New technologies have certainly created a boom in the US oil and exploration and production sector, but the federal government never lets an opportunity go unregulated...and that is slowing down what's happening on tribal and public lands, writes Don Groves at Casey Research.
On May 11, the US Bureau of Land Management (BLM) published proposed regulations governing "Oil and Gas; Well Stimulation, Including Hydraulic Fracturing, on Federal and Indian Lands."
BLM is a latecomer to this party. Its belated meddling lacks practical or economic justification. Instead, the proposed BLM rule would drive oil and gas developers off federal and tribal lands.
Complying with the rules is too complicated and costly. Producers can realize a much faster and much better return on their capital investment by developing oil and gas reserves on adjoining private lands.
Federal and tribal lands hold large reserves of oil and natural gas. At a time when the United States desperately needs to move toward, not away from, energy independence, it makes no sense to let bureaucratic meddling effectively place these valuable domestic reserves out of reach. The problems with BLM's approach are myriad.
BLM Misses the Mark
First, a central, federal, one-size-fits-all approach does not work. The reserves that the oil and gas industry wants to access using hydraulic fracturing occur in areas with different geographic, topographic, hydrological, population, precipitation, and umpteen other characteristics.
The oil and gas deposits are found at different depths; the water table is at different depths. The surface and subsurface vary dramatically, ranging from the Marcellus Shale Formation in the Northeast to the San Juan Basin in the Southwest.
States and tribes have long ago stepped up to the plate with sensible regulations suitable to their individual conditions. They are way ahead of BLM.
Second, even if states and tribes did not already have this under control, BLM's proposed regulations are inappropriate. The BLM regs are based on inaccurate assumptions, flawed economics, and a perceived but actually nonexistent need.
"It is assumed" (by BLM for its base case) "that a certain number of well stimulation events may result in contamination and thus pose a cost to society." This is the foundation of the agency's flawed estimation of "social benefits" ranging from $11.7 million to $50.3 million per year. We are left to guess what those social benefits might be.
Despite hysteria about fracking causing earthquakes, contaminating aquifers, and sending explosive gases to kitchen sink faucets, there is actually no evidence that fracking causes such problems. Indeed, the Association of American State Geologists (AASG) "recognizes that the environmental record of hydraulic fracturing activities over the past 60 years has been overwhelmingly positive."
Probably the most frequent indictment of fracturing is its potential contamination of drinking water. But the AASG further notes that "geologic data generally show a significant vertical separation between most oil and natural gas reservoirs targeted for hydraulic fracturing and the shallower freshwater aquifers." In other words, fresh water is not typically found anywhere near the fracturing area.
BLM acknowledges that about 3,400 wells—roughly 90% of all wells drilled on federal and Indian lands each year—use hydraulic fracturing. But it offers no evidence of groundwater contamination as a result of that fracking.
As noted by Donovan Schafer in his excellent article, Frack Attack: "Freshwater sources can, in fact, be contaminated by oil and gas activity. However, the contamination is not a result of the actual fracking process. Instead, it is caused by poor drilling practices and surface spills."
Even Matt Watson, an energy-policy specialist with the Environmental Defense Fund, acknowledged that "the term 'fracking' is being used for all the things in the process that can cause problems. Most of those problems have nothing to do with the actual fracking."