$400,000 fine for Marcellus Shale blowout

By Andrew Maykuth, Staff Writer
The Philadelphia Inquirer
July 14, 2010

HARRISBURG - In the heftiest fine levied thus far against a Marcellus Shale natural-gas driller, state environmental officials socked a Texas company Tuesday with a $400,000 penalty for failures that caused last month's well blowout in central Pennsylvania.

John Hanger, secretary of the Pennsylvania Department of Environmental Protection (DEP), sharply rebuked EOG Resources Inc. for failing to maintain control of the Clearfield County well, which erupted June 3 and spewed natural gas and toxic wastewater for 16 hours before it could be capped.

Hanger said that EOG had employed only one mechanism to keep the high-pressure gas well under control and that that measure had failed at the hands of employees who were not certified in well-control techniques.

He also said EOG, which is based in Houston, wasted valuable hours by failing to promptly notify officials about the blowout.

Rather than calling DEP's 24-hour emergency line, the driller left three phone messages at night with a DEP employee who was on vacation. Then, the Texans twice tried calling the county sheriff, who in Pennsylvania is not responsible for emergency response. Finally, three hours after the blowout, EOG called 911.

"This incident was preventable and should have never occurred," Hanger said at a news conference Tuesday at which he presented the findings of an independent oil-industry consultant.

John G. Vittitow Sr., a Fort Worth, Texas, petroleum engineer hired by the DEP to investigate the accident, blamed it on human error and procedures that fell short of the industry's best practices.

"I don't know any company that would cut corners like this, on this kind of well," Vittitow said.

The DEP, in addition to the penalties aimed at EOG and a contractor, C.C. Forbes L.L.C., also issued an industry-wide edict Tuesday setting stricter well-closure procedures aimed at preventing similar accidents.

Gary L. Smith, EOG's regional vice president, said in a statement that the company regretted the accident.

"EOG has worked cooperatively with the PADEP to resolve all issues," he said. "We will be implementing the new operational procedures as defined in the letter to all gas well operators and look forward to resuming our activities in the Commonwealth."

The DEP, after being criticized for accommodating the natural-gas industry as the Marcellus Shale frenzy took hold, has adopted a more stern tone this year as criticism has mounted about the industry's practices. About 1,600 Marcellus Shale wells are expected to be drilled this year.

The EOG fine surpassed the $240,000 penalty that the DEP levied in April against Cabot Oil & Gas Co., a Texas driller whose wells in Susquehanna County were blamed last year for polluting an aquifer supplying drinking water to at least 14 households in Dimock Township.

By contrast, the EOG blowout at a rural Clearfield County hunting club resulted in modest damage: There were no injuries; the well did not ignite; and the site has been cleaned up. Though some of the 35,000 gallons of wastewater that the DEP says gushed from the well contaminated a nearby spring, Hanger said that the pollution appeared to be dissipating and that he expected no permanent damage.

But Hanger, who repeatedly has called on the industry to adopt "world-class" standards to match the magnitude of the Marcellus resource, said he intended to send a strong signal to the industry with Tuesday's announcement.

"It's vital, in my mind, that this industry has strong oversight for its own good and for the good of the people of Pennsylvania," he said.

Vittitow, DEP's consultant, said the accident occurred during a well-completion phase, when a contractor - C.C. Forbes - took over the site to clean out obstructions left in the well after the drilling process was finished.

Rather than having multiple barriers to prevent high-pressure gas from escaping from the well, Vittitow said, EOG employed a blowout preventer that had only one fail-safe mechanism. That device, a pipe ram, is designed to clamp around the drilling pipe, sealing off the well bore.

As gas began to leak, the pipe ram was closed. But EOG's on-site supervisor ordered the drill pipe to be pulled up through the clamped closure, damaging the pipe ram's rubber seal. Over the next 90 minutes, the drillers lost control of the well. With no other backup, gas and wastewater shot as high as 75 feet into the air.

"This was just a bad decision, and it caught up with them," said Vittitow. "They were just doing what they've done in other places."

The DEP's order to the industry Tuesday includes a directive requiring operators to have at least two functioning barriers in place during completion operations.

