Witnesses:
Panel I
Michael McKee
County Commissioner, Uintah County, Utah
Lori Wrotenbery
Director, Oil and Gas Conservation Division, Oklahoma Corporation Commission
Michael Krancer
Secretary, Pennsylvania Department of Environmental Protection
Robert Howarth
Director, Agriculture, Energy, and Environment Program, Cornell University

Panel II
Nancy Stoner
Acting Assistance Administrator for Water, U.S. Environmental Protection Agency
Mike Pool
Deputy Director, U.S. Bureau of Land Management

 

Subcommittee Members Present:
James Lankford (R-OK), Chair
Gerry Connolly (D-VA), Ranking Member
Mike Kelly (R-PA)
Blake Farenthold (R-TX)

 

Other Members Present:
Rob Bishop (R-UT)

 

On May 30, 2012, the House Committee on Oversight and Government Reform Subcommittee on Technology, Information Policy, Intergovernmental Relations and Procurement Reform hosted a hearing to assess the economic and environmental impacts of hydraulic fracturing and its implications for an energy-independent America. Industry has located significant new areas for unconventional oil and gas exploration. Disagreement over the extent to which federal government should regulate hydraulic fracturing has become a contentious congressional debate.

 

In his opening statement, Chairman James Lankford (R-OK) discussed the importance of energy production to revamp the U.S. economy. With 58 percent of U.S. oil resources produced in the Americas, 79 percent of which are produced in North America, Lankford claims the U.S. is “truly in an energy renaissance.” Lankford noted that 96 percent of new energy production is occurring on private rather than public land, causing royalty losses and underutilization of federal lands. He compared the regulatory role of the Environmental Protection Agency (EPA) and the Bureau of Land Management (BLM) to that of state regulators. Through programs such as the Frac Focus chemical registry web site and the State Review of Oil and Natural Gas Environmental Regulations (STRONGER), Lankford stated that regulators in gas and oil producing states work closely with all interested parties to develop an industrial regulatory regime that is environmentally sound. In defining his perspective on the role of the EPA and the BLM in hydraulic fracturing regulation, Lankford said he was “very skeptical” that thousands of wells can be “overseen from Washington better than the state regulators” who are familiar with the land. Lankford concluded, “Today is a pursuit of awareness and clarity on the direction of the EPA and the BLM.”

 

Ranking Member Gerald Connolly (D-VA) stated that he disagreed on “almost every front” with the chairman. Connolly highlighted the success of oil and natural gas initiatives and noted that the U.S. is on a trajectory to match Saudi fossil fuel production and eliminate dependence on foreign oil. He said the hydraulic fracturing industry could experience “serious regression” if Congress continues to pit state and federal regulators against one another. Connolly stated that he supports “reasonable regulation” for a practice as “potentially serious to environmental safety and human health” as natural gas extraction. In conclusion, he said there is scientific evidence of at least 29 toxic chemicals found in water resources near drill sites and cases of seismicity associated with the fracturing process.

 

Sitting in on the hearing as a nonmember of the committee, Representative Rob Bishop (R-UT) introduced witness Michael McKee. He stated that 65 percent of all natural gas in Utah comes from Uintah County. Bishop commented that when regulations are established to solve problems that are non-existent this could result in “overreach” of the federal government.

 

Lori Wrotenbery, director of the Oil and Gas Conservation Division in Oklahoma, began her testimony by emphasizing the influential role of self-directed state regulations on oil and gas drilling productions. As a chairman of the board for STRONGER and a member of the Groundwater Protection Council Board in Oklahoma, Wrotenbery described the procedures and findings of these two “comprehensive, strong, responsible, flexible” and well-established programs. She noted that there are remaining challenges with hydraulic fracturing technologies and described the history of hydraulic fracturing in Oklahoma to highlight that the nature of the challenges differs from state to state. Wrotenbery described the goals of STRONGER to develop guidelines for state hydraulic fracturing regulations. STRONGER has conducted reviews in Oklahoma, Pennsylvania, Arkansas, Texas, and Ohio to help states benchmark regulatory programs and identify areas for improvement. After the surveys of the participating states were conducted about 75 percent of STRONGER’s recommendations had been met. States “do take these reviews seriously,” said Wrotenbery. She described another program, a web site called Frac Focus that encourages drilling companies to disclose the chemicals in their flowback waters. After the Frac Focus web site was created in April 2011, companies have disclosed information on over 18,000 wells.

