Texas Fracking Disclosure Law Set Standard for Other States

The hydraulic fracturing chemical disclosure law passed by Texas in 2011 served as a trailblazer for other states, said David Blackmon, director of government affairs at El Paso Corporation at the Seventh Annual Mayer Brown Global Energy Conference in Houston on Wednesday.

Fifteen U.S. states have passed or are working on hydraulic fracturing legislature since the passage of Texas’ law.

Rep. Jim Keffer did a brave thing in proposing the bill, which was met with loud, aggressive opposition, said Blackmon.

It was a difficult three month process from the time the legislation was proposed in February to its passage in May 2011. But in the end, most of the industry supported the bill, Blackmon said, noting the website FracFocus, where companies can list the chemicals they use in hydraulic fracturing operations, makes it easy to comply with the law.

The industry’s problem is not an operational issue, but a public relations issue, said Blackmon, adding that the oil and gas industry still faces challenges in its portrayal in the media. Though ExxonMobil was an early support of the Texas disclosure bill, news articles portrayed them as fighting the legislation, said Blackmon.

“The misinformation about fracking fluids is our fault because we have not educated the media about fracking fluids,” Blackmon commented, adding that the industry remains on the defensive instead of getting out in front of issues and explaining the economic benefits as well as the technical challenges surrounding shale exploration.

While opponents of shale exploration say it’s the hydraulic fracturing process itself that’s the problem, but the real issue is whether the process is done effectively, said Blackmon.

He said that the study released earlier this year by the University of Texas found no direct connection between hydraulic fracturing and groundwater contamination, and was “dead on” in its assessment of the potential issues surrounding hydraulic fracturing.

That study found that many of the problems linked to hydraulic fracturing are related to common oil and gas drilling operations such as casing failures or poor cement jobs. It also found that many contamination reports were traced to spills or mishandling of wastewater above the ground, not the fracking itself.

More regulation to protect drinking water is anticipated as the U.S. Environmental Protection Agency (EPA) conducts its study of the impact of hydraulic fracturing on drinking water supplies.

Texas and a number of states already have laws in place regulating drinking water quality, and the Bureau of Land Management passed its own law requiring disclosure of chemicals in well completions, said Blackmon.

Despite the existing laws and precautions taken by industry to prevent contamination of water supplies by fracking fluids in wells, the EPA, which is biased, will find something to regulate, said Blackmon.

The level of regulation “will depend on the presidential election,” Blackmon noted.

The EPA has been working on the study, which is scheduled for release in 2014, behind the scenes and with little interaction from the industry, Blackmon told Rigzone.

Vermont’s recent decision to ban hydraulic fracturing is bad for the industry from the public relations view, but will have zero impact in the short-term because the state has no oil and gas activity.

However, the ban could mean the state is denied the economic benefits of developing shale gas should shale resources be discovered later.

“There are plays we are pursuing today that we didn’t know about five years ago,” said Blackmon.

The ban on future shale activity “is not good public policy” and the limit on potential development “is dangerous for the industry.”

El Paso and other operators in the Eagle Ford shale play have made headway in reducing their water usage for hydraulic fracturing, Blackmon said.

“From a water perspective, the Eagle Ford is one of the most sustainable plays,” said Blackmon, thanks to technology that is allowing companies to maximize water use on site.

The Texas Commission on Environmental Quality (TCEQ) and the Alamo Area Council of Governments currently is reviewing the possible impact of Eagle Ford shale activity on air quality in San Antonio and other south Texas area cities. Last year, TCEQ put air monitors in place along the southern perimeter of San Antonio to monitor air quality.

“We’re glad it’s been done because we want to know if there is a problem,” said Blackmon. “We don’t want to there to be a repeat of the Barnett,” where Barnett shale activity triggered concerns on air quality in the Dallas-Fort Worth area.

Activity in the Eagle Ford shale and other oil and liquids rich plays continue to grow as oil prices continue to trade at a premium to record low.

Oil basins such as the Permian Basin, the Eagle Ford shale and the Niobrara are economic at current oil prices, but none of the natural gas basins are economic at current U.S. gas prices, said David Cunningham, managing director with Tudor, Pickering, Holt & Co.

However, associated natural gas also is being produced from these plays. Continued production of associated gas will help delay the recovery of U.S. natural gas prices, but the real cure for the problem is creating demand for supply, said Cunningham.

, , , ,