November 25, 2014

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November 25, 2014

November 24, 2014

Bracewell Giuliani

Federal Hydraulic Fracturing Concerns May Slow Natural Gas Development

Hydraulic fracturing, or "fracing," is the injection of a high-pressure fluid mix of water, sand and a proprietary chemical mix into formations deep beneath the surface to release natural gas. This method of resource extraction has been used in the United States for over 60 years as an enhanced recovery technique, but has been deployed with increasing frequency as a well completion process to facilitate economic production from the recently discovered, massive natural gas reserves in unconventional coalbed methane and shale plays. The increased use of fracing in this context has turned political and public attention to perceived concerns about environmental risks associated with the practice.

 
Notably, however, even the politicians who fervently support environmental groups that are drumming up concerns about hydraulic fracturing recognize that hydraulic fracturing is essential to the reliability of our energy supply as well as our goals of energy independence and a low-carbon economy. In recently issuing letters of inquiry to eight oil and gas service companies regarding the chemicals used in hydraulic fracturing fluids, Rep. Henry A. Waxman (D-CA), who chairs the House Energy and Commerce Committee, and Rep. Edward J. Markey (D-MA), who chairs the Energy and Commerce Subcommittee on Energy and Environment, simultaneously acknowledged the promises of energy independence and low-carbon fuel associated with shale gas as well as the fact that hydraulic fracturing is absolutely necessary to exploit these resources. These statements echoed similar acknowledgements made by legislators in the Subcommittee on Energy and Environment's January hearing on the ExxonMobil-XTO merger.
 

Three themes warrant continued attention from a legal and policy standpoint. The first is federal disclosure legislation – i.e., whether everyone involved at the federal level can craft a compromise that balances the political/public will to know what materials are being used in specific fracing efforts with the desire of the producing and drilling companies to preserve the value associated with their proprietary formulas. The second is the state-level efforts to more stringently govern water supply and water disposal issues associated with hydraulic fracturing. The third is obstacles imposed by local ordinances and zoning authorities – i.e., whether our nation's energy policy warrants some sort of preemptive law by the federal government that reduces the burden of patchwork, municipality-by-municipality, requirements that deter (and inflate the cost of) extracting this important resource.

 

© 2014 Bracewell & Giuliani LLP

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About this Author

Partner

Jason Hutt advises manufacturers, refiners, project developers, investor groups and financial institutions about environmental risks and liabilities associated with regulatory compliance, sustainable development and corporate transactions. He also assists in the defense of administrative, civil and criminal proceedings involving environmental enforcement agencies at the federal and state levels. Mr. Hutt counsels clients on current and upcoming regulatory issues arising as well as the preparation of environmental disclosures for SEC filings and...

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