The Obama administration has unveiled the first safety mandates for fracking operations on federal and Indian lands. The new rules, announced on March 20, 2015, take effect in late June. The rules set new well integrity standards to protect groundwater, require public disclosure of fracking chemicals, and tighten storage standards.
Dan Simmons, vice president for policy at the Institute for Energy Research, says there’s no need for the new rules. “The Obama administration’s new hydraulic fracturing regulations are a solution in search of a problem,” he said. “The states already regulate hydraulic fracturing where it is occurring on federal lands. This is because the states have primacy over the regulation of groundwater.
“Furthermore, the states are doing a good job as steward of the environment and of resource production,” Simmons said. “But instead of building on the good work the states are doing, the Obama administration is deliberately trying to reduce natural gas and oil production on federal lands by further increasing the regulations and cost of operating on these lands.”
Obama Admin Delaying Permits
A Heritage Foundation report shows in 2005 it took the Bureau of Land Management an average of 154 days to give final approval to a drilling application for lands under its control. Permit approval time has risen to an average of 227 days under President Obama.
By contrast, state governments take 30 days on average to approve the same type of permit. As a result, during the Obama administration’s first three years in office, leases on public lands fell by 42.4 percent, and new permits fell by 37.4 percent.
Isaac Orr, a research fellow with The Heartland Institute (publisher of Environment & Climate News), said, “While oil and natural gas production have grown on non-federal land by 61 and 33 percent, respectively, the amount of oil and gas produced on federal land has declined. This is in part due to the fact the time taken to approve permits has increased by 41 percent since 2006. ‘Time is money’ is a concept the federal government has never really seemed to grasp.
“The Obama administration has used the permitting process to slow down oil and gas production on federal lands, and the United States is producing more oil and natural gas than it has in decades despite the federal government, not because of it,” said Orr. “
According to the Congressional Research Service, oil production on federal lands has fallen by 6 per cent and natural gas production by 28 percent even as s production on state and private lands of oil and gas have increased by more than 61 percent and 33 percent respectively since 2009.
The Bureau of Land Management estimates the compliance cost for its new policies will be approximately $11,400 per well, or roughly $32 million per year to the industry in total. By contrast, the consulting firm Advanced Resources International estimates total annual costs associated with the regulation could range anywhere from $30 million to $2.7 billion.
Gary Stone, vice-president of engineering at FiveStates a Dallas-based oil and gas company, says the new rules will have a limited immediate effect on oil and gas production in the United States most of the current action is on state and private lands.
“New regulations issued by the Department of the Interior governing hydraulic fracturing will have limited initial impact on U.S. exploration activity but leave open the possibility of more restrictive industry-wide regulations in the future,” he said. “The new regulations currently apply only to wells drilled on federal or Indian land, so areas of high activity in south Texas’ Eagle Ford trend, the Permian Basin of west Texas, North Dakota’s Bakken and Three Forks trend, and the eastern seaboard’s Marcellus and Utica plays are largely unaffected.”
In addition, Stone said, “At least two industry coalitions have already filed suit to block the new regulations on the basis that they largely duplicate state laws.”
H. Sterling Burnett, Ph.D. ([email protected]) is a research fellow with The Heartland Institute.
Katie Tubb and Nicolas D. Loris, “The Federal Lands Freedom Act: Empowering States to Control Their Own Energy Futures,” The Heritage Foundation (February 18, 2015). https://heartland.org/sites/default/files/heritage_federal_lands_to_states.pdf