Texas Attorney Blog

Hydraulic fracturing has often been criticized for its possible effect on groundwater, but the early results of a study by the Energy Institute at The University of Texas at Austin indicates that the concern is largely unfounded. Early results of the study, entitled "Separating Fact from Fiction in Shale Gas Development" shows that the process alone does not contaminate drinking water. Instead, what the study pointed out was that fracturing sites might have a higher rate of surface problems that could occur with any type of drilling.

The purpose of hydraulic fracturing is to wrest natural gas and oil from shale and sand formations, which tend to be dense and difficult to penetrate. The hydraulic fracturing approach uses a combination of sand and chemicals, mixed with millions of gallons of water, to break up and keep open the shale formations, resulting in hydrocarbons being released. Although most of the fracturing fluid is water, a tiny percentage is made up of chemicals, several of which could potentially be dangerous. There have been reports of surface spills killing livestock and polluting drinking water. The EPA has blown that tiny percentage out of proportion, claiming that fracking fluid in general is harmful and should be phased out by the oil and gas industry.

Yet the University of Texas results show that hydraulic fracturing has been getting an undeserved bad reputation. According to Chip Groat, the University of Texas geologist leading the study, what actually happens is that shale drilling causes more problems on the surface than drilling without fracking. These problems include spills of drilling and fracking fluids and leaks from wastewater pits. There have also been problems with surface casing (a steel pipe at the top of a well meant to isolate the flow of hydrocarbons from aquifers) as well as the cement jobs that hold the casing in place, but these are problems common to any type of drilling project, not just fracking. Chip Groat’s position is that no evidence links these problems to incidents of groundwater contamination.

In Texas, hydraulic fracturing is a common practice of the oil and gas industry. Prior to the study, the Railroad Commission of Texas, the state’s oil and gas regulator, reported at least 311 complaints about the possibility of contaminated drinking water from the beginning of 2006 to the end of September this year. However, one of the commissioners stressed that no complaint had ever been linked to an improper well cement casing.

The University of Texas study shows why it is important to get all of the facts before rushing to pass legislation -- on a state or federal level -- banning or seriously restricting a method that the oil and gas industry use on a regular basis. If legislators reacted to people’s fears and just passed legislation, the oil and gas industry could suffer a serious profit loss without any genuine benefit to the public. Indeed, the public would be hurt because losses in the oil and gas industry mean losses for everyone, across a wide span of industries. Texas depends upon oil and gas producers to keep its economy humming along. Therefore, any legislation that threatens to curb their actions must be thoroughly examined for potential harmful effect.

For some years now, the conventional wisdom has held that wind power is the kinder, gentler energy source, the source that allows the energy producer to be at one with the environment. Instead, it turns out that wind power is a bigger threat to wildlife than any oil well. More than a few wind power producers have found themselves in the role of environmental foe, due to their turbines causing the deaths of countless animals.

For instance, a study in 2004 done for the Bonneville Power Administration found that wind turbines on the Altamont Pass in northern California -- among the first large-scale wind projects -- were responsible for killing 4700 birds each year, including federally protected species such as eagles, owls, and hawks. As a result, environmental groups sued Altamont’s wind power producers. The two groups arrived at a settlement in which the wind power producers agreed to cut bird deaths in half. The settlement isn't such a great deal for the birds: now the turbines kill only 2350 birds a year!

In addition to birds, more than one endangered bat has met its end at a wind farm. Most recently in September, an endangered bat was killed at Duke Energy Corp.’s North Allegheny wind farm in Pennsylvania. The discovery of the dead bat led the company to temporarily shut off the turbines at night during the bats’ migration season.

Wind power producers are no doubt surprised at their new role of environmental bad guys. A few have hired biologists to regularly examine the fields below the turbine blades for signs of wildlife, so they can make adjustments before the federal government imposes stricter rules. Others have had to give up plans for erecting wind power farms altogether. Pattern Energy intended to build a wind farm near Sacramento, California that would have had 44 wind turbines. However, the company had to shelve those plans after it discovered that despite its best efforts, it could not protect bald eagles and other birds sufficiently. Now Pattern Energy must hunt for new areas where the wildlife would be less bothered by the turbine blades.

Word has it that the U.S. Fish and Wildlife Service will be publishing new guidelines in 2012 that are considered voluntary -- for now. Those who fail to follow them are likely to receive fines or penalties if the wind turbines on their farm kill an animal protected by law.

What this demonstrates is what members of the Texas oil and gas industry have always known: there is no perfect method to produce energy: each one has costs and benefits. The lesson here is that the die-hard liberals who think wind power is somehow the environmentally friendly way to produce energy need to look at the facts.

Washington has been telling Texas small business, including Texas oil and gas companies, how they should be run for a long time. For a few moments, Texas businesses had a chance to tell Washington what to do, and the overriding message was: stop meddling.

Over 30 small Texas business owners met with Republican Congressman Pete Olson to discuss ways in which the federal government could help small businesses create jobs. Most businesses were in the manufacturing, chemical, and oil and gas industries. They complained about the federal government’s heavy hand, especially as represented by the Environmental Protection Agency. One businessman scoffed at the idea that growing levels of carbon dioxide contributed to global warming; instead, he believed that higher levels of carbon dioxide were a natural byproduct of warming.

