Utah's Mining Board Approves Fracking Rule to Set Standards for Operation

On October 24, 2012, Utah’s Oil, Gas and Mining Board approved a hydraulic fracturing rule that requires chemical disclosure and sets standards for wellbore integrity and management of flowback water and surface protection.

Effective November 1, 2012, operators must report “the amount and type of chemicals used in a hydraulic fracturing operation . . . to www.fracfocus.org within 60 days of hydraulic fracturing completion for public disclosure.” Utah Admin. Code R. 649-3-39.1. 

While this rule contains no exemption for trade secrets, Utah’s trade secrets laws may protect some of the additives used during the hydraulic fracturing process from public disclosure. 

The Utah hydraulic fracturing rule can be found at https://fs.ogm.utah.gov.

This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.

EIP Petitions EPA to Add Oil & Gas Industry to TRI

On October 24, 2012, the Environmental Integrity Project (EIP)and 16 other environmental groups petitioned the U.S. Environmental Protection Agency (EPA) to add the oil and gas industry to the list of facilities required to report pollutants released into the air, water, and land to the Toxics Release Inventory (TRI).

The TRI was enacted in 1986 in response to the disaster in Bhopal, India and initially applied only to manufacturing industries.

However, Congress vested the EPA with authority to include additional industry groups as needed; and since its inception, the EPA has added electricity producers, mining operators, and others.

The environmental groups petitioned the EPA to require the oil and gas industry to disclose the chemicals and other substances that are released during their operations, including hydraulic fracturing.

This disclosure is not tied to any permitting requirements and is sought by the groups to purportedly “give citizens information about air, water and land pollution.”

The 81-page petition is available at www.environmentalintegrity.com.

This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.

New EPA Report Again Ties Wyo. Water Pollution To Fracking

On October 10, 2012, as a follow-up to its December 2011 draft report concerning allegations of groundwater contamination in Pavillion, Wyoming, the EPA released the methodology and results for additional water samples collected from two monitoring wells by the U.S. Geological Society, in cooperation with the Wyoming Department of Environmental Quality, in April 2012, a report that was highly criticized by industry.

The EPA announced that the results of the additional testing “are generally consistent with the monitoring data” in the draft report which indicates that the groundwater in the area contains chemicals (glycols, alcohols, and methane) linked to hydraulic fracturing.

The December 2011 draft report and this additional data are now available for public comment on the EPA website through January 15, 2013. These reports can be found here; and additional information about the comment period can be found here.

The EPA’s conclusion is being questioned by industry representatives, including Encana Corp., the operator of oil and gas wells near Pavillion. An Encana spokesman stated that the EPA has provided no sound scientific evidence that drilling has impacted domestic drinking water wells and that finding hydrocarbons in two monitoring wells is not surprising given that the wells were drilled into a gas production zone.

This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.

EPA Requires Two-Day Notice of Hydraulic Fracturing Operations Effective October 15, 2012

In mid-April 2012, the EPA issued its new air emissions regulations relating to processes and equipment at natural gas well sites.

While many of these regulations have been highlighted by the EPA (such as the required use of “green completion” equipment after January 1, 2015), a notice requirement for hydraulically fractured or refractured operations has been practically ignored. 

Beginning October 15, 2012, the owner or operator of a natural gas well must provide the EPA (and in some cases, a state or local air quality agency) with at least two-day notice that hydraulic fracturing will take place at the well location. 

This notice, which can be submitted in writing or electronically, must include:
  1. the anticipated date of the well completion operation; 
  2. contact information for the owner or operator; 
  3. the API well number; 
  4. the “latitude and longitude coordinates for each well in decimal degrees to an accuracy and precision of five decimals of a degree using the North American Datum of 1983;” and 
  5. the planned date of the beginning of flowback. 
Summary of the requirements relating to natural gas well sites
New Air Emission Regulations

Sections 60.5360, 60.5365, 60.5370, and 60.5420 provide information relating to the scope of the regulations, the effective date, and the reporting requirements.

This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.

Federal vs. State Regulation

On September 10, 2012, members of the U.S. House of Representatives’ Committee on Natural Resources wrote to Secretary of the Interior Ken Salazar, requesting that the Bureau of Land Management’s proposed regulations governing hydraulic fracturing on federal land be made stronger.

