EPA Fracking Regulations in Play

Thursday, April 19, 2012 @ 06:04 PM gHale

Fracking rules are now coming into play to combat air pollution from natural-gas drilling, while giving companies until 2015 to meet the most stringent requirements opposed by the energy industry, U.S. Environmental Protection Agency (EPA) officials said.

The regulations will primarily affect the estimated 13,000 wells a year drilled using hydraulic fracturing, or fracking, to free underground gas in shale formations. The EPA rejected a bid by the American Petroleum Institute (API) to exempt wells from the requirements altogether.

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“The president has been clear that he wants to continue to expand production of important domestic resources like natural gas, and today’s standard supports that goal while making sure these fuels are produced without threatening the health of the American people,” said EPA Administrator Lisa Jackson, appointed by President Barack Obama.

An EPA draft of the rule would have put the requirements into effect in about 60 days. The final regulation delays until Jan. 1, 2015, a requirement that drillers capture gases when first tapping a well. Operators must burn off that gas during the phase-in period, the EPA said.

The EPA proposed the rule last year to focus on fracking, in which millions of gallons of chemically treated water ends ups forced underground to break up rock and free gas. The method opened vast new shale gas deposits and helped push gas prices to the lowest level in a decade. Gas for May delivery touched $1.94 per million British thermal units today, the lowest intraday price since January 2002.

The rules force drillers of new wells to capture smog- forming compounds and other substances often released into the air or flared off when they tap a well. The process also results in capturing methane, the primary component of natural gas. Half the new wells already use this technology, according to the EPA.

Devon Energy Corp. has said 90 percent its wells capture the gas and Southwestern Energy Co. says almost all wells in the Marcellus and Fayetteville shale formations collect the gas already.

“Every molecule of gas you let escape out into the air is a molecule of gas you can’t sell,” said Tim Hartley, a spokesman for Oklahoma City-based Devon.

The EPA analysis says that drillers may make $11 million to $19 million a year after paying for the equipment to comply with the rule, because they can sell the gas that otherwise would escape into the air.

Lobbyists for companies including Chesapeake Energy Corp. wanted to delay and scale back the rule while rebutting environmentalists’ claims fracking causes air pollution.

“Overall, EPA has made some important adjustment in the rules that allow” the industry to comply, said Howard Feldman, research director for the American Petroleum Institute.

The group argued to the Obama administration the equipment required to capture the gas as required by the EPA rules wasn’t available in sufficient quantities. In delaying the requirement, EPA echoed that assessment.

The EPA added incentives to prod drillers to use a technology called green completions where gas ends up trapped. Companies that refracture a well and use green completions won’t be subject to state permitting requirements, according to EPA documents.