 

Uintah County Commissioner Michael McKee discussed the importance of the natural gas industry to the families in his county. He said fracturing has been done in Uintah county for over 60 years and that the process of hydraulic fracturing allows operators to produce 10 times the amount of energy in one tenth the number of wells. He emphasized that regulatory regulations are best made at the state level and would do “better than a far-removed federal government.” McKee said that government policies have shifted investment away from Uintah County. He discussed the relationship between the BLM and native tribal authorities and concluded by saying the BLM has failed to work with tribal leaders and their rules will “kill tribal jobs.”

 

Robert Howarth from Cornell University testified on the “new and rapidly changing” science associated with hydraulic fracturing. He discussed the water quantity issues of high precision directional drilling by stating that this process uses 50-100 times more water per well than conventional fracturing. Howarth then discussed other environmental issues by citing the evidence of water contaminated with bromides due to improper waste disposal, methane contamination of water, local air pollution with benzene emissions and increased ground-level ozone, stress on climate change associated with methane (a greenhouse gas 105 times more potent than carbon dioxide), and rises in radon levels in the Marcellus Shale region. Howarth concluded that this evidence, the lack of drilling expertise within states, and the fact that gas pipelines move across state lines calls for involvement of the federal government.

 

Michael Krancer of the Pennsylvania Department of Environmental Protection described the comprehensive regulations on well casings, water handling, drilling processes, long and short-term air quality, and wastewater treatment that are in place in Pennsylvania. He said claims of studies making a connection between contamination of drinking wells and  fracking fluids are “simply not true.” The areas in each state are complex and difficult to study but Krancer asserted, “We know the science in the states.”  He cited the Safe Drinking Water Act (P.L. 93-523) and the Energy Policy Act of 2005 (P.L. 109-58) as examples of the federal government not getting involved in hydraulic fracturing regulation and questioned why the government is now showing an interest.

 

Chairman Lankford began the first question and answer period by displaying a shale rock sample and declaring that the new shale gas extraction technology is “revolutionary.” He said there is a history of shale gas extraction, including the newer technologies, and questioned Howarth as to why regulatory conflicts have arisen only recently. Howarth responded that the technology is new and not well known yet. Lankford then claimed that the EPA has not found a single site for groundwater contamination, but Howarth disagreed citing multiple incidences not reported by the EPA of fracturing associated with contamination. Lankford continued by asking Krancer about the geology in his and other states. Krancer noted that the hydrology, geology, meteorology, and other Earth and atmospheric properties are different in every state. The Chairman concluded by asking Michael McKee why investments into hydraulic fracturing have shifted out of the west and east. McKee highlighted that there is not a lack of investment opportunity because there is 111 trillion cubic feet of natural gas on public land in the west, rather he claims the policies enacted by the BLM make it easier to invest on private rather than public land. “It is valuable that decisions are made at the state-level,” McKee concluded.

 

Representative Connolly asked Krancer if the other 49 states are as equipped as Pennsylvania to regulate hydraulic fracturing. Krancer claimed that “states are in the best position to known their own state.” Connolly disagreed by saying that the expertise of Pennsylvania cannot be extrapolated to all other states. Connolly then asked Howarth about the problems associated with methane and the possibility of seismicity around fracturing sites. Howarth replied that methane is a powerful greenhouse gas and contributor to ground level ozone, which causes 30,000 premature deaths per year. Howarth said the United States Geological Survey (USGS) has attributed wastewater reinjection to increased earthquake occurrence. Scientists with the USGS state that it remains to be determined the exact links between hydraulic fracturing and seismic activity. Lori Wrotenbery disagreed, stating that any conclusive links between seismicity and fracturing processes are premature. Connolly asked Michael McKee about the winter ground level ozone levels in Uintah County, saying they top Los Angeles, California levels of 149 parts per billion. McKee says his county has been conducting research and that the levels may not be associated with the high levels of hydraulic fracturing in his county, but instead to a number of factors including winter snow and sunlight.

