April 11 (Bloomberg) -- Government must have a role in overseeing new technologies for developing oil and natural gas to prevent damage to natural resources, U.S. Energy Secretary Steven Chu said.
Hydraulic fracturing, or fracking, for gas has transformed domestic energy production in the past four years, Chu said today at a conference in New York. While most drillers operate responsibly, some may seek to skirt rules and risk damaging the environment, he said.
“The technology for recovering oil and gas through hydraulic fracturing has really raced ahead,” Chu said. “That’s something I believe that can be developed very responsibly. There has to be a regulatory role because there may be some people who want to cut corners.”
In fracking, millions of gallons of chemically treated water are injected underground to break up rock and free trapped gas. Supply increases have helped push gas prices to 10-year lows.
Drillers risk causing serious environmental damage from fracking unless they commit to the best engineering practices, a task force named by Chu concluded last year.
President Barack Obama backed drilling for natural gas in shale rock in his Jan. 24 State of the Union address and called for an “all-out” U.S. effort to develop cleaner energy sources that will help boost the economy. Fracking could create more than 600,000 jobs by the end of the decade, Obama said.
The U.S. Environmental Protection Agency has proposed rules on the disposal of drilling wastewater and on emissions from oil and gas wells. Fumes from wells include methane, the main component of natural gas, which worsens climate change, and volatile organic compounds, which contribute to ground-level ozone.
The emissions rule would require all new and any modified wells to use equipment to capture fumes that escape in the production and processing of natural gas. The agency said it will issue a final rule by April 17.
The American Petroleum Institute, a Washington group that represents oil and gas companies, says drillers will be forced to postpone new wells to comply with the emissions rule.
“Energy production from shale-rock formations is already tightly regulated,” Simon Lomax, research director for industry-funded Energy in Depth in Washington, said. “You cannot get oil or gas out of shale without meeting the requirements of state and federal environmental laws, and the myriad regulations issued under them.”
Gas well emissions prompted Wyoming officials to ask the EPA to designate part of the state an ozone non-attainment area, a label used for urban regions such as Los Angeles, which would force mandatory steps to reduce pollution. The EPA is expected to make a determination in May.
“Air pollution is a significant problem here,” Mark Brownstein, chief counsel to the Environmental Defense Fund, said at the conference, sponsored by The New York Times. “There are tangible things we can do right now to make natural gas a better option in terms of fighting global warming.”
Separately, the U.S. Interior Department is drafting rules to update well-design standards and require disclosure of the chemicals used in fracking on federal lands. Steven Mueller, chief executive officer for Southwestern Energy Co., a natural-gas producer, said the proposal, while on “the right track,” needs improvement.
“There’s some things they’re asking for, reporting, that’s almost impossible,” Mueller said in an interview. “They’re asking for real-time reporting of what you’re doing in the field. There’s some things I don’t think they thought all the way through.”
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