Summary
In 2004 the Environmental Protection Agency reviewed the drilling technique known as hydraulic fracturing finding that the practice, in use since the 1940's. The process involves encasing a well in steel and concrete and then inject a mixture of sand, chemicals and 95% water; the casing protects ground water from contamination. It is an effective method of producing natural gas. In fact The Barnett Shale produces 6% of all gas used in the United States, according to Oil & Gas journal. The practice is presently regulated by states and not subject to the Safe Drinking Water Act and oversight by the EPA. Federal regulation on top of state regulation could add $150,00 to deep well costs, and reduce drilling. Assuming a steady or increasing demand for natural gas as the economy recovers this artificial restriction on production capacity would result in higher costs.
Analysis
An estimated 70% of onshore wells drilled in the Lower 48 states involve hydraulic fracturing. Virtually all wells extracting gas from shales in the Midcontinent and tight sands in the Intermountain West utilize the process. More than 1 million fracturing jobs have been completed in the United States.
The American Petroleum Institute (API) and the Interstate Oil and Gas Compact Commission, have estimated that a bill introduced in 2008 by Diana DeGette (D-Col) to remove the exemption from the SWDA could add up to $150,000 in costs per well. DeGenette's office has indicated that the bill would add $100,000 to well costs. The cost breakdown would seem to indicate the following additional regulatory costs $100,000 for regulatory compliance costs, $25,00 for stormwater permits and $15,000 for waste permits.
However, states already regulate the practice and insist that the practice is safe. In fact states are probably better qualified to regulate the practice, because each site has unique characteristics. State technical experts have experience in each area's unique characteristics. State regulators actually go beyond water issues. State regulations assure that the operations are also conducted safely.
