In late 2011 The Wall Street Journal noted, regarding the potential for an overzealous Environmental Protection Agency to bring about a moratorium on U.S. fracking, "The agency is dominated by the anticarbon true believers, and the Obama Administration has waged a campaign to raise the price and limit the production of fossil fuels."
Questionable findings
If you recall that phraseology, you probably also remember that the Journal's scathing assessment of the agency resulted from an EPA "draft" report indicating that hydraulic fracturing may have contaminated the drinking water in Pavillion, Wyoming, a metropolis whose 175 citizens constitute a grouping a quarter the size of my high school class. While "fracking" in the area may indeed have been the result of the drilling of about 100 wells by Encana Corp. , there are a couple of elements in the draft that give one pause:
- The EPA maintains that it found 2-butoxyethyl phosphate in the town's drinking water. Fortunately -- or unfortunately -- 2-BE is a fire retardant not typically associated with oil and gas, but it is common in plastics used in drinking wells.
- While the fracking near Pavillion generally occurs at depths between 1,000 feet and 1,500 feet -- far above the 10,000-foot minimums in most venues -- it nevertheless is conducted well below water tables that are normally no more than 500 feet deep. As such, and as I've noted in past Foolish articles, one industry expert has pointed out that "it would defy physics" for fracking chemicals to make their way into groundwater.
Whatever its cause, however, the Wyoming controversy wasn't the only fracking-related incident to rear its ugly head in the past year. Last April, for instance,Chesapeake Energy -- the nation's second-largest producer of natural gas and the proverbial parent of many of the nation's unconventional drilling plays -- had a well get away in Bradford County, Pennsylvania, beneath which sits the Marcellus Shale. The errant well was brought under control with the help of a Halliburton unit, but not before it had spilled chemically treated water into a creek 150 miles northwest of Philadelphia.
The brewing federal-state battle
While the list of mishaps is likely to lengthen, given the nature of oil and gas production, the key question that has emerged for the world of fracking -- which has boosted U.S. gas reserves exponentially -- is who will end up holding the regulatory billy club over the industry. The contest is between the states and the joint efforts of the Interior Department and the EPA. For the sake of perspective, in 2005 the Congress made it clear that its intent was not that the EPA should control hydraulic fracturing under the Safe Drinking Water Act. You won't be surprised to learn that the states prefer to maintain their individual controls.
