The U.S. Environmental Protection Agency (EPA) has released a draft underground injection control (UIC) program permitting guidance for class II wells. The guidance affects the groundwater treatment of gas developments in which hydraulic fracturing, also known as fracking, is used.
Development of shale gas plays through hydraulic fracturing has been one of the main factors contributing to the dip in natural gas prices. Many electric utilities, which are in the midst of the largest retirement phase in the U.S. power industry’s history, have been influenced by these low prices to switch their plants to natural gas or combined-cycle natural gas.
EPA developed the draft guidance to clarify how companies can comply with a law passed by Congress in 2005, which exempted hydraulic fracturing operations from the requirement to obtain a UIC permit, except in cases where diesel fuel is used as a fracturing fluid. In EPA’s Prepublication of the Federal Register notice, the Agency communicates that this guidance will affect approximately 2 percent of wells that hydraulically fracture.
The draft guidance outlines for EPA permit writers, where EPA is the permitting authority, requirements for diesel fuels used for hydraulic fracturing wells, technical recommendations for permitting those wells, and a description of diesel fuels for EPA underground injection control permitting. The draft guidance describes diesel fuels for these purposes by reference to six chemical abstract services registry numbers. The agency is requesting input on this description.
While this guidance undergoes public notice and comment, decisions about permitting hydraulic fracturing operations that use diesel fuels will be made on a case-by-case basis, according to the EPA.
“The implication is that since 2005, if a company used diesel and didn’t get a permit, that was illegal,” said Richard Stoll, a partner with Foley & Lardner. However, virtually no oil and gas companies are currently using diesel in their fracking processes, Stoll said.
Deborah Jennings, chair of DLA Piper’s Environmental group, said that the oil and gas industry needs to continue to comply with EPA regulations in order to increase trust from the power industry and others. “Reasonable regulation is the right thing to do, and this is not going to adversely affect the oil and gas industry or the power industry.”
Stoll said that while this guidance and a proposed air emissions standard for hydraulic fracturing may cause an increase in the cost of gas over time, the rules are not expected to affect the power industry as much as EPA’s rules target at coal-fired power generation will. “I don’t really see this making a big difference for power generation in the long run.”
Many in the oil and gas industry are already complying with guidelines expected to be imposed as a result of this program and the air emissions standard. “Those of us in the industry who have upheld high standards and maintained clean track records will collectively breathe a sigh of relief today, as after 40 years of fracking in the US, there is now an industry standard,” Chris Faulkner, CEO of Breitling Oil & Gas.
EPA will take public comment on the draft guidance for 60 days upon publication in the Federal Register to allow for stakeholder input before it is finalized.
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