Christopher Helman, 09.28.09, 08:30 PM EDT
Politicians want to regulate the use of hydraulic fracturing in oil and gas wells. If the industry is smart, it will reform on its own.
HOUSTON -- Last week the Pennsylvania Department of Environmental Protection shut down some operations of natural gas driller Cabot Oil & Gas after 8,000 gallons of toxic chemicals were spilled on the ground and into a creek in Susquehanna County.
Houston-based Cabot Oil & Gas ( COG - news - people ) says a hose ruptured during a process called hydraulic fracturing, a method used to break apart tight rock formations, allowing gas to escape, in which a million gallons of water mixed with sand and chemicals are shot down a well under immense pressure.
More than 80% of all wells drilled in the U.S. today use some kind of "fracking." And in the Marcellus basin, a shale rock formation that stretches across Pennsylvania, Ohio, New York and West Virginia, usage is more like 100%. Without the high flow rates created by the frack, the gas wouldn't be economical to go after. With the fracks, geologists figure the Marcellus has more than 50 trillion cubic feet of gas, enough to meet all of U.S. needs for two years.
But can hydraulic fracturing be trusted? This wasn't Cabot's first fracking fracas. Pennsylvania's DEP cited the company last February for contaminating wells used for drinking near drill sites.
In a 2007 case unrelated to Cabot, an Ohio house exploded from what state regulators determined was a buildup of methane bubbling up water pipes from wells polluted by drilling operations. Nineteen neighboring homes were evacuated. Last April at least 10 cows died in Louisiana after drinking fracking chemicals collected at a drilling site operated by Chesapeake Energy ( CHK - news - people ).
So what's in this stuff? Hydrochloric acid, solvents, surfactants, petroleum-based lubricants, corrosion inhibitors, microbe killers. Basically, it's a lot of the same carcinogenic chemicals found in household cleaners like Formula 409 and Drano.
Most of the fracking fluids are recovered from the gas wells, stored in ponds, transferred to tanks and trucked to processing plants. Most wells are drilled away from and much deeper than drinking water sources. But it only takes a few mishaps to destroy public faith.
It's vital that the oil and gas industry voluntarily implement tougher standards on the implementation of hydraulic fracturing, the recovery of chemicals from wells and the safeguards to avoid contaminating groundwater with chemicals of any kind. Or politicians will let the Environmental Protection Agency do it for them.
In June, the FRAC Act (Fracking Responsibility and Awareness of Chemicals) was introduced simultaneously in the U.S. House and Senate. The act would call for hydro-fracking to be regulated under the Safe Drinking Water Act. Thus fracking would be subject to EPA's permitting process governing the underground injection of other chemicals.
This doesn't sound outlandish except to the oil and gas lobby, which points out that the EPA has none of the bureaucracy in place to accept or evaluate applications for FRAC permits, let alone issue one. If the act were to pass, the effect would be at least a temporary halt to all well fracking nationwide. In a study paid for by the American Petroleum Institute, researchers at IHS Global Insight figured that if well fracturing were halted today, U.S. natural gas production would fall 45% by 2014 and 57% by 2018. A ban would likewise cost 2.9 million jobs and decimate the business of leading frack-jobbers like Schlumberger ( SLB - news - people ), Weatherford and Halliburton ( HAL - news - people ) (which was the primary contractor on Cabot's well).
But that's the worst-case scenario. Assuming there's a (slightly less efficient) frack method that can pass muster with the EPA, the result would be just 10% less gas by 2014. The added cost to the industry would not be too much to bear. The IHS Global study figures that complying with existing rules for underground injections would cost less than $100,000 per well in shale zones. That's not a lot. Analysts at Tudor, Pickering & Holt in Houston figure that Cabot's current drilling costs are running $3 million a well. At $4 per thousand cubic feet Cabot's recent wells can pay that back in six months.
Even the biggest users of hydrofracking, like Aubrey McClendon, chief executive of leading shale driller Chesapeake Energy, concede that the industry needs to "demystify" the practice. Speaking at a conference last week, McClendon, according to Reuters, said, "We need to disclose the chemicals that we are using and search for alternatives to the chemicals we are using."
Chesapeake is keen to tap northern reaches of the Marcellus in the Catskills and Finger Lakes regions of New York State. This area, however, serves as the source of drinking water for New York City. Because of its pristine quality, New York City has been able to forego building a $6 billion water filtration system. Last year, City Comptroller William Thompson said that if water pollution from fracking in the watershed necessitated filtration, it could mean 30% higher water rates for New Yorkers. State politicians' likely revenue source for such a system: a special tax on energy companies.
Last week, nine U.S. senators--a mix of Democrats and Republicans from gas-rich states--sent a letter to Sen. Barbara Boxer, D-Calif., who, with Sen. John Kerry, D-Mass., is cobbling together the Senate's version of climate change legislation passed by the House earlier this year. In the letter, they reminded Boxer that natural gas, which has roughly half the carbon emissions of coal and 30% less than oil, should be treated as "a vital bridge fuel as we transition to the new energy economy." In exchange for legislation incentivizing expanded gas usage, the senators proposed funding an EPA study of the dangers of hydraulic fracturing to drinking water--the better to help Congress regulate it.
This move might sideline the FRAC Act for now, but should indicate to the likes of Halliburton that they'd better get to work on some new ways to get at all that gas.
How can anyone with a mind or conscience call this a "cleaner" form of energy production? Radioactive drinking water is no answer to current environmental dilemma created by companies only intereste....