Frack First, Disclose Chemicals Later Under U.S. Rule

May 4 (Bloomberg) -- Bloomberg's Megan Hughes reports that oil and gas companies wouldn’t be required to disclose chemicals used in hydraulic fracturing until work is completed, under a proposed federal rule issued today that drew swift opposition from environmental groups. She speaks on Bloomberg Television's "InBusiness." (Source: Bloomberg)

Oil and natural gas companies won’t be forced to disclose chemicals used in hydraulic fracturing until work is completed, under a proposed U.S. rule issued today that drew opposition from environmental groups.

The proposal lets gas producers exclude trade secrets and confidential information, Interior Secretary Ken Salazar said today on a conference call. It would add about $11,833 in costs per well in 2013, according the Interior Department.

“The proposal today will allow us to continue powering our economy by developing America’s abundant oil and gas resources,” Salazar said during a conference call. “It is critical that the public has full confidence that effective safety and environmental protections are in place.”

President Barack Obama has pledged to increase gas production without harming the environment. The U.S. industry argued for reporting after completing the fracking, which injects water, sand and chemicals underground to free trapped gas. Environmental groups had preferred an earlier draft of the standards that would have required disclosure before work began.

“This is a free pass to the oil and gas industry at the expense of public health,” Jessica Ennis, a Washington-based legislative associate for the environmental group Earthjustice, said today in an e-mail.

The Natural Resources Defense Council, a New York-based advocacy group, faulted the Obama administration for crafting a rule it said is weaker than the requirements set by states.

‘Critical First Step’

“This is a critical first step, but so much more needs to be done,” said Amy Mall, senior policy analyst at the Council. “Federal safeguards have not caught up” with states, she said.

The Washington-based American Exploration and Production Council, representing natural gas companies including Anadarko Petroleum Corp. (APC) and Apache Corp. (APA), had said more disclosure will slow energy development. The Independent Petroleum Association of America called the rule “an unnecessary layer of rigidity” in an e-mail sent after the rule was released.

Following recommendations from the energy industry, the Interior Department is working to integrate the disclosure called for in today’s rule with the existing website FracFocus.org, managed by with the Ground Water Protection Council and the Interstate Oil and Gas Compact Commission, and used by the companies.

‘High Bar’

The rule would require energy companies to confirm that wells meet appropriate construction standards, and that the operators have plans to manage water that flows back when the fracturing is completed.

The administration set a “high bar” for companies to invoke the exemption that would exempt reporting trade secrets or other proprietary information, Salazar said on the call.

“The proposed rule seeks to achieve benefits by making more information available to the public about the chemicals injected in well-stimulation fluids, while protecting trade secrets and confidential business information,” according to the rule.

Fracking, used by companies such as Exxon Mobil Corp (XOM) and Chevron Corp. (CVX), helped the U.S. become the world’s largest natural gas producer. While Interior rules would only apply to the federal lands, the administration hopes states will follow its model.

Salazar said the rule, which is subject to 60 days of public comment, may become final later this year.

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

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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