Frontier Fracking Showdown Pits Feds Against Western Boom States
(Bloomberg) -- High noon for the Obama administration’s stricter rules for fracking on public lands has arrived on the Wyoming range.
Four western states at the center of the shale oil boom are headed for a courtroom showdown Tuesday over who should have the last word on rules for extracting oil and natural gas from federal property within their borders.
The U.S. government says it can set standards for more than 100,000 wells that make up 11 percent of the nation’s natural gas output and 5 percent of its oil. The states argue they’re doing plenty to make sure fracking is done safely, so oversight should be left to them. With the new rules set to take effect Wednesday, U.S. District Judge Scott Skavdahl in Casper, Wyoming, may decide in court who is right.
Producers say they can’t afford the increased costs and lengthy delays they fear will accompany the new federal rules. Drillers are already struggling because of falling oil prices, which has led to a spate of bankruptcies and missed bond payments. Oil dropped from more than $100 a barrel to as low as $44 in March, undercutting the “shale gale” that drove U.S. production to near record levels.
“This is far more driven by the Obama administration saying it wants to do something on hydraulic fracturing,” Dan Naatz, vice president of the Independent Petroleum Association of America, said in an interview. “The process in place now does a great job.”
Federal officials say they’ll yield to existing state regulations when they’re as good or better than U.S. standards.
“As we continue to offer millions of acres of public lands for conventional and renewable energy production, it is absolutely critical the public have confidence that transparent and effective safety and environmental protections are in place,” U.S. Secretary of the Interior Sally Jewell said in March.
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