According to a report by Denver-based Western Energy Alliance, new federally regulated rules to regulate hydraulic fracturing (“fracking”) on public lands will cost around $1.5 billion for the energy industry to implement. The Alliance is pleading with Secretary of Interior Ken Salazar to put a hold on these new regulations.
If implemented, the new rules and regulations will “require significantly more permitting and operational expenses for companies drilling and completing oil and gas wells on federal lands,” says the economic firm John Dunham & Associates. The analysis estimates these new regulations could lead to nearly $1.3 billion in expenses dealing with new well permits and $273 million per year in costs dealing with workover for existing wells.
Fracking is largely criticized by by environmentalists who believe the process contaminates groundwater and also causes earthquakes, as it involves injecting water, sand and chemicals underground to fracture rock and release trapped natural gas and oil. The new regulations would require companies to “publicly disclose the chemicals used in hydraulic fracturing operations on public and Indian lands, with appropriate protections for proprietary information,” according to the Interior Department. This requirement is to keep the public more aware of what is going on around them, something that many shale-related companies often keep “hush-hush.”
Kathleen Sgamma, vice president of government and public affairs for the alliance does not agree with proposed new regulations. “States have been successfully regulating [fracking] for generations, including on federal lands with no incident of contamination that would necessitate redundant federal regulation,” says Sgamma. “BLM’s proposed [fracking] rule would impose a huge cost on society by diverting $1.6 billion annually away from investment in job creation into redundant regulation,” she added.
While it might not hurt to keep the government and general public “in the know,” there should be a cheaper way of going about this. It will be interesting to see whether or not the regulations pass and, if so, how it will benefit the industry and society as a whole. Although these drilling companies bring in a constant large flow of money on a daily basis, $1.5 billion is nothing to sneeze at. At the same time, more regulation of fracking might mean fewer accidents, short-term and long-term.