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Vol. 18, No. 16 Week of April 21, 2013
Providing coverage of Alaska and northern Canada's oil and gas industry

Fracking gets a listen

Companies, activists raise range of concerns with proposed Alaska regulations

Wesley Loy

For Petroleum News

Arecent call for public comment on Alaska’s proposed regulations on hydraulic fracturing drew quite a response: fracking support, fracking fears, even a taste of mom’s apple pie.

The Alaska Oil and Gas Conservation Commission, which regulates drilling statewide, sounded out its draft regulations at an April 4 public hearing.

Fracking is an old industry practice that has stoked huge public interest only recently across the country.

Cathy Foerster, who chairs the commission, told Petroleum News she was pleased with the quantity and quality of the written and oral comments the agency received.

The commission plans to review the comments and then decide, perhaps within a month, how to proceed. If the commission decides to actually adopt regulations, it’ll hold another public hearing, Foerster said.

Draft regulations proposed

The draft regulations the commission released a few weeks prior to the hearing would impose a number of requirements on oil and gas operators.

For example, companies would have to sample water wells near fracking operations. Companies also would have to notify area landowners, and disclose the chemical makeup of fracking fluids.

The AOGCC received several lengthy and thoughtful written responses from some major industry players such as ConocoPhillips, Halliburton, Schlumberger, Baker Hughes, and the Alaska Oil and Gas Association.

A group of 11 environmental organizations including The Wilderness Society and the Alaska Center for the Environment also submitted highly detailed comments.

“The proposed regulations ... go a long way toward providing the public with critical information regarding fracturing,” the environmental groups said.

But the groups and industry players alike raised many issues with the draft regulations.

Hydraulic fracturing is a stimulation treatment for low-permeability reservoirs. It involves pumping fluids at high pressure into a reservoir to cause cracks in the rock. The cracks provide paths for hydrocarbons to enter the well. Proppants, such as grains of sand, are often mixed with the injected fluids to keep the fractures open.

Fracking has long been employed in Alaska.

For example, most of the wells in the giant Kuparuk field have been fracked, operator ConocoPhillips told the commission. The company is the state’s top oil and gas producer, operating fields on the North Slope as well as in the Cook Inlet basin.

“ConocoPhillips is not aware of any instance in Alaska in which hydraulic fracturing has been associated with an environmental or other incident,” the company said in written comments. “Yet, we understand that the rapid pace of ‘unconventional’ oil and gas development in the Lower 48 has brought concerns associated with hydraulic fracturing to national attention. We support a transparent public process to ensure that Alaska has the right standards in place.”

The company raised a number of concerns with the AOGCC’s draft regulations.

It said current regulations already include well casing and cementing requirements to prevent contamination of freshwater aquifers.

“Thus, we see no need for major changes to the regulations specifically to address hydraulic fracturing,” ConocoPhillips said.

The company recommended the agency drop the requirement to sample water wells.

“The protective measures already in place ensure that hydraulic fracturing does not pose a threat to freshwater resources in Alaska,” ConocoPhillips said. “To comply with this proposed rule, operators would have to rely on nearby landowners for information about whether drinking water wells exist within ¼ mile of the well at issue, and then secure cooperation from the well owners for testing. This would impose a significant burden on operators that does not appear to be justified by any potential public or private benefit.”

The Alaska Oil and Gas Association, whose membership includes several oil producers and explorers but not ConocoPhillips, also recommended dropping the water wells sampling requirement.

The association, and others, noted that contamination of drinking water isn’t a concern on the North Slope, as a thick layer of permafrost prevents liquid freshwater aquifers.

‘Trade secrets’ and apple pie

A major focus of several industry commenters concerned “trade secrets” embodied in specially formulated hydraulic fracturing fluids.

“We have invested millions of dollars in research and development of our HF additives and seek to protect that investment,” said Halliburton, in written comments submitted on the company’s behalf by Anchorage attorney Louisiana Cutler, with the firm of K&L Gates.

The worry is that the commission’s proposed requirement that the chemical makeup of fracking fluids be disclosed could lead to competitors obtaining trade secrets through a public records request.

“A useful analogy,” Halliburton said, “might be your mother’s secret apple pie recipe: disclosing that she uses apples, butter and cinnamon might not easily allow another cook to copy her recipe but if she disclosed the exact proportions of apples, butter and cinnamon, whether she prefers Gala or Granny Smith apples, whether she uses regular or unsalted butter, and whether she grinds her own cinnamon, plus her secret ingredient that makes the pie so uniquely tasty and how much of it she uses, her recipe could be easily reproduced by other cooks.”

The Alaska Oil and Gas Association cited Coca-Cola’s “secret formula” as another example.

“The revelation of this recipe — worth many billions of dollars — would be disastrous,” the association said.

The 11 environmental organizations, however, urged the commission to require public disclosure regardless of whether an operator considers the information a trade secret under Alaska law.

“The public and those working with fracturing chemicals have a right to know what these chemicals are,” the groups said. They cited a reporting approach that would “easily” thwart competitors trying to capitalize on proprietary formulations.



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