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."