The Marcellus Shale Coalition, an industry trade group, said that most operators have already incorporated the new practices. "Our industry is committed to continuously enhancing and improving our operations, and leveraging the opportunities of the Marcellus in a manner that's safe, efficient, and beneficial to all Pennsylvanians," said Kathryn Z. Klaber, the coalition's executive director.

State Rep. Camille "Bud" George (D., Clearfield), chair of the House Environmental Resources and Energy Committee, who has called for more rigorous oversight of the industry, said he was troubled by EOG's "apparent disregard" of best industry practices.

"No human endeavor is going to be mistake-free," he said, "but the report suggests disregard for basic safeguards, which should trouble everyone."

Coincidentally, the DEP's announcement occurred the same day as the Pennsylvania Environmental Council released a 47-page report calling for a severance tax on gas production and greater regulation of the industry to avoid the state's experiences from unregulated extraction of coal and timber.

"We have to get this right," said Don Welsh, the council's president. "Pennsylvania has been through a whole lot of resource extraction in the past, and we were left a big bill to clean it up."

LINK

DEMAND ACCOUNTABILITY!

Re: Major drilling accident in NW PA.: Media banned from site. Threats of shooting, arrest

A Personal Testimony
by Michael Morrill
reported on Daily Kos
Mon Jun 07, 2010

An explosion at a natural gas well in northwest Pennsylvania resulted in a spill of at least a million gallons of oil and chemicals mixed with water. According to the AP report, there was a shower of gas and chemical-laden water shooting 75 feet into the air. The leak continued for at least 16 hours. The accident was so severe that the area was evacuated and the Federal Aviation Administration prohibited flights in the area.

When I heard of the accident on Friday afternoon, I immediately left the meeting I was attending in Washington, DC and headed for the site with my trusty Flip Camera in hand.

So where are the photos and video showing the extent of the pollution?

They don’t exist, because EOG Resources, the owner of the wells, won’t allow anyone on the site, especially with a camera. When I tried to shoot some video, they not only wouldn’t let me on the site, they told me I might be shot for being on their property and then sent thugs to chase me and threaten me.

Link to Michael Morrill's Daily Kos diary

I arrived around 7:30 PM and drove around the area trying to find the site. I asked a number of locals if they knew the site of the explosion. No one knew what I was talking about, so it wasn’t until about 9:00 that I finally stumbled upon the site. It’s about 5 ½ miles from the entrance to S.B. Elliott State Park in Clearfield County.

As I approached the site a man got out of a pickup truck and told me I would have to leave. I told him I just wanted to get some video of the cleanup. He said he couldn’t allow me on the grounds and I didn’t leave right away I would be arrested for trespassing.

In the morning I tried again and got the same answer from another man in a pickup truck.

I could see through the forest that there was work going on in the distance, but my little flip Camera couldn’t get anything but trees. I decided that maybe a hike through the woods was in order, so I drove a few miles to a point on the other side of the spill site. I chose an entrance point that was not marked as private property and hiked toward the site.

Along the way I saw still and flowing water with oily residue. Some of it may be from the spill, but most of it was uphill from the accident site. That means the water in this area is likely contaminated from the numerous gas wells being drilled.

I found a road on a ridge that appeared to head close to the accident site and walked about a half mile on that road when I was stopped by two men in a Gator. They asked me what I was doing out there and I said I was just taking a hike. They told me that I was on property owned by the Punxsutawney Hunt Club and the members didn’t appreciate trespassers. They told me, in a veiled threat, that I should leave now and as long as I was heading out I would probably not get shot.

I’m not one to back down easily, but I wasn’t ready to take a bullet for a grainy video of the spill site. I wished them a good day and turned back to my car, a couple of miles and bridgeless brook away. As I crossed the brook barefoot I noticed another pickup truck parking on the opposite hill, blocking the path. When I approached the truck two men got out. The older man got in front of me and said “Show me some ID.”

I asked him who he was and he grabbed my arm and told me I was on private property. I shook his hand off and continued walking. Without looking back, I told him there was nothing posted that indicated the land I was on was private property. He yelled to me, “We know where your car is. We called the police. You’ll be arrested when you get back to your car.” He then added, “We know you’re taking water samples.”

The truth is, I had filled up some drinking water bottles with samples of water from various sites along my hike. I’m not sure what use they will be, but I thought it was important to at least get something that could be independently tested.

