awareness of Chemicals Act. Fracking refers to the term hydraulic fracturing, which is used to reach gas in formations like the Haynesville Shale. The bill would no longer exempt hydraulic fracturing from the Safe Drinking Water Act and would require the industry to disclose the chemicals used in the process.
The bill is in hearings before the Natural Resources Committee. U.S. Rep. John Fleming, R-Minden, is a member.
"These proposed regulations will apply across the country and there are slightly different plays and shales, different depths and that will complicate the issue," he said. "Even those who propose this agree it will add considerable costs and will run natural gas costs up higher. There's no good reason to do it."
He also said, "The state of Louisiana already has regulations. Louisiana has done a good job "» and when federal government comes in, it will just add additional costs "» and it will just create more time and work for the companies that are out there trying to extract this valuable substance from the ground."
Last week, as the proposal was being introduced, the Louisiana House sent Congress a resolution against the addition of federal regulations. Rep. Henry Burns, R-Haughton, was among lawmakers authoring the resolution and said, "I'm hoping they listen to a state that has the experience and understands the magnitude of the benefit of natural gas."
On the flip side, those who fear the potential of contamination from the decades-old practice of hydraulic fracturing say more oversight is needed to ensure the safety of water sources.
"In most cases, we have no idea what our oil and gas companies are injecting into wells. They are not required to disclose contents — and they don't," said Dusty Horwitt, senior public lands analyst with the Environmental Working Group, based in Washington, D.C.
The Haynesville Shale discovery, announced in April 2008, has been trumpeted as perhaps the largest in the nation. Millions of gallons of water mixed with sand and lubricating chemicals are injected in the hydraulic fracturing process needed to reach this previously unattainable natural gas.
One additive is potassium chloride, a salt, which Louisiana regional Department of Environmental Quality investigators say has been found at a site in Caddo Parish where 17 cows died in April. The site is near a Chesapeake Energy-owned well that was then in the completion stage; now it is in production.
Kevin McCotter, director of corporate development-Louisiana for Chesapeake, said the company uses potassium chloride in a diluted form.
"The makeup of a typical deep shale fracturing mixture is over 99.51 percent water and sand," he said. "The remaining .49 percent of fluids is a mixture of a number of compounds found in common consumer products."
Petrohawk Energy Corp. readily shares its fracturing fluid makeup so other companies can duplicate the process, said Joan Dunlap, vice president of investor relations. Petrohawk joins Chesapeake and EnCana Oil and Gas in opposing the legislation and is working through the national American Natural Gas Alliance.
Opponents of more federal regulation say the Haynesville Shale is far below aquifers, unlike in some other parts of the country. "The well bore itself is cement lined," Dunlap said. "It is a very safe situation in Louisiana. What they are more sensitive to is more shallow horizontal drilling."
Dunlap's concern, shared by EnCana, is of the "potential of being regulated to death. Natural gas and water are natural resources. Our country needs energy and our country needs water; there's a balance.
"Companies do well working in current regulation so that it doesn't introduce exorbitant costs "» and when you talk about pulling in the EPA it adds time and burden to the business that will slow it down inordinately and not add a lot of protection for citizens that don't already exist. The protection exists or we wouldn't be able to conduct our business."
Also to be considered is that a one-size-fits-all approach does not work, EnCana spokesman Doug Hock, of Denver, Colo., said. Each state has its own hydrology and geology, making the approach there unique.
In Louisiana, EnCana works closely with DEQ and the Department of Natural Resources' Office of Conservation.
"They understand the local environment, geology and hydrology and is in the best place to regulate this and have done so for years. "» This is just an answer in search of a problem," Hock said of the legislation.
Gary Hanson, of Shreveport, is a geologist who worked in the oil and gas business for 30 years and now is director of the LSU-Shreveport Watershed Management Institute.
"If the states and the oil companies can get their act together and put enough protection in place for the surface owner and the public, it would be better if it could be handled, in my opinion, in a local manner," he said. "From an environmental standpoint we are trying to extract a resource here, but it can be handled correctly. As someone with an oil and gas background, I can see some concern, but from a practical standpoint it would be really difficult for the industry to almost survive."
However, you still can't convince William Dubose, of Keithville, that anything related to oil and gas is safe. Dubose and other representatives of United Neighbors for Oil and Gas Rights had been monitoring the Caddo well and were among the first citizens to notice the cows falling dead in the pasture.
"I do share a concern," Dubose said, "because the state is the one controlling everything. I think it should go to the federal government. ... The bill is a start."
