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Vol. 20, No. 13 Week of March 29, 2015
Providing coverage of Alaska and northern Canada's oil and gas industry

New DOI fracking rules

Agency issues well integrity, reporting requirements for wells on federal land

Alan Bailey

Petroleum News

The Department of the Interior has issued a final version of new regulations for the drilling of hydraulically fractured wells on federal land. The regulations will go into effect after a mandatory 90-day waiting period.

“Current federal well-drilling regulations are more than 30 years old and they simply have not kept pace with the technical complexities of today’s hydraulic fracturing operations,” said Interior Secretary Sally Jewell when announcing the release of the new regulations on March 20. “This updated and strengthened rule provides a framework of safeguards and disclosure protocols that will allow for the continued responsible development of our federal oil and gas resources.”

New techniques

Drilling techniques involving the use of horizontal wells and hydraulic fracturing have upended the U.S. oil and gas industry in recent years by enabling the production of hydrocarbons from relatively impervious rocks such as shales. But the new techniques have also generated concerns about environmental impacts and the potential for groundwater contamination.

Of more than 100,000 oil and gas wells on federally managed lands, more than 90 percent use hydraulic fracturing, Interior says.

The new rule represents the culmination of four years of extensive public involvement in bringing drilling regulations up to date. In developing the rule, the Bureau of Land Management published both a draft rule and a supplemental draft rule, as well as holding regional forums and numerous stakeholder meetings, and reviewing more than 1.5 million public comments, Interior says.

Supplement existing regulations

Existing drilling regulations, which continue in place, govern issues such as the need for adequate steel well casings for the protection of water zones and the use of appropriate cement in wells. The new regulations add requirements such as the mandatory reporting of specified information relating to drilling operations.

Under the new regulations, an operator must submit detailed information about a proposed drilling operation, including information about subsurface faulting and fracturing, and information about the depths of usable subsurface water resources. The operator must provide estimates of the amount of fluids to be used during fracturing operations and must disclose to BLM and the public a list of the chemicals to be used in conjunction with the fluids. There are some limited exceptions to the public disclosure requirements, to accommodate trade secrets.

The casing and cementing program for a well must meet certain performance standards, and there are requirements for the monitoring of cementing operations during well construction. There is also a requirement for well annulus pressure testing prior to an hydraulic fracturing operation. The new regulations require fluids recovered from an hydraulic fracturing operation to be stored in enclosed, covered or netted-and-screen, above-ground tanks.

The new regulations also require specified practices to be demonstrated for all wells, and not just for a sample well in a drilling program.

In Alaska, the Alaska Oil and Gas Conservation Commission has recently developed regulations for hydraulically fractured wells within the state. These regulations, which are scheduled for publication in the Alaska Administrative Code in April, will presumably operate in parallel with the new federal regulations for drilling in federal land inside the National Petroleum Reserve-Alaska.

Mixed response

The new regulations have met with a mixed response from environmental groups, who welcome regulation of hydraulic fracturing while also questioning whether the new regulations are stringent enough.

Given the scale of oil and gas well operations on BLM administered land “it is absolutely critical to bring the agency’s rules up to speed to meet today’s challenges,” wrote Mark Brownstein, associate vice president of the Environmental Defense Fund. “With this rule, the agency is taking important steps to ensure that hydraulic fracturing on public lands is done according to ambitious new safety and environmental standards.”

“These rules put the interests of big oil and gas above people’s health, and America’s natural heritage,” wrote Amy Mall, senior fracking policy analyst at the Natural Resources Defense Council. “The bottom line is: these rules fail to protect the nation’s public lands - home to our last wild places, and sources of drinking water for millions of people - from the risks of fracking. More than ever, this underscores the urgent need to get better protections in place around the country - at the local, state and federal levels.”

Oil industry groups, on the other hand, have criticized the regulations for being too restrictive and for duplicating state and local rules.

“Despite the renaissance on state and private lands, energy production on federal lands has fallen, and this rule is just one more barrier to growth,” said Erik Milito, American Petroleum Institute director of upstream and industry operations. “Under the strong environmental stewardship of state regulators, hydraulic fracturing and horizontal drilling have opened up a new era of energy security, job growth, and economic strength. Increased production and use of natural gas has helped cut U.S. carbon emissions to a nearly 20-year low, and this decision only stands in the way of further progress, hampering natural gas development on federal lands onshore, where it has already declined an amazing 21.6 percent since 2009.”

The Independent Petroleum Association of America and the Western Energy Alliance have filed a lawsuit challenging the new regulations and saying that the administrative record lacks the necessary evidence to sustain the issuance of the regulations.

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