EPA Sets Guidance for Using Diesel in Hydraulic Fracturing

The U.S. Environmental Protection Agency set standards for using diesel fuel in hydraulic fracturing, adding to federal requirements on the practice that has led to a boom in natural gas production.

Representatives of drilling companies say diesel has mostly been phased out of the process known as fracking. The EPA’s regulatory effort could lead to greater federal oversight and further delays, according to industry officials.

In the draft of a guidance document to state permitting officials today, the agency included six categories of fuels deemed to be considered diesel, while stopping short of an outright ban on the use of the fuel demanded by environmental groups.

The diesel guidance coupled with two rules issued by the Obama administration in recent weeks “shows that industry is not going to get a free pass,” Amy Mall, a senior policy analyst at the Natural Resources Defense Council, said in an interview. “These are all important steps, but they are not enough.”

In 2005, Congress exempted fracking from requirements of the Safe Drinking Water Act, a move health advocates labeled the “Halliburton loophole” after the company led by Richard Cheney before he became vice president. Halliburton is the world’s largest provider of fracking services, such as the fuel.

Drilling Restraints

The law specified that the EPA retained authority over fracking if diesel is used. While companies such as Schlumberger Ltd. (SLB) say they no longer use diesel, environmental advocates had pressed for a broad definition of the fuel, which industry lobbyists said could constrain drilling by adding more requirements and delays.

The standards left unanswered any liabilities for companies that used the fuel in the past to help break up deep rock formations to free trapped natural gas.

“It provides no clarification as to what the agency is doing as to the previous use of diesel,” Jason Hutt, a lawyer for drillers at Bracewell & Giuliani LLP in Washington, said in an interview.

In the guidance, the EPA identified six distinct categories of fuels covered by the agency, including two types of diesel, crude oil and kerosene. It also offered a catch-all description that could include other fuels. If those fuels are being used, drillers will need to apply for a specific permit, which could delay drilling.

Diesel is used in some fracking operations where the underground rock or clay has a tendency to absorb water, according to a report by Democrats on the House Energy and Commerce Committee.

To contact the reporter on this story: Katarzyna Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Daniel Enoch at denoch@bloomberg.net

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