US Interior to issue frack fluid disclosure rule next year

Washington (Platts)--31Oct2011/325 pm EDT/1925 GMT

The US Department of the Interior plans to issue a proposed rule requiring disclosure of the chemicals in fracking fluid before the end of this year, Deputy Secretary David Hayes said Monday in Washington.

Interior hopes to have the rule governing disclosures of frack fluids by drillers operating on federal leases finalized within a year and will provide protection for trade secrets, Hayes said.

Hayes' comments came at a meeting of the US Secretary of Energy's Natural Gas Subcommittee meeting in Washington, where he also allowed that Interior was working at rewriting its Onshore Rule Number 9 to account for advances in horizontal drilling and hydraulic fracturing.

"Disclosure would improve public confidence" in shale gas extraction, Hayes told the subcommittee, which is charged with advising Secretary of Energy Steven Chu and the Obama Administration on what steps government and industry can make to instill public confidence and minimize the environmental impact of extracting natural gas from shale formations.

Interior manages 700 million acres of federal land onshore in the United States, Hayes said.

Other updates to the onshore drilling Rule 9, which has not been revised since 1982, Hayes said, will deal with water management and disposal of flowback water, which is not addressed in the current version.

Hayes said Interior may introduce a certificate system where drillers certify that they are in compliance with state and local standards regarding water management to avoid duplicating state regulatory efforts.

The Department of Energy's shale gas advisory panel, named by Chu on direction from President Barack Obama earlier this year, was meeting to hear testimony from federal agencies to check on their progress toward the committee's recommendations for better data collection, use of best practices, and transparency; all designed to improve public confidence and industry performance in shale gas production.

Environmental Protection Agency Deputy Administrator Bob Perciasepe said the agency is already going through the rulemaking process to limit air emissions from new gas wells as well as sending new guidelines to the states regarding the use of diesel fuels in fracking.

The EPA is also formulating new rules regarding the standards to which flowback and produced water from oil and gas wells must be treated before it is sent to a public water treatment plant.

Industry regards the pretreatment standards effort as irrelevant, noting that in Pennsylvania's Marcellus Shale the state Department of Environmental protection and drillers have agreed to a ban on flowback water being sent to local water treatment plants, while elsewhere in the country most wastewater is sent to certified deepwater underground injection wells. In the Marcellus, industry trade groups report that 75% of the wastewater is recycled for new fracks while the rest is trucked out of state to disposal wells.

Perciasepe acknowledged that water is more often a state or federal issue and that he hoped "recycling is going to be one of the best practices."

Subcommittee members led by former CIA director and MIT chemistry professor John Deutch peppered Interior and EPA with water questions. One of the subcommittee's recommendations is that water be treated "cradle to grave" to the public can see where it came from and where it eventually goes.

"Water is a systemic issue," Deutch said. "I don't see where that's happening in industry" or the government. "I see it as a systems problem and it isn't being done."

--Bill Holland, bill_holland@platts.com

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