EPA Ties Fracking, Pollution

Wall Street Journal
9 December 2011
By Deborah Solomon and Russel Gold

Chemicals found in a Wyoming town's drinking water likely are associated with hydraulic fracturing, the Environmental Protection Agency said Thursday, raising the stakes in a debate over a drilling technique that has created a boom in natural-gas production.

The agency's draft findings are among the first by the government to link the technique, dubbed "fracking," with groundwater contamination. The method—injecting large volumes of water, sand and chemicals to dislodge natural gas or oil—has been criticized by environmentalists for its potential to harm water supplies, which the industry disputes.

The EPA findings spooked investors in Encana Corp., which drilled the Wyoming wells, sending the Canadian company's shares down more than 6% in New York Stock Exchange trading. The value of some other energy companies heavily invested in fracking also fell, including Chesapeake Energy Corp., which dropped 5.1%.

The findings, which will be peer-reviewed by scientists before being made final, could expose Encana to fines and litigation. The company has been providing fresh water to 21 homes in the area since August 2010, when it began meeting with the EPA and state regulators to find a long-term alternative to well water for the area.

EPA spokeswoman Betsaida Alcantara said the agency is discussing steps with Encana to fix the problems. "Our highest priority is to ensure a long-term source of clean drinking water," she said.

Doug Hock, an Encana spokesman, said the company—the second-largest natural-gas producer in North America after Exxon Mobil Corp.—wasn't aware of any pending enforcement action by the EPA but added "they always have that option."

Mr. Hock called the EPA's findings "a probability rather than a definitive conclusion. For an agency that prides itself on science, that's surprising." He added that Encana has tested the wells at issue and "the results show there has been no issue with wells releasing natural gas or other contaminants into the environment."

Environmental groups said the finding confirms that fracking poses environmental risk and should be subject to strict rules or banned outright. Supporters of natural-gas production said the report was narrowly focused and shouldn't be used to draw broad conclusions about fracking's impact.

The EPA itself said the Wyoming field differs from most fracking sites because the fracking "is taking place in and below the drinking water aquifer and in close proximity to drinking water wells"—unlike most sites where fracking is done far below the water table.

The EPA conducted a multiyear study in response to concerns voiced in 2008 by residents in Pavillion, Wyo., about the smell and quality of their water.

The agency, after drilling its own wells in Pavillion and sampling water, said it detected benzene, a carcinogen, that exceeded safe drinking-water standards, as well as methane—the primary component of natural gas—and synthetic chemicals such as glycols and alcohols "consistent with gas production and hydraulic fracturing fluids."

The EPA said that in one well it drilled it measured 246 micrograms of benzene per liter, far above the maximum permitted level of five micrograms per liter. The EPA said it looked at other explanations for the contaminants but concluded fracking was "likely" to blame.

Critics of the report didn't dispute that the findings raised some concern but said the EPA was a long way from proving a causal link. Kevin Book, an energy policy analyst at Clearview Energy Partners LLC, described the findings as "circumstantial" and said some of the evidence "may be incomplete or inconclusive."

The EPA has responded to several instances of potential fracking contamination, including in Texas and Pennsylvania. In Texas, the EPA ordered a company, Range Resources, to provide fresh drinking water to residents who said their water was contaminated. The case is the subject of a lawsuit.

The agency ordered Pennsylvania to tighten its standards related to removal of drilling wastewater and recently said it would consider nationwide standards for disposal of such water.

The EPA, which has been looking more intently into fracking under the Obama administration as the practice has exploded, is conducting a broad study to gauge the possible effects on drinking water, with preliminary results expected in 2013.

The ability to extract gas and oil using fracking has triggered a modern-day gold rush, with states including Pennsylvania and Colorado benefiting from new jobs and tax revenue.

Petroleum engineers and other industry experts cautioned against extrapolating the EPA's Wyoming results to other parts of the country, saying the wells at issue and the region's geology were atypical of areas that have undergone fracking.

The gas-bearing rock being fractured in Wyoming was only about 1,220 feet deep. And some of the water wells extended down 800 feet. By comparison, in Texas and Pennsylvania most of the rocks being fracked are several thousand feet deeper than water wells.

And, unlike gas-rich geologic formations such as the Marcellus in Pennsylvania and Barnett in Texas, the Wyoming field doesn't have a rock barrier that sits atop the gas reservoir.

"It is not something we can say, 'If it's happening here, it can happen anywhere,' " said Ian Duncan, a research scientist at the Bureau of Economic Geology at the University of Texas. "There is such a large difference in the amount of rock between where the fracking is going on and where the water is."

The report cited problems with how the wells were constructed, including intervals where the wells had no cement casing or weakened cement. EPA officials said this could be related to the age of the wells, some of which date to the 1950s, and varying state regulations over the years.

Environmental groups have cited the potential for poor well construction as a risk and said the report shows the need for tighter rules. "Even if you just set aside the fracking issue, the EPA found a lot of problems. These wells were not constructed properly, they weren't cemented properly," said Amy Mall of the Natural Resources Defense Council.

The EPA announcement irked Wyoming authorities. Gov. Matt Mead issued a statement saying the draft analysis "is scientifically questionable and more testing is needed."

Tom Doll, the state's oil and gas supervisor, said "more sampling is needed to rule out surface contamination or the process of building these test wells as the source of the concerning results."

In 2004, Colorado officials found that Encana failed to sufficiently cement a well and caused gas to seep into a creek. They fined the company $371,200. Mr. Hock, the Encana spokesman, said the faulty cement job was "regrettable" but that the company hasn't had a similar problem since.

—Ryan Tracy, Tom Fowler and Daniel Gilbert contributed to this article.

Write to Deborah Solomon at deborah.solomon@wsj.com and Russell Gold at russell.gold@wsj.com