Leaky Wells Spur Call for Stricter Rules on Gas Drilling

Sept. 17 (Bloomberg) — A study that blamed natural gas
drilling for water pollution in two states has spurred calls for
stricter regulations to keep wells from leaking methane into

The study backed the oil and gas industry in one respect:
It discounted hydraulic fracturing, or fracking, as the source
for harmful methane in water. Some environmentalists contend
that by blasting rock with a mixture of water, chemicals and
sand, producers can force the gas into drinking water near the

The analysis, published in the peer-reviewed Proceedings of
the National Academy of Sciences, found instead that leaks in
the steel-and-cement casings surrounding the well bore were to
blame. Imperfections in the seal allowed gas to escape before it
reached the surface, making water undrinkable and in some cases

“The study appears to be attracting a lot of attention for
the sometimes sleepy issue of well construction,” said Scott
Anderson, a senior policy adviser at the Environmental Defense
Fund, who has worked with gas driller Southwestern Energy Co. to
develop well integrity guidelines. “This will help underscore
the importance of recent and still-needed revisions in state
regulations governing the drilling of wells.”

Record Levels

Fracking has pushed natural gas production to record levels
in the U.S., lowering energy costs, supplanting higher-carbon
coal in power generation and creating thousands of jobs. It has
boosted industries like chemical makers that use it as both an
ingredient for their products and a fuel. The process has been
dogged by questions of its environmental risks, however, with
groups like the Sierra Club pressing for stricter national rules
to guard against water contamination.

The Bureau of Land Management, part of the Interior
Department that regulates oil and gas production, three years
ago said it planned to update rules for natural gas production
on federal lands, given the increased development enabled by
hydraulic fracturing, or fracking. The rules haven’t been

Bob Abbey, the bureau’s director when it proposed the
rules, said federal standards for well construction are key to
limiting the risks of water pollution from drilling. The
proposed rule will also focus on the release of information
about the chemicals used in fracking, and the disposal of
wastewater produced in the process.

Federal Rules

“There are some good companies operating out there, and
there are some not so good ones,” Abbey said. Federal rules can
“provide assurance to the public that drilling can be done
safely,” he said.

Jessica Kershaw, a spokesman for the Interior Department,
said a draft of proposed rules has been sent to the White House
for review. The new rules will “bring these requirements into
the 21st century to keep pace with modern best practices,” she
said in an e-mail.

As proposed, the BLM rule would require testing for leaks
before hydraulic fracturing begins. Wells that penetrate
underground drinking water sources also would have to record
data on their cementing of wells to prevent leaks, and report
the results to the government.

Producer Objections

The draft could still be rewritten by the administration of
President Barack Obama before the rule becomes final. Some
producers objected to the proposal, saying tests would delay
fracturing and tie up expensive rigs.

Another critical component, Abbey said, is having enough
inspectors to ensure the standards are being followed.

States also have updated and toughened drilling rules,
though advocates said more is required.

Pennsylvania tightened its regulations on well casings in
February 2011 after concluding that wells drilled by Cabot Oil &
Gas Corp.
had leaked methane into nearby water wells.

The state also set standards for cement, used to seal the
casing to keep gas from leaking. Reported cases of water supply
contamination by stray gas from wells fell to two last year from
12 in 2010, according to the Pennsylvania Department of
Environmental Protection.

Texas tightened requirements on well construction including
casing in May 2013.

Wells must be tested to withstand the maximum pressure
expected during fracking, and any failed test must be reported
to the state, according to a statement by the Railroad
Commission of Texas, the oil and gas regulator.

Colorado Rules

Colorado, meanwhile, requires the casing to extend from the
surface to at least 50 feet below the groundwater aquifer at the
site, according to an October 2011 report from the State Review
of Oil & Natural Gas Environmental Regulations, a nonprofit that
works with states on drilling and production standards.

The group has received funding from the U.S. Environmental
Protection Agency, the U.S. Department of Energy and the
American Petroleum Institute.

Wells must be pressure-tested in Colorado. The state
imposed tighter casing standards in Garfield County, where
water-well contamination has been reported, and for areas where
gas is known to be under exceptionally high pressure, according
to the State Review report.

Rob Jackson, a professor of earth sciences at Stanford
University who helped write the study released Sept. 15 on leaks
in Pennsylvania and Texas, said new rules are required to reduce
pollution risks.

Stringent Standards

“We should be comparing states and adopting the most
stringent standards we can,” he said in an interview.

A number of industry operators say that fracking poses
little to no risk of fouling water supplies, although shoddy
wells have the potential to do so. The more the distinction can
be made, “it allows a rational conversation to take place,”
said Paul Goodfellow, a vice president for Royal Dutch Shell Plc
who helps oversee shale drilling in the U.S. and Canada.

“We’ve spent a fair amount of time talking about well
construction,” said Goodfellow, who sits on the board of a non-profit that advocates for more environmentally friendly drilling
practices. “Regulation is critical in this space, but even more
important than good regulation is enforcement.”

While much of the debate over drilling has focused on
fracking, Jackson said the general public doesn’t care in what
way drilling posed risks to drinking water, only that it did.

“The differentiation between fracking and well integrity
is important to the professionals, but to the public they don’t
care about that distinction,” Jackson said. “Fracking and
horizontal drilling has enabled the whole process, and they
don’t care what step their water has been harmed by.”

To contact the reporters on this story:
Jim Snyder in Washington at
Jim Polson in New York at
Bradley Olson in Houston at

To contact the editors responsible for this story:
Jon Morgan at
Susan Warren at
Steve Geimann

About BloombergNEF

BloombergNEF (BNEF) is a strategic research provider covering global commodity markets and the disruptive technologies driving the transition to a low-carbon economy. Our expert coverage assesses pathways for the power, transport, industry, buildings and agriculture sectors to adapt to the energy transition. We help commodity trading, corporate strategy, finance and policy professionals navigate change and generate opportunities.
Sign up for our free monthly newsletter →

Want to learn how we help our clients put it all together? Contact us