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The World Has Too Many Oil Refineries

The World Has Too Many Oil Refineries

Several years of heightened investment…

Andy Tully

Andy Tully

Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com

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No Surprises: Obama’s Fracking Rules Upset Everyone

The Obama administration’s new rules on hydraulic fracturing, or fracking, are being denounced by the energy industry as impeding a US oil renaissance and by environmental groups who call them too weak to be effective.

The Interior Department and the Bureau of Land Management (BLM) drew up the rules for the technology used in extracting oil and gas from underground shale formations. Interior argues that they’re years overdue, and that they can be a guide for many states working to develop their own rules for the practice.

Fracking’s advantage is that it provides drillers with a new way to extract oil and gas that was previously inaccessible because it was locked deep underground in shale. It’s more expensive than conventional drilling, requiring injections of water mixed with chemicals to break up the rock.

Related: Three Reasons Why US Shale Isn’t Going Anywhere

Fracking could help the United States become the world’s largest producer of oil and gas, but it has also raised concerns that the chemicals – each drilling company has its own secret mix – could poison nearby groundwater supplies for both people and wildlife. As a result, states are struggling to develop their own rules to cover private and state-owned land, where most fracking is practiced.

The new federal rules will formally cover only federally owned land, where only about 10 percent of fracking occurs in the United States, according to the Interior Department. But it says it can help states address their own approach to fracking rules.

Interior Secretary Sally Jewell said March 20, the day the rules were announced, that current federal drilling regulations “are more than 30 years old” and that updating them could provide some states with “the only regulations they have” governing fracking. Related: Is Fracking’s Bad Reputation Justified?

The new rules, which take effect in late June, would require drillers to publicly name the chemicals they use on a website called FracFocus.org within 30 days of completing a fracking operation. The regulations would also permit government workers to assess the integrity of concrete barriers used to contain the chemically treated water used in fracking wells.

As soon as the new regulations were announced, two energy industry groups, the Independent Petroleum Association of America and the Western Energy Alliance, filed a lawsuit in a federal court in Wyoming arguing that the rules were based on “unsubstantiated concerns” about the safety of fracking.

And Erick Milito, a director of the American Petroleum Institute called the move “a duplicative layer of new federal regulation. … We urge the BLM to work carefully with the states to minimize costs and delays created by the new rules to ensure that public lands can still be a source of job creation and economic growth.” Related: U.S. Shale A Marginal, Not Swing Producer

As for environmentalists, Madeleine Foote of the League of Conservation Voters said the regulations were “an important step forward,” even if they weren’t strict enough. Some said fracking should be banned on federal land at a time when the US government is trying to limit carbon emissions.

“Fracking threatens our air, water and climate – and for what?” said Drew Hudson, executive director for Environmental Action. “When the shale gas bubble pops, and it will, we’ll have wasted years on a seriously dirty way to drill for a mostly dirty fuel.”

With such criticism from all sides, perhaps Obama’s only consolation is the old axiom that you may very well have done the right thing when you’ve made everyone angry.

By Andy Tully of Oilprice.com

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