Shale Regulation: Drilled

Pennsylvania levies big fines, but in Texas the gas industry turns frac-fluid disclosure into thin soup.
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Posted May 25, 2011 by Peter Gorman in News

It’s not a good sign, to those who were hoping the Texas Legislature might strengthen regulation of the gas drilling industry, when the only bill that seems to have a chance of passing is now being backed vigorously by the drilling industry.


Not a good sign, but not surprising, in a session in which conservative, business-oriented values have reigned supreme and the lobbying power of the oil and gas industry is stronger than ever.

The measure known as the frac fluid bill is a wounded survivor of the legislative process. It’s aimed at letting the public know what’s in the drilling fluids that are widely believed to have caused serious health and public safety threats in Texas and other states. Drillers generally have denied responsibility for such health problems. But while that bill was being carved on in Austin, Chesapeake Energy, a huge player in shale development, was agreeing to pay fines of more than $1 million in Pennsylvania for fouling water wells and causing other problems in a gas well fire.

metroDozens of bills meant to protect the health and property rights of Texans from gas drilling were introduced this session. The frac fluid bill was the only one of significance to make it out of committee. As introduced, it would have required drillers to post, on the internet, a list of the chemicals used in hydraulic fracturing. Now, however, activists and one author of the bill say it’s so full of holes that even if it passes it will be of little use to the public.

The bill was authored by a bipartisan group including State Representatives Jim Keffer, an Eastland Republican, and Lon Burnam of Fort Worth. The original version would have required drillers to post the recipes for their chemical soups  and also to provide that information to the Texas Railroad Commission, which oversees the gas and oil industry. A single loophole was included: If company officials believed a particular chemical or compound was proprietary, they could leave that off the list — though the makeup of even those chemicals would have to be provided in medical emergencies potentially related to frac fluid exposure.

The bill was approved overwhelmingly in the House and may be voted on as early as Wednesday (May 25) in the Senate. But Sharon Wilson, organizer of Earthworks’ Texas and Oil and Gas Accountability Project (OGAP), said the amendments added at various points along the way have left the legislation “very weak. It is not going to do what it was meant to do by a long shot.”

The original proposal, she said, would have given residents near gas wells critical information about what chemicals to test for, if they believed their wells were being affected by drilling activities. If those chemicals were found in the tests, “people would know where they came from, and the drillers could be held accountable.”

Being held accountable means paying injured parties, something that is seldom required of drillers in Texas. And even when it does, it’s generally kept quiet. “There is a lot of secrecy and covering up for the oil and gas industry in Texas,” said Wilson, who also writes a blog called Bluedaze about gas industry issues.

A case in point: The water wells for three homes at the north end of Hill County were ruined when Williams Production-Gulf Coast Company began fraccing nearby. Benzene, toluene, methane, and other chemicals got into the aquifer and thence into the water wells, killing livestock and making the water unfit for human use (“Water Foul,” April 30, 2008). Williams denied any responsibility, claiming the chemicals were already present, but finally agreed to purchase all three properties late last year, with a stipulation that none of the homeowners could talk to the press about the settlement.

Pennsylvania may not be doing a strong job of regulating the drilling industry, Wilson said, “but it’s still doing a much better job than Texas.”

Pennsylvania, which sits on the Marcellus shale, has traditionally been as friendly to the gas, oil, and coal industries as Texas, but legislators and regulators there recently moved to hold natural gas companies accountable for environmental damage.

In December, the Pennsylvania Department of Environmental Protection announced a settlement with Cabot Oil & Gas Corp. in which the company agreed to pay $4.1 million to 19 homeowners in the town of Demock, whose water supplies were ruined by migrating methane. Cabot also agreed to remediate the problem and paid the state $500,000 to cover the cost of the investigation.

Then on May 16, the Pennsylvania DEP fined Chesapeake Energy $900,000 for contaminating eight water wells in Bradford County in northern Pennsylvania and another $188,000 for damages caused by a condensate tank fire at a drilling site.

In its ruling on the well contamination, the Pennsylvania agency noted that “Chesapeake failed to properly case and cement the gas wells and to prevent the migration of gas into sources of fresh groundwater” — similar to what residents believe happened in the Hill County case in Texas but that produced no fines for Williams.

“We have never had any fines like that levied in Texas,” said Wilson.

Katy Gresh, spokesperson for the Pennsylvania DEP, said the fines against Chesapeake and the settlement with Cabot are “a signal that we are committed to regulating this industry in an environmentally conscious manner that will not put public health and safety at risk.”

In February, Pennsylvania also enacted its own frac fluid disclosure law, much stronger than the bill being considered here.

Kevin Sunday, another spokesman for the Pennsylvania DEP, said the new law requires gas companies, within 30 days of drilling a well, to provide the Bureau of Oil & Gas Management — the equivalent of the Texas Railroad Commission — with a detailed report on the construction, casing, and pressure testing of the well, along with “full chemical disclosure,” including the relative strengths of each chemical in its frac fluid cocktail.

While the makeup of some of those chemicals is allowed to be kept from the public as trade secrets (except in cases of medical necessity), all must be revealed to the state agency, Sunday said, so “the state will know exactly what was used and in what concentration, without exception.”

By contrast, said Craig Adair, Burnam’s chief of staff, the amended Texas bill would require companies to quantify only those chemicals designated by the Occupational Safety and Health Administration (OSHA) as toxic or carcinogenic. “The problem is that there are a lot of chemicals that may be toxic or carcinogenic but that have not been designated yet,” Adair said.

The formulas of proprietary chemicals probably could be kept secret even from the Railroad Commission, Wilson said.

Another exemption: Drilling companies will not have to list “any chemicals that are incidental or were not intended to be included,” Adair said. “And that’s a pretty big loophole.”

The changes in the bill were forced on lawmakers by drillers, he said. “Industry essentially said they would kill the bill if the changes were not made. The industry has bought this whole [piece of] legislation.”

One of the key players in the Barnett Shale, Devon Energy, said this week the company never opposed the legislation. “Devon already voluntarily discloses the chemicals used in fraccing on the web site put up by the Interstate Oil and Gas Commission and the Groundwater Protection Council, so we are not opposed to legislation that requires that,” said company spokesman Chip Minty.

Adair said that, even in its eviscerated form, the bill is “better than nothing.

“Once this is in place, we can go back and tighten it up in the next session if we find that things are being withheld,” he said.

Wilson said news media have continued to portray the Texas legislation “as a real disclosure bill, but it’s not.” Her organization had pushed not only for disclosure of all chemicals used in fraccing and their concentrations, but a requirement that everyone within a mile of a well bore be notified of the frac fluid contents.

“Politicians tell the public that if we regulate this industry they’ll take their jobs and mailbox money and leave the state,” Wilson said. “But look at New Mexico and Alabama: They’ve got some of the toughest drilling regulations anywhere, but the companies are still drilling furiously in those states.

With the exception of Burnam, State Sen. Wendy Davis of Fort Worth, and a few others, Wilson said, “our legislature … is listening to industry lobbyists and not to Texas citizens.”


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