When I got a few hundred yards from my car I could hear the last two men who confronted me. As I approached my car the older man took out an old disposable film camera and took my picture. I tried to get my Flip Camera to take some video of them, but the battery was dead and I only got a few seconds.

They tried to get me to stay and wait for the police to come, but I wasn’t about to test the fairness of the local criminal justice system. I told them to back off or be charged with assault, and susprisingly they complied.

As a parting shot the younger one said,” Don’t come back.” I replied, childishly, “I’ll do what I want.” He said, “If you come back you won’t leave.”

I got in my car and started to leave the way I came in. They passed me and I drove a safe distance behind them. Then I realized that I may be driving into a trap. When they turned a corner toward the spill site, I stopped and turned around. I drove a few miles in the wrong direction, but eventually found a connection to Route 153. And then home.

I have some video that I’ll be posting later today and tomorrow. It’s not very expository, but it’s all I could get. I’ll also be trying to find an independent lab that can identify the chemicals and oily residue in the water samples I took. I’ll post the results of those tests as I get them.

In the meantime, it’s important for the public to know what’s really going on at the spill site.

There has been very little news coverage of this major accident and part of the reason is the lack of access to the site. It’s hard to report when you have no information. It’s harder when the perpetrators are in full control of what little information has been released. “Nothing to see here,” EOG Resources assures us. “It was only a million gallons and we took care of it.”

If that’s the truth, it’s a huge accident that threatens local waterways that flow into the Susquehanna River and Chesapeake Bay. But what if it’s worse than that? We don’t know because there are no independent eyes and ears on the site. Haven’t we learned yet that we should never rely on the word of the people who caused the problem?

I’m calling on Governor Ed Rendell and Department of Environmental Protection Secretary John Hanger to use their offices to grant access to the spill site to the media, environmental organizations and the local population. It’s probably too late to see anything damning, but it will at least give us a picture of where the accident occurred so we can begin to ask the right questions and make sure any investigations are accurate and complete.

DEMAND ACCOUNTABILITY!

DEP Orders EOG Resources to Halt All Natural Gas Drilling Activities in PA

COMMONWEALTH OF PENNSYLVANIA
Dept. of Environmental Protection
Commonwealth News Bureau
Room 308, Main Capitol Building
Harrisburg PA., 17120

FOR IMMEDIATE RELEASE

06/7/2010

CONTACT:

Neil Weaver, Department of Environmental Protection

717-787-1323

HARRISBURG -- The Department of Environmental Protection today ordered EOG Resources Inc. to suspend its natural gas well drilling activities in Pennsylvania after a June 3 blowout at one of the company’s Clearfield County wells sent natural gas and at least 35,000 gallons of drilling wastewater into the sky and over the ground for 16 hours.

DEP Secretary John Hanger said that while the order bans all drilling and hydrofracturing, or fracking, operations for specified periods of time, the suspension will remain in effect until DEP has completed a comprehensive investigation into the leak and the company has implemented any needed changes.

“DEP staff, along with an independent expert, will conduct a detailed investigation of not just the incident that occurred last week in Clearfield County, but of EOG Resources’ drilling operations, as a whole, here in Pennsylvania,” said Hanger. “The Clearfield County incident presented a serious threat to life and property. We are working with the company to review its Pennsylvania drilling operations fully from beginning to end to ensure an incident of this nature does not happen again.”

The order prohibits EOG Resources from drilling activities up to seven days; from engaging in fracking operations up to 14 days; and from completing or initiating post-fracking operations for 30 days in any wells throughout the state. These actions and operations cannot resume until the department agrees that the investigation has been fully completed.

The results of the investigation will also help determine whether DEP should take additional enforcement action against the company, such as fines or penalties.

Hanger added that EOG Resources has been fully cooperative and in agreement with the department’s ongoing investigation and order.

The leak began at approximately 8 p.m. on Thursday, June 3, when the well’s operators lost control of it while preparing to extract gas after fracking the shale. As a result, natural gas and flowback frack fluid was released uncontrollably onto the ground and 75 feet into the air. The well was capped at around noon on June 4.
The EOG well pad is located in a rural area near the Penfield/Route 153 exit of Interstate 80 in northwestern Clearfield County, near Moshannon State Forest.

