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The Problem with Duplicate Fracing Regulations

American Petroleum Institute‘s Chief Economist John Felmy has warned policymakers that unnecessary duplicate regulations could obstruct the development of unconventional oil and gas plays in the US. He pointed out at a news conference in Washington, DC that these plays have already created jobs and helped improve economic conditions in many areas of the country.

Mr. Felmy restated API’s position that regulation by state agencies is best suited for shale development and techniques like hydraulic fracturing, or fracing. He particularly noted the “North Dakota Miracle,” which turned that state into the number two oil producer in the nation and reduced unemployment to three percent while increasing incomes overall. He also highlighted other successes in states such as Texas, Arkansas, Ohio, Pennsylvania, and Louisiana. API and the industry are getting involved in states to raise awareness about the economic benefits of shale, including doing workshops in shale states. API has also issued fracing best practice guidelines, which can be helpful for a discussion of safety standards and industry safeguards. These standards include information about well construction and integrity, water management, mitigating surface impact, environmental protection, and isolating potential flow zones during well construction.

Aside from these statements regarding state regulations, Mr. Felmy also spoke at a recent DC conference about the possibility that New York may lift its high-volume fracing ban. New York is home to part of the Marcellus Shale, and there is potential there for growth and development. Fracing has taken place in New York since the 1950s, and horizontal wells since the 1980s. Both are legal. But newer technology with high-volume fracing, which makes it possible to get to oil and natural gas that was unreachable before, has been banned since 2008.

There is talk by state officials of lifting the ban on high-volume hydraulic fracturing in at least some areas of the state. Governor Andrew Cuomo talked to reporters last summer about lifting the ban in struggling counties on the Pennsylvania border, if the towns approve of the use of the fracing technology. Mr. Felmy said he was hopeful the Governor would follow through and asserted that polls show a large majority of New Yorkers believe the oil and gas industry and natural gas development will bring jobs to the state. A 2011 study commissioned by API showed that, were the ban lifted, the state could see over 47,000 total jobs created in 2015 and over 64,000 in total jobs in 2030, up from the current estimate of 14,800 jobs for both years. In addition, lifting the ban in New York could result in revenues of $83 million per year by 2015 and $456 million per year by 2030.

Mr. Felmy said that “(w)e remain committed to safe and responsible development of our shale energy resources and to working closely with the states to ensure effective, appropriate regulation.”

See Our Related Blog Posts:

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