But Fleming said he has had a chance to ask questions of industry experts and he believes their answers to the Natural Resources Committee, backed by EPA studies, truthfully indicated there has been no documentation of contamination to drinking water.
So why is the issue coming up now? LOGA's Briggs contends it's all politics, saying the Obama administration is biased against the oil and gas industry.
"Environmental activists," he said, "are taking advantage of that."
By Vickie Welborn • vwelborn@gannett.com • June 14, 2009
The shale boom could go bust if proposed legislation before Congress passes, adding federal regulations that could be costly and time-consuming to the natural gas industry, including operators in the Haynesville Shale.
The new federal level of regulation — aimed at environmental concerns — could eventually impact consumers, who would ultimately bear the extra costs, opponents say.
"It would have tremendous impact on the Haynesville," said Don Briggs, president of the Louisiana Oil and Gas Association. "If this bill were to pass, it would increase the cost of overrides $100,000 a well. More importantly, the time to get a permit would take months to accomplish. ... Now it is a matter of weeks."
He later added, "Time is money in industry."
The bill is called The FRAC Act — Fracking Responsibility and Awareness of Chemicals Act. Fracking refers to the term hydraulic fracturing, which is used to reach gas in formations like the Haynesville Shale. The bill would no longer exempt hydraulic fracturing from the Safe Drinking Water Act and would require the industry to disclose the chemicals used in the process.
The bill is in hearings before the Natural Resources Committee. U.S. Rep. John Fleming, R-Minden, is a member.
"These proposed regulations will apply across the country and there are slightly different plays and shales, different depths and that will complicate the issue," he said. "Even those who propose this agree it will add considerable costs and will run natural gas costs up higher. There's no good reason to do it."
He also said, "The state of Louisiana already has regulations. Louisiana has done a good job "» and when federal government comes in, it will just add additional costs "» and it will just create more time and work for the companies that are out there trying to extract this valuable substance from the ground."
Last week, as the proposal was being introduced, the Louisiana House sent Congress a resolution against the addition of federal regulations. Rep. Henry Burns, R-Haughton, was among lawmakers authoring the resolution and said, "I'm hoping they listen to a state that has the experience and understands the magnitude of the benefit of natural gas."
On the flip side, those who fear the potential of contamination from the decades-old practice of hydraulic fracturing say more oversight is needed to ensure the safety of water sources.
"In most cases, we have no idea what our oil and gas companies are injecting into wells. They are not required to disclose contents — and they don't," said Dusty Horwitt, senior public lands analyst with the Environmental Working Group, based in Washington, D.C.
The Haynesville Shale discovery, announced in April 2008, has been trumpeted as perhaps the largest in the nation. Millions of gallons of water mixed with sand and lubricating chemicals are injected in the hydraulic fracturing process needed to reach this previously unattainable natural gas.
One additive is potassium chloride, a salt, which Louisiana regional Department of Environmental Quality investigators say has been found at a site in Caddo Parish where 17 cows died in April. The site is near a Chesapeake Energy-owned well that was then in the completion stage; now it is in production.
Kevin McCotter, director of corporate development-Louisiana for Chesapeake, said the company uses potassium chloride in a diluted form.
"The makeup of a typical deep shale fracturing mixture is over 99.51 percent water and sand," he said. "The remaining .49 percent of fluids is a mixture of a number of compounds found in common consumer products."
Petrohawk Energy Corp. readily shares its fracturing fluid makeup so other companies can duplicate the process, said Joan Dunlap, vice president of investor relations. Petrohawk joins Chesapeake and EnCana Oil and Gas in opposing the legislation and is working through the national American Natural Gas Alliance.
Opponents of more federal regulation say the Haynesville Shale is far below aquifers, unlike in some other parts of the country. "The well bore itself is cement lined," Dunlap said. "It is a very safe situation in Louisiana. What they are more sensitive to is more shallow horizontal drilling."
Dunlap's concern, shared by EnCana, is of the "potential of being regulated to death. Natural gas and water are natural resources. Our country needs energy and our country needs water; there's a balance.
"Companies do well working in current regulation so that it doesn't introduce exorbitant costs "» and when you talk about pulling in the EPA it adds time and burden to the business that will slow it down inordinately and not add a lot of protection for citizens that don't already exist. The protection exists or we wouldn't be able to conduct our business."
