Years into a fracking-fueled oil and gas boom, the Department of the Interior today announced long-awaited rules regulating the controversial extraction technique on US public and tribal lands.
Fracking isn’t new, but, until recently, the process – which injects wells with water, sand, and chemicals to release oil and gas – wasn’t widely practiced. Today, fracking is commonplace: 90 percent of new land-based wells in the US are fracked, according to government data, and federal lands produce 11 percent of the natural gas and 5 percent of the oil the US uses.
While many states and municipalities have rules governing the practice, modern fracking has gone largely unregulated at the federal level since it started to spread across the US roughly seven years ago. For critics of the technique, the gap in federal regulations is a major oversight that puts local waterways and air quality at risk. Meanwhile, the oil and gas industry says the federal rules are “duplicative" of state regulations, and will only crimp a domestic boom that has driven down consumer costs and buoyed the US economy.
For the Obama administration, it’s simply a matter of policy catching up with a dramatic oil-and-gas boom that continues to surprise industry watchers.
“Current federal well-drilling regulations are more than 30 years old and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” Interior Secretary Sally Jewell said in a conference call with reporters Friday.
The Obama administration’s reforms mark the first country-wide safety standards on fracking, and require companies operating on federal lands to disclose the chemicals they use during fracking. First proposed in 2013, the rules also set standards for waste water disposal to prevent fracking fluids from contaminating water supplies.
“I’ve personally fracked wells, so I understand the risks as well as the rewards,” Sec. Jewell, a former petroleum engineer, said Friday.
In states and cities from Colorado to Denton, Tex., environmentalists and industry have grappled over who gets to regulate fracking and how much regulation is needed to prevent environmental damage. The Obama administration says fracking can be done safely, and the new rules represent an initial foray into regulation.
Interior’s rules only apply to federal lands, but they could serve as a road map for states where fracking is just beginning.
“We believe that in order to have a durable industry in the future you need to strike an appropriate balance between protecting public health and safety, and allowing for responsible production,” Brian Deese, a senior White House advisor, said at a Monitor-hosted breakfast Friday.
Soon, Interior will also come out with tougher standards on flaring, the burning off of natural gas at drilling sites, which increases climate-warming methane emissions. It’s all part of President Obama’s broader efforts to balance booming US oil and gas development with protecting the environment and curbing human-induced climate change, which is driven by the burning of fossil fuels.
Alongside advances in horizontal drilling, fracking has over the last several years unleashed a US oil and gas boom that’s propelled US production to levels not seen since the 1980s. Today the US competes with Saudi Arabia and Russia as the world’s top producer of oil. Booming US oil production played a substantial role in pushing oil prices to around $40 a barrel from over $100 a barrel little more than six months ago.
Until now, Interior’s decades-old rules for oil and gas production on federal lands hadn’t addressed modern advances in fracking and how they could impact the environment. America’s abundant public lands hold a quarter of US shale oil and gas, Sec. Jewell says, and fracking has the potential to unleash those reserves.
The speedy adoption of fracking throughout the country has alarmed environmentalists and some local communities. Fracking is at least partially responsible for an increasing number of earthquakes in Oklahoma and elsewhere, and environmentalists are also concerned that undisclosed and potentially dangerous fracking chemicals could leak into the water supply.
Interior’s requirement that companies disclose their chemicals is a step toward solving one of environmentalists’ chief concerns. Still, some thought the Obama administration should have gone further.
“While this proposal has improved from previous versions, it represents a missed opportunity to set a high bar for protections that would truly increase transparency and reduce the impacts to our air, water, public lands, and communities by the oil and gas industry,” Madeleine Foote, legislative representative for the League of Conservation Voters, an environmental group, said in a statement Friday.
Industry says the federal government should refrain from regulating, arguing that regulators in oil and gas states are better equipped to manage – and encourage – booming US production.
"[E]nergy production on federal lands has fallen, and this rule is just one more barrier to growth,” Erik Milito, director of upstream and industry operations at the American Petroleum Institute, an industry group, said in a statement Friday. “Under the strong environmental stewardship of state regulators, hydraulic fracturing and horizontal drilling have opened up a new era of energy security, job growth, and economic strength.”
While energy output has boomed on private lands, natural gas production on federal lands has declined 21.6 percent since 2009, according to API. An overall rise in cheaper, cleaner-burning natural gas has also facilitated a transition away from carbon-heavy coal. That has helped push the country’s total carbon emissions down to a 20-year low.
Sec. Jewell is quick to point out that Interior’s new rules only cover the limited portion of oil and gas reserves that are found on US lands.
“The responsibility for developing this energy safely must now be taken up in state capitals, engineering labs, and board rooms all across the country,” Jewell said this week.
New York has already gone so far as to ban fracking altogether, and some towns across the country have attempted the same. Sec. Jewell has criticized that approach in the past.
“I would say that is the wrong way to go,” Jewell told KQED, a California public radio station, in early January. “I think it’s going to be very difficult for industry to figure out what the rules are if different counties have different rules.”
Meanwhile, Pennsylvania, Oklahoma, Texas, North Dakota, and others have adopted fracking widely and often with minimal regulation, reaping economic benefits from increased oil and gas production, particularly when prices were high.
On average, the cost of Interior's new rules will be less than one quarter of one percent of the total cost of drilling a well, said Neil Kornze, Director of the Bureau of Land Management, in Friday’s conference call.