EPA Approves State-Specific Plan for Hydraulic Fracturing, Opening Door for Stricter Regulations

Strategic Insights -

The US Environmental Protection Agency (EPA) has approved a state-specific plan for hydraulic fracturing in Alabama, requiring companies to comply with drinking water standards. This decision, made under a tight deadline, is expected to pave the way for environmental groups to seek tougher regulations across the country, particularly in the Rocky Mountain region. The new rule will require companies to treat their fluids before use and prohibit the upward movement of any fluid in the formation being fractured, posing significant challenges for coalbeds. Alabama's Oil & Gas Board proposed the tougher oversight to avoid EPA revoking the state's primacy and taking over regulation of the hydraulic fracturing sector.

Key Takeaways:

  • The EPA's decision to approve the state-specific plan for hydraulic fracturing in Alabama sets a precedent for environmental groups to seek stricter regulations across the country.
  • The rule requires companies to treat their fluids before use, even if the fluid used is the same water that already exists in the underground formation.
  • The rule prohibits the upward movement of any fluid in the formation being fractured, posing significant challenges for coalbeds.
  • Complying with the rule will be costly for producers, as most naturally occurring water that is found and used by oil and gas companies is not potable.
  • The treatment and safe disposal of natural occurring water during drilling is the single most costly environmental regulation that onshore producers face, according to the Interstate Oil and Gas Compact Commission.
  • Hydraulic fracturing has resulted in methane production of some 315 million cubic feet per day of gas, or 30% of Alabama's total gas production.
  • The approval of the state-specific plan was made under a tight deadline imposed by a federal court on October 29.
  • The Coalbed Methane Association of Alabama expects the new rule to be costly for producers and has warned of potential economic consequences.
  • The Interstate Oil and Gas Compact Commission estimates that treatment and safe disposal of natural occurring water during drilling is the single most costly environmental regulation that onshore producers face.
  • The Coalbed Methane Association of Alabama notes that complying with the rule will be costly for producers and warns of potential economic consequences.

Sources:

  • The Oil Daily, October 29
  • The Oil Daily, December 15
  • The Oil Daily, December 22