Also to be considered is that a one-size-fits-all approach does not work, EnCana spokesman Doug Hock, of Denver, Colo., said. Each state has its own hydrology and geology, making the approach there unique.
In Louisiana, EnCana works closely with DEQ and the Department of Natural Resources' Office of Conservation.
"They understand the local environment, geology and hydrology and is in the best place to regulate this and have done so for years. "» This is just an answer in search of a problem," Hock said of the legislation.
Gary Hanson, of Shreveport, is a geologist who worked in the oil and gas business for 30 years and now is director of the LSU-Shreveport Watershed Management Institute.
"If the states and the oil companies can get their act together and put enough protection in place for the surface owner and the public, it would be better if it could be handled, in my opinion, in a local manner," he said. "From an environmental standpoint we are trying to extract a resource here, but it can be handled correctly. As someone with an oil and gas background, I can see some concern, but from a practical standpoint it would be really difficult for the industry to almost survive."
However, you still can't convince William Dubose, of Keithville, that anything related to oil and gas is safe. Dubose and other representatives of United Neighbors for Oil and Gas Rights had been monitoring the Caddo well and were among the first citizens to notice the cows falling dead in the pasture.
"I do share a concern," Dubose said, "because the state is the one controlling everything. I think it should go to the federal government. ... The bill is a start."
But Fleming said he has had a chance to ask questions of industry experts and he believes their answers to the Natural Resources Committee, backed by EPA studies, truthfully indicated there has been no documentation of contamination to drinking water.
So why is the issue coming up now? LOGA's Briggs contends it's all politics, saying the Obama administration is biased against the oil and gas industry.
"Environmental activists," he said, "are taking advantage of that."
Views: 82
Replies to This Discussion
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Permalink Reply by Checkmateking on -
The dhimmicrats and Obama will kill us all
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Permalink Reply by The_Baron on
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While protection of our water is important, the EPA will do nothing to help, only complicate a matter that needs no federal attention. This should be left to the States.
My favorite quote from the article: "answers to the Natural Resources Committee, backed by EPA studies, truthfully indicated there has been no documentation of contamination to drinking water."
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Permalink Reply by The_Baron on
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Bump.....
This should be of great concern to all of us. Federal regulation into an area that is already well managed by the states will seriously hinder and limit domestic oil and gas production.
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Permalink Reply by sesport on
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After looking at the depths of the treatable water for Barnett & Marcellus (@ approx. 3,000 ft.) & HS (shallower @ approx. 1,000 ft.) and the depths of the producing seams (Marcellus = approx. 6,000 ft., Barnett = about 8,000 ft. and HS = approx. 10,000+ ft.), I'm finding it difficult to understand how gas will make it's way that far up to treatable water. Especially since it's going to want to flow towards the lower pressure of the horizontal.
Any help here appreciated - :0)
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Permalink Reply by sesport on
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That was the conclusion I had come to, improbable but not impossible. We don't want car wrecks and plane crashes to happen either, but they are mechanical operations and accidents due to mechanical failure will happen. I view this particular issue (frac process & production) as just that, a mechanical operation that will be prone to mechanical accidents. We just have to keep in mind the "probability" factor for our particular play.
One article I was reading (can't recall, would have to look for reference) mentioned that within each play and even within each field the drilling & production processes will vary.
Thanks :0)
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Permalink Reply by Mac Davis on
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It seems there's potential for leakage where the vertical well bore passes through the aquifer.
Not publishing the full list of contents of frac fluids raises a lot of suspicion. Unless someone is lying, it's actually pretty benign stuff once diluted, but not saying what's in it makes people believe it's something terribly toxic. There seems to be some debate about whether they divulge the contents or not, but the perception is that they don't.
There's also the possibility of surface spills of toxic chemicals.
The oil and gas industry has a real public relations problem. The industry has ridden roughshod over so many people that "everyone knows" that they're evil. Every time someone gets screwed by a landman, that's a new enemy of the industry. Every time someone gets screwed out of royalties, another enemy. Every noisy compressor station in a bad location. Every time someone gets nearly killed by a wild salt water truck driver. Everyone who's worked in the industry and been injured or screwed over by "the industry" recruits a bunch more enemies among his friends and relatives.
The industry has taken their practices and attitudes appropriate to working out in the middle of nowhere and applied it to populated areas. They tend to be high-energy ultra type-A personalities and don't think about playing nice. This makes more enemies.
Lots of people have real reasons to hate and fear the industry. Some have imagined reasons. When the industry tries to do things in populated areas, there's a real opportunity for some payback from people who think they've been wronged by the industry.
