Hydraulic Fracturing: Short-Term Key Issues for
Industry Practice Area
December 10, 2010 | KELLEY DRYE CLIENT ADVISORY
The day after the 2010 mid term elections, President Obama surprised many when he called for John L. Wittenborn
increased development of America's natural gas resources and by extension the increased use of William M. Guerry Jr.
hydraulic fracturing (a/k/a "fracking"). The call for more natural gas drilling by a democratic
administration highlights the ever-increasing complexities associated with natural gas drilling and
fracking in particular. Whether it be regulatory, legislative, legal, or practical - natural gas fracking
is one of the most visible and contentious environmental issues of the day. Questions regarding
whether and when the practice is safe, whether the state or the federal government should Office
regulate, and if and how environmental groups and industry can reach consensus in what
promises to be the next big resource boom must all be addressed in the coming years.
In the first of a multi-part series on fracking, this article explores the key issues that will affect
industry in the short-term, including the push for disclosure of fracking fluids, development of best
management practices ("BMPs"), and the Environmental Protection Agency's ("EPA") upcoming
What is Hydraulic Fracturing?
Hydraulic fracturing, or "fracking" for short, is a method of extracting natural gas reserves, primarily
in low-permeability gas reservoirs (i.e., rock formations with limited porosity and few
interconnected pores preventing gas or fluid from passing through easily). As with any natural gas
well, the initial wellbore is drilled through shallow groundwater into and below impermeable rock
formations that separate the groundwater from the hydrocarbon producing zones.
To make the unconventional shale-gas more accessible, a mixture of water, sand, and specially
engineered chemicals, known as "fracking fluid" or gel are pumped at high pressure into the
natural gas reservoir, causing fractures to extend either horizontally or vertically away from the
wellbore in opposing directions. The fractures increase the connectivity of natural gas reserves,
ultimately allowing access to the gas at increased and economically viable volumes. The
chemical/sand/water mixture is then pumped back out of the wellbore, leaving behind proppants
(typically sand), which keep the fractures open permitting more gas to flow. Once the mixture is
removed, the pressure difference allows the gas to escape into the wellbore for recovery.1 It is the
potential for communication between the groundwater layers and the hydrocarbons during
production that has prompted the most concern over the practice.
Since 1947, the oil and gas industry has used hydraulic fracturing to recover natural gas reserves
in relatively accessible geologic formations using conventional technologies. While accessible
sources are still being discovered, the industry is increasingly turning to unconventional natural
gas resources, which are located much deeper than the already tapped conventional gas
reserves. Advances in drilling technologies, including horizontal drilling and fracking are allowing
companies to exploit these unconventional gas reserves that heretofore have been unreachable or
economically unviable. As market and policy forces continue to drive cheaper and cleaner
domestic fuels, the pressure to develop these unconventional resources continues to increase.2
Perhaps nowhere is the pressure to tap unconventional resources greater than in the Marcellus
Shale - a shale formation that stretches from the southern part of New York, through the western
half of Pennsylvania, the eastern third of Ohio, almost all of West Virginia, and small portions of
Maryland and Virginia. It is estimated that there are between 50 and 500 trillion cubic feet ("tcf") of
natural gas reserves in the Marcellus - making it (at the high end) the second largest source of
natural gas in the world with enough gas to last over three centuries. However, significant shale
gas reserves exist throughout the country, including in Texas and the West.3
The ongoing fracking debate makes clear that one of the most significant and visible issues is the
composition, management, and disclosure of fracking fluid.4 Following the lead of some states,
EPA recently sent nine drilling companies voluntary disclosure requests seeking the composition
of their fracking fluid. Despite EPA's efforts, many drilling companies have resisted full disclosure
of fracking fluid, typically on grounds that the composition information is made available during the
permitting process or that it constitutes confidential and proprietary intellectual property or trade
Whether the fracking composition is made available or not, the drilling industry continues to
reassure regulators that the chemicals are relatively benign, present in minute quantities, and
strictly managed to ensure no contamination.5 Yet, in 2010, House Energy Committee Chairman
Henry Waxman (D-CA) reported that two companies (Halliburton and BJ Services) continued to
use diesel in fracking fluid, despite having signed an agreement with EPA in 2003 not to do so.
