API Study on Hydraulic Fracturing – Platt’s and NY Times

hydro

Platt’s – The American Petroleum Institute issued a new study Wednesday saying that
legislation pending before the US Congress to regulate hydraulic fracturing
could cost the US economy as much as $374 billion in the year 2014 alone.

The three-part study, which IHS Global Insight performed, is the latest
in a series of studies and reports that energy industry advocacy groups issued
in an attempt to block proposed legislation that would impose federal rules on
the well-completion process of hydraulic fracturing, or “fracking.”

“More than one million wells have been completed using this technology,”
API President Jack Gerard said in a statement. “Unnecessary additional
regulation of this practice would only hurt the nation’s energy security and
threaten our economy.”

The study compared three scenarios–a total elimination of fracking, a
restriction of the fluids that can be used in fracking operations, and the
implementation of additional federal underground injection control compliance
regulations on top of current state and local rules that govern the practice.

Restrictions on fracking would limit US oil and natural gas production,
resulting in sharply increased imports by 2018. The study adds that
international purchases of oil and gas would surge nearly 60% under a
no-fracking scenario, almost 30% under the fluid-restriction scenario and
nearly 14% under the UIC compliance scenario, the study says.

Losses in US Gross Domestic Product, in 2008 dollars, would rise
substantially in five years to reach $374 billion under the no-fracking
scenario, $172 billion in the fluid-restriction scenario and $84 billion in
the UIC compliance scenario, the study says.

The study also says that legislation restricting fracking would lead
to peak employment losses in 2015 of nearly 3 million jobs in the no-fracking
scenario, 1.4 million jobs in the fluid-restriction scenario and 676,000 jobs
in the UIC compliance scenario.

Additionally, the US deficit would expand under each of the restricted
fracking scenarios–by $139 billion in 2014 in the no-fracking scenario, by
$66 billion in the fluid-restriction scenario and by $32 billion in the UIC
compliance scenario, the study says.

The study adds that the US trade balance would deteriorate, with the
most dramatic impact — a widening of $135 billion in 2014 — seen with the
no-fracking scenario. The current account deficit on trade in goods and
services would widen by $95 billion in 2014 in the fluid restriction scenario
and by $46 billion in the UIC compliance scenario.

The API report is the latest salvo in an exploration-and-production
industry campaign to derail passage of a bill that was introduced last month
in both houses of Congress. The bill would repeal a portion of the Energy
Policy Act of 2005 that states hydraulic fracturing is not subject to
regulation under the US Safe Drinking Water Act.

The Fracking Responsibility and Awareness of Chemicals Act, or FRAC Act
— sponsored by Democratic lawmakers Senator Bob Casey of Pennsylvania,
Representatives Diana DeGette and Jared Polis of Colorado and Maurice Hinchey
of New York — also would require industry to disclose what chemicals are used
in the fracking process.

Representatives for two of the lawmakers on Wednesday dismissed the new
study, calling it part of a campaign of “scare tactics” that the energy
industry has employed to defeat the proposed legislation.

“The continuous scare tactics by the industry lead me to believe that
maybe they have something to hide in the chemicals that they’re using,”
Kristofer Eisenla, a DeGette spokesman, said in an interview. “Our bill simply
repeals an exemption to the oil and industry and requires them to play by the
same rules as everybody else,” Eisenla said.

DeGette, who is also vice chairwoman of the House of Representatives’
Committee on Energy and Commerce, wants to “hold a hearing and commission a
study that looks at the economic and environmental impacts of fracturing,”
Eisenla said.

Hinchey spokesman Jeff Lieberson said in an interview that the IHS study
should be discounted, as it was not conducted independently.

“It’s just ridiculous,” Lieberson said. “Their forecasting, showing
production going down dramatically, doesn’t make sense because all we’re
trying to do is to go back to the way things were in 2004, before the loophole
was inserted in the 2005 energy bill.”

