New Fracking Rules for Public Land

On Friday, March 20, 2015, U.S. Secretary of the Interior Sally Jewell announced the final rule for hydraulic fracturing on federal and tribal lands. This rule establishes new requirements to ensure wellbore integrity, protect water quality, and enhance public disclosure of chemicals and other details of hydraulic fracturing operations. This final rule will supplement the existing regulations that were established in 1982 and last revised in 1988, long before the latest hydraulic fracturing technologies were developed or became widely used.

The rule requires an operator planning to conduct hydraulic fracturing to do the following:

• Submit detailed information about the proposed operation, including geology, the location of faults and fractures, the depths of all usable water, estimated volume of fluid to be used in the hydraulic fracture operation, and estimate the direction and length of fractures. 
• The rule requires more stringent monitoring and verification that the cementing of the borehole is properly done. An expanded set of cement evaluation tools are required to help ensure that usable water zones have been isolated from the gas well and protected from contamination. 
• Elimination of the “type well” concept to demonstrate well integrity. All wells are now required to demonstrate well integrity. 
• Public disclosure of all chemicals will be required after fracturing operations are complete. The existing database, FracFocus will be used for this disclosure. 
• The final rule requires that all produced and recovered water from the hydraulic fracture be stored in rigid enclosed, covered, or netted and screened above-ground tanks. Open pits (for the most part) are not acceptable. 
• Finally, the rule requires additional disclosure and public availability of information about each hydraulic fracturing operation. 

The Bureau of Land Management estimates that the compliance cost will be approximately $11,400 per well, or about 0.13% to 0.21% of the cost of drilling a well.

Hydraulic fracturing is the current method of extracting unconventional oil and natural gas that is locked inside impermeable geological formations. Hydraulic fracturing, or fracking as it is more commonly known, was made possible by horizontal drilling. Fracking involves the pressurized injection of fluids made up of mostly water with some chemical additives into a geologic formation. The pressure used exceeds the rock strength and the fluid opens or enlarges fractures in the rock. As the formation is fractured, a “propping agent,” such as sand or ceramic beads, is pumped into the fractures to keep them from closing as the pumping pressure is released. The fracturing fluids (water and 1-2% chemical additives) are partially recovered and returned to the surface where they are stored until final treatment or disposal. Natural gas or oil will flow from pores and fractures in the rock into the wells allowing for enhanced access to the methane or oil reserves. Hydraulic fracturing techniques are particularly effective in enhancing oil and gas production from shale gas or oil formations.

The development of horizontal drilling, combined with hydraulic fracturing, has made the production of oil and gas from shale feasible. Well stimulation techniques, such as hydraulic fracturing, are commonly used by oil and natural gas producers to increase the volumes of oil and natural gas that can be extracted from wells. The current debate over fracking centers on the economic benefits, energy security and potential environmental safety of the process. The greenhouse gas emissions from a coal-fired power plant can be reduced by about half and the mercury and sulfur emissions eliminated if the plant is replaced by a natural gas fired power plant. Opponents cite the potential negative health and environmental effects as reasons to ban the practice, while proponents tout its economic benefits, positive environmental impact of cleaner and lower carbon energy than coal, and energy security.

The environmental concerns that surround fracking include air pollution from the operation of heavy equipment, human health effects for workers and people living near well pads from chemical exposure, noise and dust, induced seismicity from the disposal of fracking fluids, and increased greenhouse gas emissions from poor well head control and continued use of hydrocarbons. However, the biggest health and environmental concerns remains the potential for drinking water contamination from fracturing fluids, natural formation waters, and stray gases. This new rule is aimed primarily at protecting our water resources.

Many of the requirements under the new rule are consistent with industry guidance and the voluntary practice of operators; some of the requirements are already required by state regulations. So to the extent that industry is already in compliance, the costs of may be overestimated. The rule provides significant benefits to all Americans by avoiding potential damages to water quality, the environment, and public health. The rule creates a consistent, predictable, regulatory framework, and could be used in states with limited experience in regulating fracking operations.

This rule only applies to drilling/fracking operations on federal and Tribal lands. Last year, lands under the stewardship of the Interior Department produced over 200 million barrels of oil (5% of the oil consumed in the U.S.) and close to 3 trillion cubic feet of natural gas (11% of the natural gas consumed). There are currently over 100,000 wells on federally managed lands across the country, with close to 3,000 new wells drilled each year. Of wells currently being drilled, over 90% use hydraulic fracturing. Currently, there are nearly 36 million acres of Federal land are under lease for potential oil and gas development in 33 states. As of June 30, 2014, there were approximately 47,000 active oil and gas leases on public lands, and approximately 95,000 oil and gas wells. Existing wells will have to come into substantial compliance with the rule.