Legislation Could Change the Drill for Barnett Shale

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Published at: www.rigzone.com

Added Regulation and Higher Costs

June 9, 2009

Analysis by: GLG Expert Contributor

In 2004 the Environmental Protection Agency reviewed the drilling technique known as hydraulic fracturing finding that the practice, in use since the 1940's.  The process involves encasing a well in steel and concrete and then inject a mixture of sand, chemicals and 95% water; the casing protects ground water from contamination.  It is an effective method of producing natural gas.  In fact The Barnett Shale produces 6% of all gas used in the United States, according to Oil & Gas journal. The practice is presently regulated by states and not subject to the Safe Drinking Water Act and oversight by the EPA. Federal regulation on top of state regulation could add $150,00 to deep well costs, and reduce drilling.  Assuming a steady or increasing demand for natural gas as the economy recovers this artificial restriction on production capacity would result in higher costs.

Michael LynchConsultantMichael E. Lynch

American Petroleum Institute leads oil and gas industry in opposing EPA scrutiny

June 8, 2009

The Rigzone Newsletter quoted a report by Dave Michaels of McClatchy-Tribune Information Services of June 5 on proposed legislation that would increase the cost of drilling shale gas wells in the Barnett trend of the Forth Worth basin. Environmental groups are lobbying the Democratic Congress to make new regulations that would affect the hydraulic fracture completion technique now in use. Without hydraulic fracturing followed by proppant insertion, Barnett shale wells and those in other shale plays would be marginal or even non-commercial. The current technique is exempt from the federal Safe Drinking Water Act. Next week, Democratic lawmakers will introduce legislation which will require companies to report chemicals used in the injection water that is fundamental to the process. Residents in rural areas near Forth Worth have worried that oil field chemicals could invade their potable water wells. An Environmental Protection Agency study of 2004 found no threat to drinking water.