Panel Calls for More 'Fracking' Rules

Wall Street Journal
11August 2011
By Deborah Solomon

The use of hydraulic fracturing to drill for natural gas poses risks to air and water quality, and should be subject to tighter rules and more disclosure, an advisory panel to the Department of Energy said in a report to be released Thursday.

The report, commissioned by President Barack Obama, stops short of recommending specific state or federal regulations, but says public concern about the practice known as "fracking" could undermine an important and growing source of U.S. energy. To help assuage those concerns, the panel is urging tighter restrictions on air emissions, disclosure of all pollutants released and chemicals used in the drilling process, and further study of whether natural-gas exploration contaminates drinking water.

At the same time, the panel clearly champions natural-gas exploration, saying it has "enormous potential to provide economic and environmental benefits for the country" and reduce U.S. dependence on foreign oil. Natural gas currently provides about 25% of total U.S. energy and is projected to increase to 45% by 2035, according to the U.S. Energy Information Agency.

The panel's recommendations could help guide the Obama administration as it tries to find middle ground between environmentalist concerns about fracking and a lucrative industry that is creating jobs and increasing domestic supplies of an alternative energy source to coal. Fracking involves pumping water, chemicals and sand underground to force out natural gas.

John Deutch, the former head of the Central Intelligence Agency who heads the panel, said: "To say that there are not serious environmental impacts is not sustainable. When you realize we may have several thousand such wells drilled in the U.S. over the next 20 years, it's important to get this right."

The panel's view, he said, is "that the regulatory system wasn't moving rapidly enough and decisively enough to resolve some of these questions." But he said it was not the panel's mandate to recommend specific regulations, in part because the Environmental Protection Agency, not the Energy Department, is the primary regulator for clean-air and water standards.

The EPA recently announced the first national air standards for fractured gas wells and is embarking on a two-year study of fracking's effects on drinking water. Fracking is largely exempt from federal statutes under the 2005 Energy Act. Environmentalist groups want Congress to rescind those exemptions and tougher regulation of fracking.

Some environmentalist groups criticized the report as not going far enough, saying it relies too much on industry to clean up its own act. "The recommendations really do fall short for us," said Heather White, chief of staff for the Environmental Working Group, which has publicly criticized the panel's seven members as having too-close ties to the energy industry. They cited Mr. Deutch for serving on the board at Cheniere Energy Inc. and previously on the board at Schlumberger Ltd., which is active in fracking.

The American Petroleum Institute, which represents the oil and gas industry, has the opposite criticism, faulting the panel for not having enough industry representation.

API said in a statement: "DOE's recommendations should be informed by an understanding, first, that shale-oil and gas development is already well regulated and safe, and, second, that it could create hundreds of thousands of new jobs, generate billions of dollars in additional revenue for our government and enhance our energy security." API declined to comment on the report's specifics.

The panel's recommendations include some steps environmental groups have been agitating for, including disclosure of chemicals in fracking fluids and tougher air-emission rules for methane and other pollutants. The panel didn't recommend federal regulation related to the industry's water use, though it did suggest the industry take steps to conserve water.

The panel noted that oil and gas operations have "significant air-quality impacts," including emissions of toxic pollutants, greenhouse gases and other ozone-causing compounds. It also cited "possible pollution of drinking water from methane and chemicals used in fracturing fluids." It suggested some of the adverse effects of fracking could be mitigated through better data collection, disclosure and improved industry practices, rather than solely through regulation.

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