New study finds sharp drop in production with additional federal hydraulic fracturing regulations

WASHINGTON, June 9, 2009 - U.S. oil and natural gas production would drop significantly if Congress passes legislation to place additional federal regulations on the use of a widely used well-completion technique known as hydraulic fracturing, according to a new study. Jobs could be lost, government revenues would fall and the U.S. would be less energy secure.

If Congress were to place additional federal regulations on top of the state and local regulations that govern the oil and gas industry practice of hydraulic fracturing,the number of new U.S. wells drilled would plummet 20.5 percent over a five-year period, IHS Global Insight’s study, “Measuring the Economics and Energy Impacts of Proposals to Regulate Hydraulic Fracturing,” found. Lower development activity would potentially reduce natural gas production by about 10 percent from 2008 levels by 2014, and leave the United States more reliant on imported sources of natural gas and oil.

“Hydraulic fracturing is a safe, proven, 50-year-old technology that is critical to developing the natural gas used to heat homes, generate electricity, and create basic materials for fertilizers and plastics,” said API President Jack Gerard. “More than one million wells have been completed using this technology. Unnecessary regulation of this practice would only hurt the nation’s energy security and threaten our economy.”

Additional restrictions on use of types of hydraulic fracturing fluids would cause an even more dramatic decrease in production of both natural gas and of oil, the report found. By 2014, gas production could fall 4.4 Tcf or 22 percent, while oil production could slip 400,000 barrels per day or 8 percent.

Elimination of the use of hydraulic fracturing would be catastrophic to the development of American natural gas and oil, with a 79 percent drop in well completions, resulting in a 45 percent reduction in natural gas production and a 17 percent reduction in oil production by 2014, the study found.

With the country’s increasing reliance on unconventional resources, where over 95 percent of wells are routinely treated using fracturing, the impact of eliminating hydraulic fracturing on production would be “permanent and severe,” the report noted.

Late last month, the Ground Water Protection Council released a study that found regulation of oil and gas field activities, including hydraulic fracturing, is best accomplished at the state level where regional and local conditions are best understood and where state regulators are on hand to conduct inspections and oversee specific operations like well construction and testing and plugging.

Updated: June 9, 2009