The group wants the proposed regulations strengthened:
  1. to require the public disclosure of the pre- and post-fracturing chemicals and additives;
  2. to re-assess the use of FracFocus as the system for the public disclosure of chemicals and to consider a government-run system that would be subject to open records laws and that would allow the information to be published in an open, searchable format; 
  3. to prevent the use of open-air pits to store wastewater from hydraulic fracturing operations; 
  4. to set up strict guidelines for variances or waivers from the regulations; and 
  5. to include rules relating to set-backs in order to control air pollution. 
Read the U.S. House of Representatives' Committee on Natural Resources letter to Secretary of the Interior Ken Salazar.

Within one day of this letter, Governor Matt Mead of Wyoming expressed his opposing opinion, stating that federal hydraulic fracturing rules are unnecessary because the state regulations are already stronger. 

For example, current Wyoming state regulations require the pre-fracturing disclosure of all chemical identities and concentrations of each additive used in the hydraulic fracturing process.

This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) from Fulbright's Energy Practice.

New Drilling and Recycling Regulations Proposed by Texas Railroad Commission Relating to Hydraulic Fracturing

In recent weeks, the Texas Railroad Commission (RRC) approved several amendments to the Administrative Code relating to drilling, casing, cementing, well control, and the commercial recycling of produced water and/or hydraulic fracturing flowback fluid.

On August 21, 2012, the RRC proposed regulations covering:
  1. casing, cementing, drilling, and completion requirements, 
  2. cathodic protection wells, and 
  3. seismic holes and core holes (16 Tex. Admin. Code §§ 3.13, 3.99, and 3.100 respectively). 
These changes reflect the transfer of the Texas Commission on Environmental Quality's Groundwater Advisory Unit to the RRC. Proposed § 3.13 details the RRC's requirements for all wells, consolidates the requirements for well control and blowout preventers, and updates the requirements for drilling, casing, cementing, and fracture stimulation. 

This section provides for the isolation of usable-quality water zones, potentially productive zones, and over-pressured zones in order to prevent contamination and the migration of fluids behind the casing. Important provisions include:
  • A proposal to set surface casing to a depth of 3,500 feet or greater must be in writing and requires prior approval of the appropriate district director. 
  • The proposal must detail how the operator plans to maintain well control during drilling, ensure successful circulation and adequate bonding of cement, and, if necessary, prevent upward migration of deeper formation fluids into protected water.
  • All casing installed in a well that will be subjected to fracture stimulation must have a minimum internal yield pressure rating designed to withstand at least 1.2 times the maximum pressure to which the casing may be subjected.
  • The operator must pressure test the casing or fracture tubing on which the pressure will be exerted during the fracturing.
  • All annuli must be monitored during stimulation operations. If the pressure deviates above the anticipated increases, the operator shall immediately suspend fracturing and notify the appropriate district director within 24 hours of the deviation.
  • An operator must set and cement sufficient surface casing to protect all usable quality water strata.
  • On bay and offshore wells, all tool pushers, drilling superintendents, and operators' representatives (when the operator is in control of the drilling) must furnish certification of satisfactory completion of API training or similar nationally recognized training program on well control equipment and procedures.
  • A mechanical integrity test of the surface casing must be conducted after total depth or the next casing depth is reached to ensure integrity of the casing after drilling.
On September 11, 2012, the RRC approved new regulations relating to the commercial recycling of produced water and/or hydraulic fracturing flowback fluid. (16 Tex. Admin. Code, Chapter Four, Subchapter B, Divisions I-VI). 

Proposed Division 5 sets out requirements for off-lease or centralized commercial recycling, while proposed Division 6 concerns stationary commercial recycling of produced water and/or hydraulic fracturing flowback fluid. 

Under the proposed regulations, a commercial recycling applicant must provide engineering, geological, and other information sufficient to show that the "issuance of the permit will not result in the waste of oil, gas, or other geothermal resources, the pollution of surface or subsurface water, or a threat to the public health or safety." 

On-lease, non-commercial recycling is to be authorized by concurrent amendments to 16 Texas Administrative Code § 3.8, relating to water protection, which states that "no person conducting activities subject to regulation by the commission may cause or allow pollution of surface or subsurface water in the state."

The amendments approved on August 21, 2012 can be found at http://www.rrc.state.tx.us/rules/prop-amend-3-13-Aug21-2012.PDF; and the September 11, 2012 amendments are at is http://www.rrc.state.tx.us/rules/prop-amend-3-8-comm-recycling-Sept2012.PDF.

The public comment periods for these proposed amendments end at noon on October 9, 2012 and October 29, 2012, respectively.

This article was prepared by Barclay R. Nicholson (bnicholson@fulbright.com or 713 651 3662) and Stephen C. Dillard (sdillard@fulbright.com or 713 651 5507) from Fulbright's Energy Practice and Fulbright's Litigation Practice.