Hydraulic Fracturing Regulatory &
Policy Considerations
Edward P. Cross, P.G., M.B.A. President
Kansas Independent Oil & Gas Association
Joint Committee on Energy & Environmental Policy Topeka, Kansas September 9, 2011
Hydraulic Fracturing
Kansas First HF operation in 1947 Vast majority of wells fraced No verified or documented instances of harm to groundwater
from HF HF designed to individual well characteristics
Why is HF Necessary
To stimulate oil and gas production to increase Net present Value (NPV) of a well through: Accelerating income through increasing production rates Reducing well life operating expenses Increasing total cumulative production
Hydraulic Fracturing Under Attack
Environmental Issues Raised Natural Resource Defense Council
Drilling Down
Propublica Buried Secrets
New York Times GASLAND
Anti oil & gas development groups using a host of regulatory & environmental issues to establish barriers to responsible oil & gas development
Project BRIEF Bringing Real Information on Energy Forward (BRIEF)
Comprehensive and quantitative research project that
illuminates the real facts behind the oil and gas industry
Compiled three reports History & Progress of Effective State Regulation Role of the Federal Government Potential Economic Consequences of Proposed Regulations
www.energyindepth.org
Created to explain the oil and gas industry
Takes the “scare” out of scare tactics employed by
opponents of American energy production
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MiHQ ON THE PROCESS
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• ENERGYIN:)EPTH
Does HF Pose a Risk to Public Health?
2004 EPA report concluding the technology poses “no threat” to underground drinking water
Clinton Administration EPA Chief Carol Browner testified in 1999, finding “no evidence that . . . hydraulic fracturing . . . has resulted in any contamination or endangerment of underground sources of drinking water.”
On May 25th EPA Administrator Lisa Jackson stated, under oath, “I’m not aware of any proven case where the fracking process itself has
affected water, although there are investigations ongoing.”
Other studies reinforce these conclusions GWPC Inventory and Extent of Hydraulic Fracturing in Coalbed Methane Wells in
the Producing States (1998) IOGCC States’ Experience with Hydraulic Fracturing (2002)
Is HF Regulated? Federal Safe Drinking Water Act (SDWA) exempted HF from UIC regulation
in 1974
1997 11th circuit opinion ruled contrary to EPA that HF constituted underground injection
2004 EPA study of HF concluded that HF did not adversely impact underground sources of drinking water
Energy Policy Act of 2005 amendment subjected diesel based HF to UIC regulation and continued remainder of HF exemptions
2010 Congress asked EPA to study HF and report by 2012
EPA developed scoping document in March 2010
Is HF Regulated? EPA formed Science Advisory Board in April 2010
KIOGA urged objective, scientific analysis that included participation from industry and state agencies.
Urged congressional action to halt until study completed
EPA held stakeholder meetings across country in summer 2010 KIOGA participated in stakeholder meeting in Dallas in July 2010
EPA Hydraulic Fracturing Study Plan issued in February 2011
Included life span of water in HF process KIOGA expressed concerns to EPA in March 2011
Sweeping scope to include issues not unique to HF Absence of a review of effective state regulation Inclusion of non-science based references
Is HF Regulated? Effectively regulated by states since inception
All laws, regulations, & permits that apply to oil and gas
exploration and production activities also apply to HF Well design - location - spacing - operation - abandonment - water
management & disposal - waste management & disposal - air emissions - underground injection - surface disturbance - worker health & safety.
2009 GWPC Report underscored record of safety and performance at state level “current state regulation of oil and gas activities is environmentally
proactive and preventive.” “regulation of oil and gas activities is managed best at the state level
where regional and local conditions are understood and where regulations can be tailored to fit the needs of the local government.
ENERGYINJEPTH A LOOK BACK: HF, SDWA,AND RECENT EFFORTS BY STATES TO FIGHT BACK
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ENERGYIN:JEPTH The Energy You Need. The Facts You Demand.
FEDERAL STATUTES REGULATE EVERY STEP OF THE HYDRAULIC FRACTURING PROCESS
CWA
· Water Resowu Fro<eoian
• Inspeaionilnd ENorcement IwthoriQo'
OSHA · _s:.f«y
.... Operuions
• Inspeaion >nd EnIorcement IwthoriQo'
CWA • 'oNit2l" Resource
Pr<Xl!Ctioo
• ln5pe<tion .... Enfor<ernen< AuIbority
05HA • Vlbrlrer SoIo<y
;mel ClpI!ruicm
• Inspeaion and Etlfortement AuthoriQ'
OSHA · -s.t.ty ~dOpemions
• OlemDJ Disclo5un!!
·ln5pe<tion ....
~"" AIIIhcrity
SUPERFUND
• ~Roport~ ·Oe'illUp
·mpection ....
~"" AIIIhcrity
EPRCA
• Hazardous SubstMce Roporting
• Inspe<tion .... ~""AIaI1ori1y
CWA
• ~ Pr""'-' COOIrOl .... Coontonneas....,.
