Fracking Rules Expected to Be Unveiled by Obama Administration Friday
Rules set standards for wells, disposal of wastewater
WASHINGTON—The Obama administration on Friday is expected to issue long-awaited regulations setting new standards for hydraulic fracturing in the oil and natural-gas industries, people familiar with the matter said.
The drilling technology has been key to unlocking vast reserves of oil and gas across the U.S., but qualms about its environmental impact have made it controversial.
The regulations will set standards for wells and disposal of wastewater—and also require companies to disclose chemicals used, Interior Secretary Sally Jewell said on Tuesday in remarks discussing the rules.
“The rule will include measures to protect our nation’s groundwater—requiring operators to construct sound wells, to disclose the chemicals they use, and to safely recover and handle fluids used in the process,” Ms. Jewell said at a Washington speech. “Some have already labeled these baseline, proven standards as overly burdensome to industry; I think most Americans would call them common sense.”
The regulations, in the works since 2012, apply only to drilling on federal land, which account for 11% of the natural gas and 5% of the oil the U.S. consumes, according to Interior Department data. Other drilling is on private or state-owned lands and won’t be subject to the regulations.
The rules are significant because they set a standard that will be weighed by state regulators and private companies.
“The responsibility for developing this energy safely must now be taken up in state capitals, engineering labs, and board rooms all across the country,” Ms. Jewell said.
Hydraulic fracturing, or fracking, is a drilling technique of injecting water and chemicals deep into shale rock formations to crack open pockets of natural gas and oil. Companies have done it decades, but the practice has come under scrutiny in recent years as its use skyrocketed and triggered the U.S. oil and gas boom. Roughly 90% of new land-based wells are drilled using the technology, the government said.
The government, in a May 2013 draft proposal, said it expects the rules to cost between $12 million and $20 million a year. Some analysts said the rules won’t be overly burdensome. “We expect the direct effect will be minimal on the industry, as the associated cost increases will likely represent [less than] 0.5% of average well costs,” said a Wednesday research note by investment bank FBR Capital Markets.
The regulations represent one of the first steps by the Obama administration on fracking, which some environmental groups say is unsafe and should be banned. Administration officials say it can be done safely.
Thanks in large part to the combination of fracking and horizontal drilling, U.S. oil and natural gas production has surged in recent years. Oil production has risen 85% since 2008, to reach 9.4 million barrels of oil a day in February, and natural gas production has risen more than 30% over that same time period, the U.S. Energy Information Administration said.