NY Times on this subject:

Of Hydraulic Fracturing and Drinking Water

By JEREMY MILLER

A bill introduced earlier this month would bring federal oversight of hydraulic fracturing fluids – chemical mixtures pumped at high pressure into oil and gas wells in order to unlock deposits trapped deep underground.

Environmentalists welcomed the bill, but representatives of the natural gas industry say the legislation could lead to increased costs, job losses and increased competition for water — particularly in the West.

The bill, known as the Fracturing Responsibility and Awareness of Chemicals Act, (FRAC) was introduced in both the House and Senate by representatives from Colorado, Pennsylvania and New York. It essentially seeks to overturn a 2005 legislative tweak that placed fracturing fluids outside the regulatory purview of the Safe Drinking Water Act.

“Our legislation says everyone deserves to have safe drinking water by ensuring that hydraulic fracturing is subject to the protections afforded by the Safe Drinking Water Act,” said Representative Maurice Hinchey, a New York Democrat and one of the bill’s authors, in a prepared statement. “The bill also lifts the veil of secrecy currently shrouding this industry practice.”

Several kinds of fracturing fluids are used by the gas industry. Some are merely water or compressed gases injected underground at high pressure. Others are slurries that contain a host of chemicals and “proppants” — granular substances composed of resin-coated sand grains or similar synthesized materials — that expand in the ground and hold open fissures for gas and oil to pass through.

Hydraulic fracturing fluids were developed by Halliburton in the 1940s, but their use has increased recently as exploration of deep gas fields in places like the Marcellus Shale and Colorado’s Roan Plateau has stepped up.

Today, nine out of 10 gas wells in the United States currently use fracturing fluids, according to the Interstate Oil and Gas Compact Commission, a multistate government group.

Whether or not those fluids are polluting water supplies is a matter of debate, though a lengthy report by the investigative site ProPublica last year noted that this is often difficult to determine — not least because the precise makeup of fracturing fluids are considered trade secrets in the industry.

The pending legislation would require disclosure of ingredients.

Amy Mall, a senior policy analyst with the Natural Resources Defense Council, said that the push for regulation under the Safe Drinking Water Act is not without precedent, and that the proposed legislation would simply bring hydraulic fracturing in line with other industry practices.

“Mines and companies that inject waste underground are already regulated by the E.P.A.,” said Ms. Mall. “It’s not like they’re being asked to do something completely new.”

Gas industry representatives, however, insist that states already regulate hydraulic fracturing, and that federal oversight is unwarranted.

“In the past 50 years, more than one million wells have been fractured under state regulation, and not a single well has been linked to drinking water contamination,” said Jeff Eshelman, a spokesman for the Independent Petroleum Association of America, in an e-mail message.

Mr. Eshelman argued that regulation would increase the costs of building and maintaining gas wells and ultimately lead to the loss of jobs. Pointing to Alabama, the only state where E.P.A. Safe Drinking Water Act statutes have been applied to the underground injection of fracturing fluids, Mr. Eshelman also suggested that water scarcity could become more acute under a new regulatory regime.

According to Mr. Eshelman, the 11th Circuit Court of Appeals ruledin 1997 that only “federally certified” drinking water could be used as a fracturing agent in Alabama coal bed methane projects.

In 1997, the 11th Circuit Court ruled that fracturing fluids used in Alabama coal bed methane projects must be regulated under the Safe Drinking Water Act. To meet federal regulations, the state of Alabama developed a rule stipulating that “federally certified” drinking water must be used in fracturing fluids.

While the 11th Circuit decision was voided after the 2005 Energy Policy Act exempted the regulation of fracturing fluids under the Safe Drinking Water Act, Mr. Eshelman said that the FRAC Act could trigger similar rulings across the country and potentially put gas companies in direct competition with municipalities for water.

“This could pose a serious issue for parts of the country, such as out West, where water supplies are a major concern,” wrote Mr. Eshelman.

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