The Rising Influence of Rising Affluence

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Texas Says Fracking Recipes Should Be Secret

http://www.bloomberg.com/news/print/2011-06-01/texas-says-sacred-gas-fracking-recipes-off-limits-to-epa.html

›By Joe Carroll - Jun 1, 2011

Texas, the largest source of U.S. natural gas, plans to protect the secrecy of chemical mixtures used in hydraulic fracturing, a technique that environmental groups say contaminates drinking water.

Gas drillers won’t be required to reveal all the chemicals they shoot underground in the process because they are trade secrets, said Elizabeth Ames Jones, chairman the Texas Railroad Commission. The state agency, which oversees oil and gas exploration, will begin establishing rules later this year for disclosing some of the materials used in hydraulic fracturing.

“We won’t be knowing the recipes,” Jones said during a telephone interview from the state capital, Austin. “That’s sacred ground as far as I’m concerned and I don’t think that’s at all the direction we want to go in.”

Texas’s approach amounts to a “half measure” that will deprive landowners of the ability to find out what substances are being injected into wells on their property, said Kate Sinding, a New York-based senior attorney at the Natural Resources Defense Council. The protection promised to energy explorers and the manufacturers of fracturing fluids by Texas shows that federal oversight is necessary to make sure the practice, known as fracking, is safe, Sinding said.

The railroad commission was directed to establish a disclosure process in a bill approved by a vote of 137-8 in the Texas legislature on May 29. The bill is awaiting Governor Rick Perry’s signature. Texas follows other gas-producing states including Wyoming, Colorado, Arkansas and Michigan in requiring companies to unveil some of the materials used in high-pressure jets of water and sand used to tap gas trapped in a type of dense rock known as shale.

Federal Oversight

New York has temporarily banned the practice while it develops new rules to ensure the safety of water and air. In France, senators were scheduled today to began debating a proposed fracking ban. The debate follows a May 11 vote in the National Assembly to penalize drillers who use the technique with fines, jail time and cancellation of exploration permits.

Jones said she will discourage any effort by the federal government to assume oversight of fracking when she meets tomorrow with Energy Secretary Steven Chu in Washington. Jones is scheduled to brief Chu and the seven-person task force he established last month to study the risks of fracking at the behest of President Barack Obama.

The panel includes former Central Intelligence Agency Director John Deutch, Environmental Defense Fund President Fred Krupp, and Daniel Yergin, co-founder of Cambridge Energy Research Associates, a unit of IHS Inc. (IHS)

‘Gold Standard’

“We will have the gold standard of state regulatory processes on this issue,” said Jones, 54. “We will prove that states can regulate their energy patches better than the one- size-fits-all approach of the federal government.”

Exxon Mobil Corp. (XOM) Chief Executive Officer Rex Tillerson last week called on the federal government to leave fracking oversight to the states. Exxon, the largest U.S. gas producer since its $34.9 billion takeover of XTO Energy Inc. in 2010, is mounting an advertising campaign to defend fracking as environmentally safe, Tillerson told reporters after the company’s annual meeting in Dallas on May 25.

Michigan’s Department of Environmental Quality last week adopted fracking disclosure rules that allow drillers and service companies to shield proprietary mixtures from public view, Brad Wurfel, a spokesman for the agency, said in a phone interview from Lansing.

Shale Resources

Regulators in states that rely on oil and gas royalties and fees for a substantial portion of state revenue may feel too beholden to the energy industry to strictly enforce fracking rules, said Kenneth Green, the interim director of the Center for Regulatory Studies at the American Enterprise Institute.

“Some states are going to be better at it than others,” Green said. “Those that derive a lot of revenue from the gas industry may be too lax.”

U.S. gas output expanded 20 percent in the past five years fracking enabled energy explorers to extract the fuel from shale formations in Texas, Louisiana, Arkansas and Pennsylvania previously considered impenetrable. In 2010, gas production from U.S. wells reached a level last seen in 1973, Energy Department figures showed.

Texas is experiencing a drilling boom as explorers including Exxon, Occidental Petroleum Corp. (OXY), Chesapeake Energy Corp. (CHK), Marathon Oil Corp. (MRO), Anadarko Petroleum Corp. (APC) and Southwestern Energy Co. (SWN) expand the search for oil and gas.

Texas pumped 587 billion cubic feet of gas in March, or 31 percent of U.S. production, according to the Energy Department in Washington.

Shale formations have the potential to more than double the world’s gas reserves, the Energy Department said in an April 5 assessment. By 2035, gas trapped in shale may account for almost half the nation’s supply, the agency said.

New York’s Department of Environmental Conservation is drawing up proposed rules to regulate drilling in the Marcellus Shale, a formation that stretches beneath several eastern states.‹