Well frac regs loom

Patrick Crow
Washington, D.C.
[email protected]

U.S. oil industry groups are concerned about a recent federal court ruling that could require separate regulation of hydraulic fracturing of wells.

The Eleventh Circuit Court of Appeals, sitting in Atlanta, recently ruled the Environmental Protection Agency must require that Alabama's Underground Injection Control (UIC) program regulate the fracturing of coalbed methane wells.

The Legal Environmental Assistance Foundation Inc. had sued EPA in 1995, alleging the agency erred by not requiring controls under the Safe Drinking Water Act's UIC chapter. EPA appealed, lost, and now may request a rehearing.

Oil companies, industry associations, and some state regulatory bodies are concerned the ruling eventually could be applied to all oil and gas wells in the U.S.

Last week, the Interstate Oil and Gas Compact Commission passed a resolution, proposed by the Texas Railroad Commission, that supported EPA's position.

Reasoning

As it does with other states, EPA delegated its UIC powers to Alabama.

The state oil and gas board did not regulate hydraulic fracturing, which was consistent with EPA's interpretation that the UIC program covers only wells whose "principal function" was the injection of fluids into the ground.

The court said, "EPA's argument that a methane gas production well is not an 'injection well' because it is used primarily for gas extraction is spurious. Congress directed EPA to regulate 'underground injection' activities, not 'injection wells.'

"In view of clear statutory language requiring the regulation of all such activities, they must be regulated, regardless of the other uses of the well in which these activities occur."

The court brushed aside EPA's argument that Congress did not intend the UIC law to cover drilling activities. "We are unpersuaded for the rather simple reason that hydraulic fracturing is not a 'drilling technique.' It involves the injection of fluids into the ground after the well has been constructed."

Problems seen

Dennis Lathem, executive director of the Coalbed Methane Association of Alabama, said the ruling affects 3,000 coalbed methane wells. The 2,759 in production now are averaging a combined 308 MMcfd, a fourth of the state's gas output.

He said if the case is not changed or overturned, the principle might be applied to hundreds of thousands of wells nationwide, since, "I don't know of any state agency that requires a specific permit prior to hydraulic fracturing."

Lathem said, "If the issue is that the industry is not protecting groundwater, that's erroneous. Alabama is replete with rules to protect groundwater from drilling activities, and each individual well has to be permitted."

And he said there is a certain irony in the court's ruling. "Many water wells are hydraulically fractured, too."

Lathem said, "I would think it would be a tremendous waste of resources to needlessly duplicate a process that already is in place, since permits already are required for wells. We hope a reasonable way can be found to satisfy all parties on this issue."