BLM to Revise Proposed Federal Fracking Regulations

The U.S. Bureau of Land Management (BLM) will publish a new draft proposal of hydraulic fracturing regulations for federal lands in this year's first quarter, a Department of the Interior (DOI) spokesperson confirmed to Rigzone Friday.

The decision comes in response to the more than 170,000 comments from stakeholders and the public on the proposed rule. Some oil and gas industry groups had criticized the rule, saying it would negatively impact domestic energy production, drive up costs and discourage exploration of resources on public and Indian lands.

BLM said it would make improvements to the draft proposal in order to maximize flexibility, facilitate coordination with state practices and ensure that operators on public lands implement the best practices.

DOI spokesperson Blake Androff said in a statement the BLM had proposed a "commonsense and achievable" rule with the proposed regulations that leverage technologies already used by oil and gas companies to protect water resources and improve transparency through the disclosure of hydraulic fracturing chemicals. "Many companies are already implementing these best practices." But due to concerns raised and suggestions received, BLM has been developing revisions to the draft rule since the public comment period closed. The revisions will be submitted to the Office of Management and Budget next week for review. The new draft rule will then be available for review and comment by the public.

BLM will seek comments on the revised draft proposal. Once those comments have been analyzed, BLM expects to issue a final rule that will ensure that operators apply proven cost-effective safety and environmental protection process when engaging in hydraulic fracturing on U.S. public lands.

The current draft rule was published in May of last year; the public comment period closed in September 2012.

The updated draft rule will maintain the three main components of the initial proposal, including:

• Requiring operators to disclose the chemicals they use for fracturing activities on public lands
• Improving assurances on wellbore integrity to verify that fluids used in wells during fracturing operations are not escaping
• Confirming that oil and gas operators have a water management plan in place for handling fracturing fluids that flow back to the surface

The Obama administration's first priority has been to continue expanding domestic oil and gas production while ensuring safe and responsible production, said Androff.

"As the President had made clear, this administration's priority is to continue to expand domestic oil and gas production, while ensuring that production takes place safely and responsibly," said Androff. "As we continue to offer millions of acres of America's public lands for oil and gas development, it is important that the public have full confidence that the right safety and environmental protections are in place."

However, oil and gas industry groups have said the proposed rule would thwart the expansion of production.

American Petroleum Institute (API) Jack Gerard welcomed the decision as a positive first step, "the real test will be in the substance of the re-proposal," Gerard commented in a statement.

"We hope that the administration will recognize the strong oversight provided by existing state and federal regulations and take sufficient time to review the many thoughtful comments provided by the oil and natural gas industry and others," Gerard noted.

API had formally commented to the BLM on the proposed regulations in June 2012, requesting extensive changes to make the final rule workable. In its comments, API said the currently proposed rule lacked technical and scientific support and would create additional delays in operations and increase costs, which would provide further disincentives to operators to develop federal resources.

API made a number of suggestions in its comments. These include BLM streamlining the approval process by using a single approval, followed by post-activity reporting of information consistent with state permitting processes. API also called for the proposed rule to be clarified to apply only to the specific stimulation process of hydraulic fracturing and not well stimulation.

Additionally, API said operators should use the FracFocus website to disclose hydraulic fracturing fluids, rather than imposing administrative burdens on BLM without providing any "meaningful" increase in the transparency already provided by FracFocus.

API added in its comments that operators should be allowed to submit relevant well integrity information indicating factors, tests and diagnostics with a post-completion report, rather than interrupting drilling or delaying stimulation operations to get an additional approval.

API and other energy industry groups, including the Independent Petroleum Association of America and the Western Energy Alliance (WEA), have spoken out against the proposed rule, calling the regulation unnecessary, excessive and requiring actions that no state currently regulating oil and gas production deems necessary.

WEA applauded the decision Friday.

"BLM has wisely resisted political pressure to rush through a highly complex and controversial rule," said Kathleen Sgamma, vice president of government and public affairs for WEA, in a statement. "We continue to believe that a federal fracking rule is not necessary, as states have been effectively regulating for decades with an exemplary health, safety and environmental record."

WEA estimated that the first draft would have added over a quarter of a million dollars to the cost of each new well on public lands, for an aggregate annual cost of $1.5 billion.

"We hope BLM's next steps include a thorough cost assessment to balance the regulatory burden with the impact on jobs and economic growth."

WEA noted that several western governors, tribes, members of Congress, the Interstate Oil & Gas Compact Commission and many others publicly opposed BLM regulating hydraulic fracturing on public lands.

Approximately 90 percent of the wells drilled on federal and Indian lands use hydraulic fracturing, according to DOI.