House Panel Probes Natural Gas Hydrofracking Process

WASHINGTON (Dow Jones), Feb. 19, 2010

The House Energy and Commerce Committee said Thursday it had begun an investigation into the potential impacts of a natural gas production process called "hydrofracking" on the environment and human health.

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 supplies.

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

"Hydraulic fracturing could help us unlock vast domestic natural gas reserves once thought unattainable, strengthening America's energy independence and reducing carbon emissions," said Chairman Henry Waxman (D., Calif.).

"As we use this technology in more parts of the country on a much larger scale, we must ensure that we are not creating new environmental and public health problems. This investigation will help us better understand the potential risks this technology poses to drinking water supplies and the environment, and whether Congress needs to act to minimize those risks," he said.

Waxman and energy subcommittee Chairman Ed Markey (D., Mass.) sent out letters to eight hydrofracking service and production companies, including Halliburton Co. (HAL), BJ Services Co. (BJS) and Schlumberger Ltd. (SLB), requesting information on the process. The committee said it had already collected some information from Halliburton, BJ Services and Schlumberger but was seeking additional details.

The announcement of the probe comes just days after Steve Heare, director of the EPA's Drinking Water Protection Division, said that despite claims by environmental organizations of thousands of cases, he hadn't seen any documented evidence that the hydrofracking process was contaminating water supplies. He also said state regulators were doing a good job overseeing the process. 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. Those activities are largely already regulated by the federal government under the Safe Drinking Water and Clean Water acts.

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

In an emailed statement, the American Petroleum Institute said hydraulic fracturing is a safe technology critical to developing the nation's vast natural gas reserves. "It has been used for more than 60 years in more than 1 million U.S. wells without a single confirmed instance of groundwater contamination."

Companies such as Range Resources Corp. (RRC), EOG Resources Inc. (EOG), Devon Energy Corp. (DVN), Royal Dutch Shell PLC (RDSA, RDSA.LN) 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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