Shale Drilling Faces Crackdown

Wall Street Journal
27 April 2011
By Ryan Tracy

The Environmental Protection Agency will more closely regulate the use of diesel fuel in a drilling process used to recover natural gas, Administrator Lisa Jackson said Tuesday.

The EPA until recently hasn't moved to regulate hydraulic fracturing, a process that involves injecting various types of drilling fluids into wells to free oil and natural gas trapped in shale formations deep underground.

Instead, the EPA relied on state regulators, in part because Congress in 2005 exempted hydraulic fracturing from regulation under the federal Safe Drinking Water Act.

But the EPA still has authority to regulate the injection of diesel fuel into underground wells. In January, House Democrats released the results of an inquiry that found companies had used 32 million gallons of fracturing fluids containing diesel fuel from 2005 to 2009. The inquiry found that the companies had not sought and the EPA had not issued permits to use diesel, an apparent violation of the Safe Drinking Water Act.

House Democrats also issued a report earlier this month showing that between 2005 and 2009, 29 known or possible carcinogens were present in fracturing fluids used by oil and gas service companies. The report was based on data provided by 14 companies.

Ms. Jackson said Tuesday the agency was consulting with the oil and gas industry, states and other federal agencies as it considers guidance for companies who seek permits for injecting fracturing fluids underground.

"In general, we would prefer to allow the states to be the first level of response," Ms. Jackson said. But she also said the agency was looking "to find those places where EPA needs to provide, if not guidance, some direction as far as injection of fracking fluids. The place where we do have a gap right now is on diesel injection."

Some oil and gas companies say they no longer use diesel in fracturing fluid, which is made up largely of water and sand. Industry groups also have sued the EPA to stop it from moving forward with the permitting guidelines, saying that the agency has not gone through a proper rulemaking process to develop them.

"We recognize they have the authority under the law to regulate the use of diesel fuel in the hydraulic fracturing process," said Lee Fuller, vice president of government relations for the Independent Petroleum Association of America, one of the plaintiffs in the suit. "Our challenge is principally that they didn't develop the regulations under the federal administrative procedures law."