Environmentalists have been resolute in demanding disclosure of fracking fluid chemicals as the
first major step toward broader regulation and have called on Congress for help. Disclosure
provisions were included in the Senate's legislative response to the Gulf Oil Spill, but the bill did
not receive a floor vote in the Senate and is not expected to be taken up prior to the end of the
111th Congress. More recently, Representative DeGette (D-CO) and Senator Casey (D-PA)
introduced the Fracturing Responsibility and Awareness of Chemicals (FRAC) Act, which would
reverse the "Halliburton loophole" and require disclosure of the chemical constituents used in any
fracking process. Environmental groups have indicated that they will continue to push disclosure
legislation in both the House and Senate in addition to legislation reversing the Halliburton
loophole allowing EPA to regulate the activity.6
B. Best Management Practices
Another key issue will be the development and implementation of BMPs. Industry has generally
resisted a move toward duplicative federal regulation and appears to be promoting BMPs as an
alternative to either strict disclosure rules or legislation authorizing EPA regulation under the
SDWA. Industry representatives argue that duplicative federal regulation could greatly inhibit the
production of much-needed oil and natural gas, besides delivering a severe blow to the U.S.
economy. A recent three-part study by IHS Global Insight estimated that federal regulation could
cost the U.S. between $84 billion and $374 billion in Real Gross Domestic Product losses,
accompanied by a loss of between 676,000 to three million jobs.
The industry has not spoken with a unified voice as to what BMPs should entail, or how they
should be incorporated, if at all, into state regulatory programs; however, some clues are
emerging. During a recent Department of Interior forum, several industry spokespersons
addressed the issue. An overarching concern for the industry is that each drilling site is unique in
its geology, hydrogeology, and surface characteristics, making a set of detailed BMPs which would
apply nationwide impracticable. The American Petroleum Institute ("API") and others have begun
to develop broad principles, which would be designed for further site-specific refinement. Included
in API's BMPs, are standards for well casing and construction, data collection guidelines, and
monitoring and testing protocols. Other suggested BMPs include standards for the reuse and
recycling of wastewater (including fracking fluid), proper construction and lining of wastewater
ponds, plans to curb emissions and other air impacts, and protection against surface water
For their part, in addition to calling for the repeal of the 2005 SDWA fracking exemption,
environmental groups like the NRDC, and some state regulators emphasize that BMPs must be
comprehensive and incorporate the concept of "no drill zones" - i.e., places where the proximity to,
and geology of, drinking water sources are such that no matter how carefully constructed, the risk
of drinking water contamination is simply too great. NRDC is working in states like New York to
identify such zones as well as demand full disclosure. Other initiatives by environmental groups
include regulations to limit water withdrawals, and additional requirements imposed during the
C. EPA's Study
On October 8, 2009, in response to widespread national concern, Congress adopted a conference
report in conjunction with EPA's funding bill urging EPA to commence a new study on the
relationship between fracking and drinking water. Congress encouraged EPA to use "a credible
approach that relies on the best available science, as well as independent sources of information .
. . to be conducted through a transparent, peer-reviewed process that will ensure the validity and
accuracy of the data." Congress' mandate acknowledges the growing public concern over fracking,
its potential connection to drinking water contamination, and implicit in its charge, the
shortcomings with a prior 2004 EPA study.8
EPA has begun the process of assembling the panel to carry-out the study. Mindful of the
inadequacies of its past efforts, EPA is taking care in naming the panel. Of course, this has
prompted maneuvering from both industry and environmental groups to position favorable
viewpoints.9 Nominations for positions concluded October 1, 2010, and the Agency is expected to
announce the panel members soon.
Meanwhile, EPA has begun circumscribing the study's scope. Early indications are that the
Agency favors a, site-wide, life-cycle study. Such an approach would be significantly broader than
the 2004 study and would focus on multiple potential contamination and exposure pathways -
going beyond just the direct potential connection between fracking and drinking water. For
example, a lifecycle analysis could account for potential impacts on land-use, erosion, storm-water
runoff, water resource depletion, local air quality, community health, ecosystem services, along
with potential ecological and health risks associated with potential drinking water contamination. In
addition, and in contrast to the 2004 study, the report - whether broad in scope or not - likely will
consider non-conventional natural gas reserves (i.e., shale), not just coalbed methane.
Notably, EPA has begun to emphasize environmental justice across its programs. Given the
Agency's increased focus in this area and the likelihood that fracking will impact thousands of
largely rural, poor communities throughout the country (particularly in the Marcellus Shale Area)
EPA's report will likely accommodate environmental justice considerations - which would lend to a
broad, life-cycle approach.
