Fracking Rule Could Slow Energy Revolution

Mark Green
Posted March 20, 2015

Some important context to the new federal hydraulic fracturing rule announced by the Bureau of Land Management (BLM). The chart below shows the recent trend in federal onshore energy development:

It’s not an inspiring picture. Since BLM deals with onshore energy, let’s look at oil and natural gas output together, measured in barrels of oil equivalent (boe). Federal onshore production has declined from 1.8 million boe in fiscal year 2009 to 1.6 million boe in FY2014, a decline of 11.3 percent, according to federal data.

Breaking out the natural gas production figures, the decline is more dramatic. Onshore production of natural gas in federal areas fell from 8.7 billion cubic feet per day (Bcf/d) in FY2009 to 6.8 Bcf/d in FY2014, a drop of 21.6 percent.

The reason is federal policy. Whether you’re talking about access to reserves or permitting red tape, the bottom-line result is declining production.

More context: Contrast those numbers with what’s happened on state and private lands from FY2009 through FY2014. Again, oil and natural gas measured in millions of barrels of oil equivalent, we see production growing from 11.1 million boe in FY2009 to 17.4 million boe in FY2014, an increase of 57.4 percent:

Now, against a backdrop of struggling energy development in areas controlled by the federal government, we have Washington announcing a new hydraulic fracturing rule that would impose new costs and delays on development, without improving existing state and federal regulations. Erik Milito, API director of upstream and industry operations:

“Despite the renaissance on state and private lands, energy production on federal lands has fallen, and this rule is just one more barrier to growth. Under the strong environmental stewardship of state regulators, hydraulic fracturing and horizontal drilling have opened up a new era of energy security, job growth, and economic strength. Increased production and use of natural gas has helped cut U.S. carbon emissions to a nearly 20-year low, and this decision only stands in the way of further progress.”

The reality is that state regulatory regimes and the officials who oversee energy development in the respective states are doing a good job – as was noted by former EPA Administrator Lisa Jackson when she was still in the administration. These regimes are tailored for each state’s geology, hydrology and other physical characteristics. Overlaying them with a federal rule could mean duplicative regulatory hoops for operators to hop through, unnecessarily delaying operations and driving up costs.   

It’s good that BLM is following the lead of states that already are using the FracFocus.org chemical disclosure registry for the public disclosure portion of the rule. Since April 2011, FracFocus has been providing the public with detailed information on specific wells and now covers more than 91,000 of them. Otherwise, it’s hard to see how the BLM rule will do anything but add to the downward-trending numbers discussed above. Milito:

“A duplicative layer of new federal regulation is unnecessary, and we urge the BLM to work carefully with the states to minimize costs and delays created by the new rule to ensure that public lands can still be a source of job creation and economic growth.”