Energy policy — oil and gas: Diesel fuel as a component of hydraulic fracturing fluid

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From Bloomberg (Kim Chipman):

The providers injected 32.2 million gallons of unauthorized diesel fuel, or fluids containing the fuel, to extract gas from wells in 19 states from 2005 to 2009, Representatives Henry Waxman, Edward Markey and Diana DeGette wrote today in a letter to Environmental Protection Agency Administrator Lisa Jackson. BJ Services led with 11.5 million gallons followed by Halliburton at 7.2 million, they said.

Companies using hydraulic fracturing — a technique that shoots water, sand and chemicals into shale to extract natural gas — aren’t required to get permits unless they use fluids containing diesel, which the EPA said is a threat to drinking water. No companies sought such permits, the lawmakers said.

“This appears to be a violation of the Safe Drinking Water Act,” according to the letter from Waxman of California, Markey of Massachusetts and DeGette of Colorado. “It also means that the companies injecting diesel fuel haven’t performed the environmental reviews required by the law.”

Schlumberger Ltd., the No. 1 provider of oil-field services, Halliburton, the second biggest, and BJ Services agreed with the EPA in 2003 to stop using diesel fuel in fracturing fluids for coalbed methane production. Such wells tend to be closer to sources of drinking water than other oil and gas production wells.

More coverage from David O. Williams writing for the Colorado Independent. From the article:

The process was exempted from the Safe Drinking Water Act under the Energy Policy Act that was passed during the Bush administration in 2005 – except in cases when diesel fuel is used. Oil and gas industry officials claim the fracking process has been used safely for decades, but conservationists and a growing number of community activists in heavily drilled areas of the country claim the process has led to groundwater contamination.

From the Houston Chronicle (Peter Fowler):

Industry representatives said the EPA didn’t require permits for using diesel in hydraulic fracturing until June 2010 – after the period in the congressional study. “The letter relies entirely on the notion that historically the EPA has regulated hydraulic fracturing, and that’s not the case,” said Matthew Armstrong, an attorney with Bracewell & Guiliani who represents a number of energy companies…

Concerns include the potential for the chemicals to get into drinking water or for natural gas to migrate into water wells. The industry says such incidents are rare and can be avoided. Most hydraulic fracturing fluid uses water as its primary component, but in formations where water is absorbed too easily – such as in certain kinds of clay – diesel is used as an additive. It usually is just one component of the chemical used in the mix. Armstrong said about a third of the 32 million gallons referred to in the letter was straight diesel fuel.

The EPA and industry agreed in 2003 that diesel wouldn’t be used in hydraulic fracturing jobs in coal bed methane formations, because drilling in those formations tends to be closer to drinking water sources. But oil field services giants Halliburton and BJ Services, among other companies, say that agreement doesn’t apply beyond drilling operations in those formations.

The EPA first said it would require companies to seek permits to use diesel in non-coal bed operations last June, in a posting on the agency’s website. That wasn’t a proper way to change the rules, Halliburton said in a statement. “This action did not follow the standard administrative processes required in adopting new federal regulatory requirements, and the companies involved had no knowledge this change was being made by the EPA,” the company said.

Halliburton is among the companies represented by the Independent Petroleum Association of America and the U.S. Oil & Gas Association, which are challenging the EPA’s new requirement. A federal appeals court in Washington recently denied the EPA’s motion to dismiss the case, and the court will hear arguments later this year…

About half of the 32.2 million gallons of fluid containing diesel was injected in Texas, followed by Oklahoma, North Dakota, Louisiana and Wyoming.

More coverage from Allison Sherry writing for The Denver Post. From the article:

Because the EPA has had the authority to regulate this area since 2005 and hasn’t done it has left oil and gas companies practices open for interpretation. “No one is really contesting the EPA’s authority but it can’t just decide one day that it wishes it would have regulated this in the past,” said Matt Armstrong, a DC-based leading industry lawyer. “It’s an attempt to sort of create a media circus around this issue.”

More oil and gas coverage here and here.

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