Members of EPA's Science Advisory Board, however, have cautioned EPA to limit the scope of the
study - indicating that a life-cycle assessment, while potentially helpful, would not be realistic in the
time-frame EPA has set for itself (i.e., publishing a report by the end of 2012). Instead, the
members have called on the Agency to take a site-specific, risk-based approach that focuses on
the greatest risks to human health first. Such an approach, narrower in scope, would focus on the
environmental risks injection fluids pose to drinking water, and may consider the composition,
handling, and storage of fracking fluid.
While too early to tell, the eventual study most likely will strike a compromise between a
comprehensive life-cycle assessment and a study confined simply to potential direct drinking water
impacts. Whatever the scope, the study's outcome will be a watershed moment, and depending on
the conclusions may open the door for a comprehensive federal regulatory scheme (precisely the
opposite effect the 2004 study had).
Over the next several years there promises to be a number of substantial developments related to
the practice of fracking. Already, environmentalists have had success in pushing for greater
disclosure of the composition of fracking fluids - a movement that is likely to gain momentum.
Meanwhile, industry continues to develop BMPs as an alternative to comprehensive federal
regulation or more stringent state regulations. As environmentalists and industry jockey for
position, EPA will be developing what likely will be the first-ever nationally focused look at fracking
impacts. The conclusions drawn by EPA will be important. The next article in the series explores
the historic and current regulation of fracking at the federal level, and how EPA's ongoing study
may change the regulatory environment.
1 See Schlumberger Oilfield Glossary, available at
http://www.glossary.oilfield.slb.com/Display.cfm?Term=permeability.; See also Orford, Adam,
"Fractured: The Road to the New EPA ‘Fracking' Study", Marten Law, September 17, 2010.
2 Natural gas is used to heat about half the homes in the United States. Natural gas is also used
for electricity generation in about twenty percent of electric utilities in the United States. Because
of its relatively low carbon content, the drive for cleaner fuel has elevated the importance of natural
gas in the United State's energy portfolio. Indeed, following deregulation in 1990, most new electric
power generation capacity has been based upon natural gas.
3 Several other prominent shale plays include the Barnett Shale in Texas with proven reserves of
2.5 tcf and potentially up to 30 tcf; the Haynesville Shale in Northern Louisiana, Southern
Arkansas and Eastern Texas with an estimated 250 tcf of natural gas resources; and the New
Albany shale in Illinois and Indiana, with reserves estimated at 160 tcf.
4 As of November 9, 2010, eight of the nine companies had either fully complied or unconditionally
promised to comply with EPA's request.
5 See e.g., Marcellus Share Coalition "In the Spirit of Full Disclosure", stating that 99.5% of
fracking fluid is water and sand, with the remaining 0.5% comprised of a known mixture of
chemicals, including acids, glutaraldehyde, sodium chloride, N, n-Dimethyl formamide, borate
salts, polyacrylamide, petroleum distillates, guar gum, citric acid, potassium chloride, ammonium
bisulfate, sodium or potassium carbonate, proppant, ethylene glycol, and isoproponal. Website
available at http://marcelluscoalition.org/wp-content/uploads/2010/06/msc-spirit-of-full-
6Given the results of the midterm election, however, the likelihood of either piece of legislation
passing has been somewhat diminished.
7 For example, on December 9, the Delaware River Basin Commission recommended measures
to protect surface water contamination and depletion within the Delaware River watershed. These
include preserving minimum stream flows through prior-approved withdrawals, minimum setbacks,
financial assurance, and stricter regulation on fracking wastewater.
8 In 2004, EPA commenced a study to ascertain the impacts to underground sources of drinking
water directly related to hydraulic fracturing of coalbed methane wells. The report concluded that
"injection of hydraulic fracturing fluids into coalbed methane wells poses little or no threat to
[underground sources of drinking water] and does not justify additional study at this time . . . EPA
did not find confirmed evidence that drinking water wells have been contaminated by hydraulic
fracturing fluid injection into coalbed methane wells." Significant concerns were raised regarding
EPA's conclusion and industry's involvement in the report.
9 For example, the short list of environmentalists for the panel include Theo Colvurn, a Colorado
zoologist and pharmacist and member of the Endocrine Disruption Exchange, and Anthony
Ingraffea, a Cornell professor and prominent critic of fracking. See Soraghan, Mike, New York
Times, "Controversial Candidates on ‘Short List' for EPA Fracking Panel" (September 20, 2010).
On the industry side, Jon Olson, a former Mobil research engineer and current professor at the
University of Texas, Austin also is slated to be on the panel. Id.