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Colorado Legislature Beefs-Up Fracking Regulations

December 15, 2011

The Colorado state legislature passed new laws this week intended to more closely regulate the natural gas extraction technique known as fracking. The most stringent in the country, the new rules will require drill companies to publish the exact content and concentration of chemicals used in extraction, information previously considered to be competitive trade secrets.

State lawmakers passed the bill unanimously on Tuesday and plan to put the regulation into effect by April of next year. It´s as yet unclear whether the passage of the new legislation was expedited by claims released last week by the U.S. Environmental Protection Agency that it had detected groundwater in Wyoming that had possibly been contaminated by nearby fracking operations.

The new laws will be similar to but more extensive than legislation put into effect in Texas earlier this year. Unlike drillers in the Lone Star State, companies in Colorado will now be required to report the concentrations of various chemicals in their extraction fluids.

For advocates of stricter drilling regulations, this specificity is exactly what they´ve needed to more closely monitor the industry.

“That´s the big advancer here. We´re getting a full picture of what’s in that fracking fluid´” Michael Freeman, a lawyer for the organization Earthjustice who collaborated with industry insiders to design the new laws, told P. Solomon Banda of the Associated Press (AP).

Even when not required to identify specific names of chemicals, drillers will still have to report the ingredient´s chemical family, which often leaves only a handful of possibilities for competing companies trying to reproduce their recipes.

While fracking–or hydraulic fracturing–has been in use by the industry for over half a century, it has come under increasing fire in recent years as drilling sites have slowly encroached upon more heavily populated urban centers, inciting fears that some of the toxic chemicals it uses may leak into nearby reservoirs of drinking water.

Interestingly, both politicians and industry leaders alike seem pleased with the new regulations.

According to a legal advisor with Colorado Petroleum Association, the new legislation constitutes a “good rule for the state and a workable rule for the industry.”

Similarly, Colorado´s democratic governor John Hickenlooper called the law “the fairest and most transparent rules on the transparency of frack fluids of any state in the country,” anticipating that it would become a “national model” for fracking regulation.

And Hickenlooper may be correct in his prediction, as states like Michigan and Pennsylvania are said to already be discussing similar measures.

In states like Arkansas, Montana, Texas, and Wyoming–which were previously considered to have the most stringent fracking laws–drillers are already required to release information about the types of chemicals used in their extraction fluids, though not the exact concentrations.

According to the industry website FracFocus.org, only a small number of fracking firms claim that the content of their extraction fluids constitute trade secrets. Companies participating in the voluntary website say that the fluid is predominantly made up of water and sand, and usually contains only a small quantity of dissolved substances such as petroleum chemicals, isopropyl alcohol and hydrochloric acid.

According to insiders, the legislation was the end-product of intense negations and a lot of give-and-take on the part of both drilling companies and environmental advocates.

“Everyone gave up something,” president of the Colorado Oil and Gas Association Tisha Schuller told Mark Jaffe of the Denver Post. “But we got a good rule.”

One of the major points of contention surrounding the legislation apparently centered on the issue of how to define ℠trade secrets´. Some members of the industry were worried that they would be required to disclose information that gave them a competitive advantage, while environmentalists concerned about companies using the term as a loophole to avoid reporting potentially hazardous chemicals.

After postponing the scheduled vote on Monday, both sides finally reached a compromise that will require companies to report all the chemicals they use as well as their concentrations but will not force them to reveal in which of their fluids they´re used.

Most in the fracking industry believe that this arrangement will provide sufficient protection from copy-cat competitors.

“We think that under these rules reverse-engineering won´t be possible,” said senior VP of Halliburton Rick Grisinger.

Currently, some thirty percent of the U.S. domestic supply of natural gas is obtained by hydraulic fracturing, which uses millions of gallons of the various water-based to break open underground rock and release trapped gas.

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Source: RedOrbit Staff & Wire Reports