EPA Escalates Debate Over Gas Fracturing on Water Quality Concern

Federal regulators asked companies including Halliburton Co. to disclose chemicals used to dislodge underground natural gas after residents in two states where the practice is widespread were warned not to drink well water.

The U.S. Environmental Protection Agency asked nine oil- service companies to identify chemicals they employ in hydraulic fracturing for a study on potential threats to drinking water, the agency said yesterday in a statement. In fracturing, millions of gallons of chemically treated water are forced into underground wells to break up rock and allow gas to flow.

The EPA action is likely to heighten the debate over drilling for gas locked in shale formations, which is accelerating along with concern over possible health and environmental risks. Such production may produce 50 percent of the U.S. gas supply by 2035, up from 20 percent today, according to IHS Cambridge Energy Research Associates.

“EPA is taking seriously its charge to examine the risks associated with hydraulic fracturing,” Kate Sinding, senior attorney with the New York-based Natural Resources Defense Council, said in an interview. “As EPA goes forward with its studies, we may well see recommendations about what the states can and should be doing better, as well as plans for more federal oversight.”

Wyoming, Pennsylvania

On Aug. 31, the EPA told residents of Pavillion, Wyoming, not to drink water after benzene, methane and metals were found in groundwater. Pennsylvania regulators issued a similar warning to residents near Chesapeake Energy Corp.’s gas wells after reports on Sept. 2 of water bubbling in the Susquehanna River near Scranton. States have taken the lead in overseeing the boom in hydraulic fracturing after the EPA’s oversight role was limited by a 2005 energy bill. Congress is debating legislation to give the EPA explicit authority over the process.

Federal oversight would add costs and duplicate the efforts under way in the states, Stephanie Meadows, senior policy adviser for the Washington-based American Petroleum Institute, an oil industry group, said today.

“We don’t see the need for another layer of federal oversight,” Meadows said on a conference call with reporters.

The group doesn’t oppose the EPA’s request for information on fracturing chemicals provided safeguards are in place to protect proprietary information, she said.

Marcellus Shale

Since 2008, 1,785 wells have been drilled in Pennsylvania’s portion of the Marcellus Shale, a gas-rich rock formation from New York to West Virginia. New York regulators have placed a moratorium on new gas drilling. and the state Senate voted in August to prohibit new permits until May 15.

The EPA will hold public hearings on the issue in Binghamton, New York, next week.

“The companies have different views on whether or not they should be providing this information,” Kevin Book, managing director at ClearView Energy Partners LLC, a Washington-based policy analysis firm, said in an interview. “The EPA is nudging in everywhere they see what looks like state accommodation.”

Houston-based Halliburton said it would comply with the request.

“Halliburton supports and continues to comply with state, local and federal requirements promoting the forthright disclosure of the chemical additives,” Teresa Wong, a Halliburton spokeswoman, said yesterday in an e-mailed statement.

Schlumberger, Baker Hughes

EPA’s request for companies to volunteer the information also went to Schlumberger Ltd.; BJ Services Co., which was acquired this year by Baker Hughes Inc.; Complete Production Services Inc.; Key Energy Services Inc.; Patterson-UTI Energy Inc.; RPC Inc.; Superior Well Services Inc. and Weatherford International Ltd., according to the agency’s statement.

“We are pro-actively evaluating all of our wells in the area and we are prepared to take all necessary steps to remedy the situation,” Chesapeake spokesman Brian Grove said in an e- mail. “Based on comprehensive field testing, the issue does not pose a threat to public safety or the environment.”

Gas drilling is safe and will benefit residents and produce tax revenue, the Hamburg, New York-based Independent Oil & Gas Association of New York, an industry group whose directors include representatives from Halliburton and Talisman Energy Inc., said in a statement. Critics of fracturing in New York have waged a “a calculated campaign of misinformation and ignorance,” said Brad Gill, the group’s executive director.

Results By 2012

“We are reviewing the request and intend to cooperate,” Gary Flaharty, vice president of investor relations for Houston- based Baker Hughes said in an e-mailed statement. “We support the EPA in their efforts to conduct a fact-based scientific study.”

Companies have 30 days to respond. Results of the study will be announced in late 2012.

“We have no qualm with disclosing what it is we’re adding to the water we’re pumping,” Joe Winkler, chief executive officer for Houston-based Complete Production Services, said in an interview.

Since 2009, the EPA has been investigating complaints of tainted groundwater in Pavillion, Wyoming, about 100 miles (161 kilometers) west of Caspar. While the latest round of tests detected petroleum hydrocarbons, including benzene and methane, in wells and in groundwater, the agency said it couldn’t pinpoint the source of the contamination.

More Tests

Further tests are planned. The EPA is working with Calgary- based EnCana Corp., the primary gas operator in the area, according to a statement.

Oklahoma City-based Chesapeake was issued a notice of violation and is working with Pennsylvania’s Department of Environmental Protection to determine the source of gas detected in the Susquehanna River and at six private water wells this month. The Chesapeake wells haven’t been fractured with water and chemicals and aren’t producing gas.

“This scientifically rigorous study will help us understand the potential impacts of hydraulic fracturing on drinking water, a concern that has been raised by Congress and the American people,” EPA Administrator Lisa Jackson said in a statement.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net.

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