• thnogoment ReIJIirements
• "'peaion and EnfoIo!ment AuIbority
CWA
· Witer" Resoura! Pnxeaicn >nd
Disdwie I\eqURrner1IS
• Reporting
· Impection;;and ~ Authority
SDWA
· Witel" "'iec.tion I\eqURrner1IS
• Impection iIInd blDcemenl Authority
Hydraulic Fracturing Policy Considerations
Economic Impact
Closure of over 50% of America’s oil and natural gas wells Domestic oil production slashed by 183,000 barrels per day Domestic natural gas production slashed by 245 billion cubic
feet per year National GDP lowered by $374 billion by 2014 $785 million lost revenue to state treasuries 2.9 million jobs lost including 5,000-7,000 Kansas jobs
Sources: IHS Global Insight “Measuring the Economic and Energy Impacts of Proposals to Regulate Hydraulic Fracturing” 2009; www.EnergyinDepth.org
www.EnergyInDepth.org
Hydraulic Fracturing Policy Considerations
STRONGER
Review state oil & gas regulations Review Team
State regulators Environmentalists Industry
21 states reviewed accounting for over 90% of production Unveiled HF guidelines for state regulatory programs
Not prescriptive regulatory standards, but outline of key elements for effective HF regulation
PA - OH - LA - OK
Hydraulic Fracturing Policy Considerations
Fluid Disclosure
Frac Fluid Registry GWPC and IOGCC created web-based database
Frac Focus (www.fracfocus.org) Voluntarily disclose chemical constituents of frac fluids
Several states adopting some form of HF disclosure
MT - AR - WY - CO - OK - PA - OH - TX - IL
E-Reference Cross-reference state statutes that regulate HF and generate
PDF report
A FLUID SITUATION: TYPICAL SOLUTIOW-USED IN HYDRAULIC FRACTURING
0.49% ADDITIVES*
•
On .... age, 99.50/0 of fracturing fluids are
comprised of freshwater and compounds a~ injected into
deep shate gas formations and are typicalty confined by many
thousands o(~ or rock layers.
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Hydraulic Fracturing Fluid Product Component Infonmation Disclosure
-.- 6(1512011 ..... , ....... ~ F.....,. -- 15-055-22101
0peraDr_: oXY WeII ........ ~ StR.cbIjohn M-1
""'""""" -tOCt8959
"--' 37.71&917
~-....,21
PI I r I Type: Oil True ~ DepIh (TW): 5 ,020
ToUI W'" Volume {Pr: 11 ,550
~F"""""'FIuid~
T,_1Iame S'~lplier I'gpose Ingr_ Chemical Abstract MaxmllMi MaxmLm Comments Service Number Ingredient Ingredient
(CAS" Concentration Concentration in Additive in HF Ruid
(% bymass)- (% bymass)-
XLW-22C BHI Crosslir*ef- Triisopropanolarnine 122-20-3 7."'" D.1I033O%
Ammcrium HydrtWde 1336-21-6 5."'" DJI0242%
ZirclooUn Socium Hydroxy lactate 1 1 3 184-~ 8O.lID'!O D.D29Dl %
"""-Frac Sand (AI BHI - c.y.o.oo;n. SEa (cmrtz) ,.....,.,.7 100.00% 33.Q32Q2'IJ(, ........ ) [CWT]
w_ """"'"" cam.. W_ 7732-18-6 100.00% ... -Enzyme G-VlI BHI .... .., ~ EnzyrnI!o Conoen~ IIIl2!KXh3 D ..... 0.00001%
w_ 7732-18-6 QQ ...... 0.02536%
FAW-4 BHI F~ _ GO,..,. MonobutyI EIhe.- 111·78-2 10 .00% D.D21 Q9% ,- 67-<13<) 20.""" DJM39]%
GBW<; BHI ......, Arnncnium Per.iulfate 7727-54-0 100.00% 0.0 10 14"
GW-30LF BHI GeIIar< Pecrdet..m OistiILales Blend CBI 70.""" D_4gg 1~
G.Jar G..m.. SI.bs1ituted 68130-1 !5-4 40._ D.285_
I-igh Peml CRB-L T BHI ......, Ammcri...., PersuIphaU! 7727-54-0 100.00% D.OO676% c.y.o.oo;n. SEa 7631-86-G 10.00% D.1lODtl8OI.
Infto25OW BHI &.1 ...... &.1 ....... CBI BO.lID'!O 0,(16424"
2""""""",,, 1 11-76-2 20 ..... 0.0 161:16%
Hydraulic Fracturing Policy Considerations
KIOGA Effort
Willing to work for transparency Oppose EPA involvement
Senator Udall (D-CO) Initial focus on Democratic Senators from oil producing states
Visited 12 in 2009 Expanded to Democrats & Republicans in 2010 visiting 25 Senators and 41
Representatives 2011 = 22 Senators and 32 Representatives
Developed Credible Relationships
Built bipartisan support Look to our group for credible information for working through sensitive
energy issues We have earned the undivided attention of a number of key Congressional
Members
Thank You
Kansas Independent Oil & Gas Association www.kioga.org Edward Cross, President [email protected] 785-232-7772