Mainly, the group of business owners wanted the federal government to use regulation as a force of good, not to hamper small businesses. “They’re like police who just want to getcha,” a businessman complained about the federal regulatory agencies. In particular, the business owners requested that Washington require foreign companies to comply with the same regulations that American businesses comply with, or face higher import duties. They also requested that the federal government stop the process of bundling that results in larger companies being favored for contracts over smaller companies.

Business owners also had a long list of regulations that they wanted cut back or removed altogether. This included repealing the Dodd-Frank Act that purports to reform Wall Street, reducing the power of the Food and Drug Administration, creating sunset provisions on certain taxes and agencies, speeding the process for drilling permits, and reducing the amount of time and effort it takes to complete an Environmental Impact Statement, or eliminate it altogether.

“The jobs are there,” Congressman Olson claimed, “we just need to get the government off the private sector’s back” and allow them to come out. One businessman remarked that due to oppressive government regulations, he had to lay off several employees and move their jobs overseas.

Continue reading " Texas Small Business Owners Rail Against Federal Overregulation at Meeting with Congressman Pete Olson " »

Last fall, the Texas Railroad Commission held a hearing to consider a new rule for disclosure of hydraulic fracturing chemicals. At the hearing, Chemistry Professor Andrew Barron from Rice University claimed that the rule would serve to demystify the chemicals used and help assure the public that the chemicals were not overly dangerous.

The new rule will be codified as 16 Texas Administrative Code section 3.29 and would implement House Bill 3328. House Bill 3328 has already been passed by the Texas state legislature and signed by Governor Perry. Section 3.29(c) lists disclosure requirements for suppliers, service companies, and operators who are involved with hydraulic fracturing. Under the Rule, not later than 30 days after the completion of a hydraulic fracturing treatment, suppliers and service companies must provide the well operator with the names of each chemical substance that was purposely added to the hydraulic fracturing fluid. In particular, any chemical ingredient that requires a Material Safety Data Sheet must be listed.

The rule defines “chemical ingredient” as “a discrete chemical constituent with its own specific name or identity.” An additive is “any chemical substance or combination of substances” contained in a hydraulic fracturing fluid that is purposely added to the base fluid for a specific reason whether or not that reason is to create fractures in a formation.

Under the rule, operators of wells have the responsibility of submitting information to a hydraulic fracturing chemical disclosure online registry. The data that must be given includes the operator’s name, the date of the treatment, the well’s location, the well’s API number, the amount of water used in the treatment, each chemical treatment used, and several other important pieces of information. Operators must also submit a well completion report for each well that received a hydraulic fracturing treatment to the Railroad Commission. Certain chemical ingredients are exempt from being listed under Section 3.29(d), such as ingredients not disclosed by their manufacturer, or ingredients not intentionally added to the hydraulic fracturing treatment. Ingredients that are trade secrets would also be protected from disclosure.

The proposed rule was published in the Texas Register on September 9, 2011. A 32-day public comment period -- including the October 5th hearing -- has already concluded. Some of the comments came from sources such as Pioneer Natural Resources. In an October 11, 2011 letter, Pioneer’s Vice President of Government Affairs, Roger Wallace wrote: “Pioneer strongly supports mandatory public disclosure of the chemical ingredients used in hydraulic fracturing.” Wallace expressed concern that the Railroad Commission would come under pressure to create a rule that gives suppliers, service companies, and operators too much discretion, and thought that the trade secret section would make it too easy for certain ingredients to be kept hidden. Meanwhile, the Texas Oil and Gas Association -- which produces 90% of Texas’s crude oil and natural gas -- expressed general support and proposed several revisions to the rule. These revisions include clarifying a number of terms, such as “hydraulic fracturing treatment” and “landowner,” and promoting a clearer process for challenging a claim of trade secrets. Already, several oil and gas companies voluntarily post the ingredients of their frac fluids on their websites. I suspect that the disclosures made will allow people to see that the chemicals used are pretty mundane, and hopefully some of the hysteria about fraking will dissipate.

Contrary to the Obama administration’s expectations, it sounds as though states are doing a fine job regulating the oil and gas industry, according to members of a shale gas subcommittee in the U.S. Senate. In the Shale Gas Subcommittee 90-day Report subcommittee members reported to the Senate Committee on Energy and Natural Resources during a hearing last fall. The subcommittee was formed to make recommendations about the safety and environmental performance of shale gas production.

The Report made 20 recommendations, including:

1. Improve public information about shale gas operations.

2. Improve communication between state and federal regulators. The subcommittee recommended continued yearly support to STRONGER (the State Review of Oil and Natural Gas Environmental Regulation) and to the Ground Water Protection Council for expansion of a data management system that determines risk, along with similar programs.

3. Improve air quality. The subcommittee had recommendations for reducing general pollutants, ozone precursors, and methane quickly.

4. Protect water quality. The subcommittee recommended a water management system based on “consistent measurement and public disclosure of the flow and composition of water at every stage of the shale gas production process.”

5. Disclose fracturing fluid composition. The subcommittee believed that although the risk was remote that fluid from deep shale reservoirs fractures could leak into drinking water, any chemicals in fracturing fluids should be made available to the public.

6. Manage short-term and cumulative impacts on communities, land use, wildlife, and ecologies.

Continue reading " Senate Subcommittee Reports That States Regulate the Shale Oil and Gas Industry Effectively " »