EPA Official: State Regulators Doing Fine on Hydrofracking

WASHINGTON (Dow Jones), Feb. 16, 2010

State regulators are doing a good job overseeing a key natural gas production technique called hydrofracking and there's no evidence the process causes water contamination, a senior federal environment official said Monday.

Environmentalists and some lawmakers are pressing to give the Environmental Protection Agency federal oversight of the process, concerned that the drilling technique is contaminating water suppliers.

State regulators and the natural gas industry have been fighting against federal regulation, saying it could prevent or delay development of trillions of cubic feet of new resources.

The process, which injects water, sand and a small amount of chemicals into natural gas reservoirs under high pressure, has opened new deposits to development, dramatically expanding estimates for domestic production.

"I have no information that states aren't doing a good job already," Steve Heare, director of EPA's Drinking Water Protection Division said on the sidelines of a state regulators conference here. He also said despite claims by environmental organizations, he hadn't seen any documented cases that the hydro-fracking process was contaminating water supplies.

In its 2011 budget, the EPA is seeking to spend $4 million to study the environmental impacts of the process.

Bill Kappel, a U.S. Geological Survey official, said contamination of water supplies is more likely to happen as companies process the waste water from hydrofracking. In some instances, municipal water systems that treat the water have reported higher levels of heavy metals and radioactivity.

"Treatment of the [waste] water hasn't caught up with the hydro-fracking technology," Kappel said.

But both re-injection of that waste water and water treatment at the surface is already regulated by the federal government under the Safe Drinking Water and Clean Water Acts.

Although legislation in the House and Senate to bring greater federal oversight of the hydro-fracking process hasn't gained momentum, Heare said even if such proposals are approved, it wouldn't likely have a dramatic affect on regulation. States would still have the right under the Safe Drinking Water Act to use their own regulatory standards.

The National Association of Regulatory Utility Commissioners has pushed to maintain state's primacy in oversight of oil and gas activities.

Contrary to some press reports, Heare also noted that the EPA wasn't conducting any current investigations linking hydrofracking to water contaminations.

Companies such as Range Resources Corp. (RRC), EOG Resources Inc. (EOG), Devon Energy Corp. (DVN), Royal Dutch Shell PLC (RDSA) and Chesapeake Energy Corp. (CHK) say the process is multiplying their reserves. For example, the Marcellus deposit that lies under Pennsylvania, Virginia, Ohio and New York is estimated to hold more than 500 trillion cubic feet, compared to total conventional natural-gas resource estimates in the U.S. of around 378 trillion cubic feet, according to the U.S. Geological Survey.

Copyright (c) 2010 Dow Jones & Company, Inc.

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