Summary
The economic strength of the United States would suffer considerably if hydraulic fracturing is federally regulated according to the API. Present proposals to include the practice under the EPA regulation would be redundant and increase regulatory costs for drilling by $100,000 per well.
Analysis
Hydraulic fracturing is a drilling technique involving the injection of a mixture of 95% water and 5% chemicals and sand into shale to extract trapped natural gas. The practice has been in use in the oil and gas industry since the 1940's. The fracking process was exempted from federal regulation under the under the 2005 Energy Policy Act.
Shale gas a been developed for more than 50 years and has the potential to play a major role in the US energy portfolio. A single play, the Barnett Shale, produces 6% of all natural gas consumed today.
Legislator's have expressed concern about the process and possible contamination of ground water supplies, and would like to pass legislation placing the oil and gas drilling process under the 1974 Safe Drinking Water Act, regulated by the EPA.
Presently states are responsible for implementing regulations governing exploration of oil and gas resources. Regulator's argue that states are better qualified because their agencies are better informed as to each drilling site's unique characteristics. Due to these unique characteristics a federal "cookie cutter" approach is not desirable.
The API (American Petroleum Institute) estimates that with a total ban on fracturing would US GDP would plunge by $374 billion or 2.3% and 2.9 million jobs would be lost by 2014.
Fluid restrictions would result in an estimated drop of 1.1% of GDP or $172 billion, with a loss of 1.3 million jobs (0.9%).
A UIC (underground injection control) scenario would cut domestic GDP by $84 billion or 0.5% and oil and gas payrolls would be reduced by 635,000 jobs during the same period.
The API also has estimated that imposition of federal regulations would result in the number of US wells drilled would drop 20.5% reducing domestic gas production by about 10% from 2008 levels.
The study in question is sponsored by the API and is being conducted by IHS Global Insight.
Natural gas is second only to coal in the production of electricity, and burns cleaner than King Coal. The Obama administration is also pushing natural gas as method of reducing motor vehicle emissions and other pollutants. Natural gas offers the potential to bridge the gap between present fossil fuel reliance and the major deployment of renewable energy sources such as wind, solar and geothermal.
