Just who should regulate shale gas production is seeping its way into this year’s presidential race. The White House has said that the unconventional form of natural gas is an essential “bridge fuel” that uses extraction processes that must be federally regulated.

At the core of the debate is whether the U.S. Environmental Protection Agency has the authority to monitor certain aspects of shale gas production such as the disposal of waste water and the assurance of clean water supplies. And while EPA says that it will work hand-in-hand with all stakeholders during its review process, the agency does say that it will not hesitate to stand up for everyday Americans.

That determination is prompting natural gas producers to take certain preemptive steps to avert federal oversight. For their part, those developers are adamant that such regulations should remain at the state level, noting that the country’s geography varies from region-to-region and that a one-size-fits-all approach is not just impractical but also duplicative and expensive.

“State regulators are eager to prove they don’t need more federal oversight, but the Obama EPA continues to linger in the background,” adds Christine Tezak, a regulatory analyst with Baird.

Production from shale formations has grown from a negligible amount just a few years ago to almost 15 percent of total U.S. natural gas production. By 2035, natural gas, generally, will make up about 45 percent of the utility generation market, says the U.S. Energy Information Administration.

EPA, which is expected to issue proposed hydraulic fracturing rules in 2 years, wants such safeguards as requiring developers to disclose the chemicals that they use to “frack.” That’s the process by which producers ply loose the shale gas from the rocks where it is embedded deep underground.

While the industry has said that such transparency would reveal proprietary and competitive information, it is coming around. Chesapeake Energy, for example, says that the disclosure of fracking chemicals is the only way to move forward. Already, about 10 states have such rules on their books.

State Role

The regulatory agency is also considering “green completions” whereby producers would install the necessary technologies to capture such releases as methane that can be re-sold. The same rule would require that the fracking fluids either re-injected or re-cycled, which some states already mandate. The wastewater injection method, however, is being blamed in some circles for tremors that recently occurred in Ohio. While the matter is being investigated, it has caused some states to delay those practices until they can be fully understood.

“One of the starting points is the need for much more complete measurement of water quality, air quality, and specifically methane,” says Daniel Yergin, who helped craft ideas for EPA’s consideration, in testimony. “Many of the recommendations focus on best practices and technical innovation. They also emphasize the importance of community engagement and the need for disclosure and transparency. They recognize the central role of state regulation in this arena.” 



The EPA readily acknowledges that the states have played the lead role when it comes to natural gas development. But it is arguing that because shale gas is such a game changer that the federal government must exercise leadership and ensure that industry’s extraction methods are safe and responsible.  



Consider Pavillion, Wyoming, where EPA has been investigating whether the fracking process polluted the drinking water there: It says that the ground water does contain “synthetic chemicals” associated with drilling. The samples, it adds, do not meet the Safe Drinking Water Act standard. 



EPA’s analysis also says that the wells drilled at Pavillion were too shallow. That is, most shale gas is plumbed from a mile beneath the earth’s surface, making it far less likely that any harmful elements can resurface and pollute the ground water. But in the case of Wyoming well owned by Encana, the depth was just 1,220 feet.

“EPA’s highest priority remains ensuring that Pavillion residents have access to safe drinking water,” said Jim Martin, EPA’s regional administrator in Denver.



Indeed, that’s EPA’s goal for the rest of the nation as well. And while the agency says that the federal government has the legal authority to monitor development, shale gas producers counter that the agency’s involvement would deter progress. This issue as well as EPA’s overall reach are now part of the presidential debates. 


EnergyBiz Insider is the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has also been named one of the Top Economics Journalists by Wall Street Economists.

Follow Ken on  www.twitter.com/ken_silverstein

energybizinsider@energycentral.com

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