Moody’s: Mid-term elections dim federal fracing regulation prospects

Results of 2014’s congressional elections have reduced the prospect of the federal government enacting its own hydraulic fracturing regulations, Moody’s said in a Dec. 17 report. It noted that Republicans, who generally have taken the position that state regulations are sufficient, will assume control of the US Senate in addition to the House in January.

This change in Washington’s political climate means oil and gas producers can avoid the consequences of higher costs from federal regulation, the New York credit rating service said. It cited an Independent Petroleum Association of America estimate that one proposal could raise costs per well by up to $100,000.

“However, the biggest benefit of not having federal regulation is the time to receive permits, which likely would have slowed,” the report added.

Operators face growing regulations of their exploration and development of unconventional resources on state and local levels, it continued. Courts in Pennsylvania and New York have upheld communities’ rights to ban fracing even if state law allows it, and new local restrictions face legal challenges in Colorado and Texas, Moody’s report said.

It also pointed out that New York Gov. Andrew Cuomo (D) banned the technology’s use within the state following a 3-year study (OGJ Online, Dec. 17, 2014).

Contact Nick Snow at nicks@pennwell.com.

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