You may argue it's all politics. That's the world the industry is working in now. The devil-may-care, screw everyone, attitude is going to cause major problems in this new environment.
I'm not sure I have the answer, but I think the industry will do a lot better in the long run if they start trying to be somewhat better neighbors. The big boys need to take an interest and not do business with fly-by-night "screw everyone" smaller outfits.
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Permalink Reply by Spring Branch,mineral owner on
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And every time someone cashes a royalty check....a new friend! My own feeling is: for every fault the o & g industry has , and I 'm sure they have plenty, they do a cooresponding amount of good which seems to go largely unrecognized. If a poll were taken in NW Louisiana among royalty owners which asked whether the royalty owning public wanted the O & G companies to stop drilling and pack their bags and leave for good or to continue drilling and mailing out royalty checks, I dare say with a few exceptions on this web site, the vast majority of folks would want them to stay and continue drilling and continue mailing out those royalty checks. I personally deal with O & G regularly down in 15/15 and find them very responsive to my requests (demands). The type of work they do is not dainty and never will be.
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Permalink Reply by Mac Davis on
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In our system, the complainers tend to count more than the fans. Possibly sad, but it is true.
I think you may be overoptimistic about those cashing royalty checks being friends. A lot of people will think they should have gotten a better deal. A lot of the production companies have a sorry attitude when dealing with mineral rights holders, being uncommunicative at best. A lot of them commit outright fraud to try to rip off the mineral rights holders.
A lot of the people I've talked with who are getting checks feel they're being defrauded. They like the cash, but think they should be getting more. They may be in the "enemy" camp, and be in favor of more stringent regulation and oversight. The biggest opponents of the industry I've seen are those who are receiving royalties and feel they're being robbed.
Also, once you your unit has been drilled, you have no financial incentive in seeing other units being drilled. It's easy to be critical of noise, aesthetics, traffic, environmental concerns on the activity that doesn't profit you. Remember, you're usually not talking about shutting down existing wells.
I'm not an enemy of the industry. I do think they really need to have more of a "good citizen" attitude and less of a robber baron mentality. Forget whether it's the right thing to do. I'm saying it will be the more profitable thing to do in the long run.
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Permalink Reply by Spring Branch,mineral owner on
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I largely disagree. Too many generalities and hypotheticals. Maybe the friends/enemies nomenclature is not the best description. I agree that the average Joe, having had his life changed by the comings and goings in the oil patch will take the position, "What have you done for me lately?", but that same person would vote against that company packing its bags and leaving, if it meant the end of the royalty checks. I know many folks who were living on Social Security checks, whose income doubled, tripled, or quadrupled thanks to those royalty checks. Will they still gripe?....sure, but they gripe about the care their doctor gives them, too, and their dentist and their auto merchanic, etc. In a couple years, well # 2, ah, flush production again ..........thank you daddy! The agreement between the two parties is spelled out in the lease agreement. Good lease or bad lease ...it 's the agreement.
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Permalink Reply by sesport on
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I agree, good points. I know too well how misinformation can spread through a neighborhood, especially where money is concerned. lol
I wonder if persistent problems are specific to operator or whether it's rational to make a blanket statement about the entire industry? Also, what would be the probability (maybe a ratio) of each of the various failures happening? Of all the wells recently drilled (say, last 5 yrs.), how many have had the given kinds of failures? Is there a quantitative value for the number of cracked casings passing through the water table vs. casings that haven't cracked.
Now I'm getting too diagnostic. Thanks for the help. :0)
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Permalink Reply by Spring Branch,mineral owner on
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Sesport, I think that concern is overblown....you are talking about a string of 7 5/8 casing inside a string of 10 3/4 casing run to a depth way below any aquifer. That is my thinking, anyhow.
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Permalink Reply by sesport on
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Spring - I probably agree when I think of all the wells drilled to date in the HS alone vs. ,say, the number of blow-outs reported. Not sure where I'd find reports for the number of casings cracked and at the depth of concern. I say I "probably" agree because I don't have those hard numbers in front of me.
As far as the possibility of an increase in class actions, I can see that being a strong possibility for the urban areas. I think there may be one neighborhood that is organizing re. the drilling/well at Hamel's. Being more densely populated with smaller tracts of land/minerals, and strong neighbor-to-neighbor communication, the best way for these folks to go is class-action. Somebody, I'm sure, will seize the opportunity.
Thanks & best - sesport :0)
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