 

Representative Mike Kelly (R-PA) asked questions specifically about EPA studies in Dimock, Pennsylvania. Krancer described the process, which involved four rounds of sampling, costing about $4 million, and resulting in no records of contamination and no cases of negative health impacts. Kelly concluded that scientific studies concerning hydraulic fracturing have been politicized through the media and movies such as Gasland.

 

Representative Blake Farenthold (R-TX) asked Lori Wrotenbery to compare the protective well casings of conventional and unconventional natural gas production, as well as to describe the location of the water table relative to the extraction site. Wrotenbery said the multiple layers of steel and concrete surrounding the boreholes have been required for many decades and have improved with time. She stated that variations in geology cause different depths to the water table depending on location. Farenthold questioned McKee about the costs associated with regulating hydraulic fracturing. McKee replied that besides jobs, money is being lost from royalties on public lands and delays in permitting.  

 

Nancy Stoner of the U.S. EPA opened up the second panel discussion by clarifying the role of the EPA within the oil and natural gas industry. She recognized that states have the primary regulatory role, whereas the role of the government is to promote research and development, ensure safety, regulate tribal lands, and guarantee safety. Stoner stated that the EPA has been asked to clarify the permits and requirements for waste disposal under the Safe Drinking Water Act. The EPA has developed permitting guidance for technical operations, that poses no new restrictions on companies, that is available to industry, states, tribes, environmental organizations, and the public. The EPA continues to conduct research to understand the effects of hydraulic fracturing on drinking water. As an example, Stoner said that by using the EPA pre-treatment program for extraction and proppant fluids companies can prevent water contamination. Stoner concluded by describing the EPA efforts to clarify the Energy Act of 2005, which excludes monitoring of natural gas extraction unless diesel fuels are used in proppant agents, by releasing the Underground Injection Control (UIC) Class II draft guidance available for public comment until July 9.

 

Mike Pool, Deputy Director of the Bureau of Land Management, began his testimony by describing the mission of the BLM to facilitate “safe, responsible, and efficient development” in order to protect lands and reduce dependence on foreign oil. Pool stated that the BLM complements state regulations by “providing a consistent standard.” He described the royalty process and said that government annually receives $2.6 billion in royalties, and tribal trust land royalties exceed $400 million. He highlighted the BLM efforts to work with tribal leaders by holding conferences to discuss the future of hydraulic fracturing to which 84 tribal leaders attended. In conclusion, Pool reiterated the role of the BLM to ensure disclosure of chemicals in hydraulic fracturing operations, assure well integrity, manage water requirements of flowback fluids, and strengthen regulations on federal and tribal trust lands.

 

The second questioning period began with Representative Kelly asking Nancy Stoner about the EPA’s decision to specifically address “the definition” of diesel fuels now and stated that the EPA has “changed its position” with regard to fracturing. Chairman Lankford expressed similar concern. Stoner replied stating that the UIC Class II document is for guidance only and is not aware that the EPA has changed positions since the Energy Policy Act of 2005. The new EPA rule was formed to address air pollution issues and mandates that by 2015 operators of fractured natural gas wells must use “green completion” equipment to capture gases known to be volatile organic compounds.  Kelly disagreed and said hydraulic fracturing should “not be part of policy.” Kelly turned to Pool and said that 96 percent of the increased production in oil and natural gas are occurring on private as opposed to public lands. Pool’s only comment was that the government has statutes for leases.

 

Ranking Member Connolly continued the prior discussion and asked why it took seven years for the EPA to propose this new rule. Stoner replied that originally regulation was focused on coal bed methane, but recent industrial shifts outside of the realm of coal bed methane no longer makes previous guidance applicable. Connolly asked Mike Pool to comment on McKee’s assertions about the BLM in Uintah County.  Pool said that the state hydraulic fracturing regulations were very outdated and that the Secretary of the Interior and the BLM have held regional meetings to formulate improved standards “in line with state standards.”

 

Chairman Lankford asked Pool why state rules do not apply to federal lands and suggested that BLM rules are out of date relative to state regulations. Pool replied that the requirements associated with the Federal Onshore Oil and Gas Leasing Reform Act (30 U.S.C.181ET SEQ), which authorizes each BLM state office to conduct oil and gas lease sales on at least a quarterly basis, are very basic.

 

Witness testimonies, opening statements, and a hearing of the webcast can be found on the committee web site.