The department’s Emergency Response and Oil and Gas programs responded to the incident, along with the Pennsylvania State Police, the Pennsylvania Emergency Management Agency, and local fire and police departments.

PEMA elevated its activation level to coordinate resources among multiple state agencies and worked with PennDOT and the Federal Aviation Administration to institute a temporary airspace restriction above the well. The restriction was lifted at approximately 1:45 p.m. on June 4.

“Fortunately, the well did not ignite and explode, and there were no injuries to the well crew or emergency responders,” said Hanger. “Our preliminary assessment is that the environmental damage was modest as the frack fluid was contained and did not appear to reach any streams, but DEP is continuing its monitoring efforts because sometimes the impacts of a spill like this are delayed. We have noted that a spring in the area has shown a spike in conductivity and that discharge is being collected by EOG for proper disposal.”

The secretary noted that the company expects to have a more accurate estimate of the amount of fracking water that was leaked after it finishes draining the pits and waterboxes it deployed to collect the fluids. As of June 7, initial estimates totaled 35,000 gallons, although more was certainly released and the company believes this accounts for a majority of the leaked water.

DEP’s preliminary investigation has determined that a blowout preventer on the well failed, but the agency does not yet know if that failure was the main cause of the incident. The blowout preventer has been secured and will be one piece of the investigation.

EOG Resources, formerly known as Enron Oil & Gas Co., operates approximately 265 active wells in Pennsylvania, 117 of which are in the Marcellus Shale formation.

For more information, visit www.depweb.state.pa.us.

DEMAND ACCOUNTABILITY!

Gas, fluids spew for hours from blown-out Pa. well

By MARC LEVY and JENNIFER C. YATES
Associated Press Writer
KansasCity.com

A blowout at a natural-gas well in a remote area shot explosive gas and polluted water as high as 75 feet into the air before crews were able to tame it more than half a day later, officials said Friday.

The gas never caught fire, and no injuries were reported, but state officials worried about an explosion before the well could be controlled. The well was brought under control just after noon Friday, about 16 hours after it started spewing gas and brine, said Elizabeth Ivers, a spokeswoman for driller EOG Resources Inc.

Pennsylvania, historically an insignificant source of natural gas, is trying to adapt its laws to respond to a furious rush to tap a gas-rich shale formation under its land. The blowout could test the ability of state regulators, who promised an aggressive investigation into the accident. (see DEP Press Release below)

"The event at the well site could have been a catastrophic incident that endangered life and property," Department of Environmental Protection Secretary John Hanger said in a statement. "This was not a minor accident but a serious incident that will be fully investigated by this agency with the appropriate and necessary actions taken quickly."

If the agency finds that mistakes were made, it will take steps to prevent similar errors, he said. It was too early to tell the extent of any environmental damage, he said.

Details about the accident were still sketchy, but the agency was told that unexpectedly high gas pressure in the new well prevented the crew from containing it, said Dan Spadoni, a spokesman for the Department of Environmental Protection.

EOG declined to explain how the accident happened, citing the ongoing investigation. Public safety and protection of the environment are of the utmost importance, the company said in a statement.

President Barack Obama and others have touted exploration of shale as a major new source of clean, homegrown energy. However, lawmakers who are battling for more stringent oversight of such drilling to protect clean drinking water quickly seized on the accident.

"Incidents like this blowout are a reminder that there are dangers and that precautions must be taken to protect the health and well-being of Pennsylvanians," U.S. Sen. Bob Casey said in a statement.

Casey has sponsored a bill to require the industry to comply with the Safe Drinking Water Act and force it to disclose the chemicals it uses in its hydraulic fracturing processes - in which millions of gallons of water, sand and chemicals are blasted underground to shatter tightly compacted shale and release trapped natural gas.

Amy Mall, Senior Policy Analyst, writes on Switchboard, the staff blog of the Natural Resources Defense Council:

"Today a natural gas well blew out in a Pennsylvania state forest during a hydraulic fracturing operation. Officials have estimated that one million gallons of hydraulic fracturing fluid, including chemical additives, plus an undetermined amount of wet natural gas, has blown out of the well. Wet natural gas can contain highly flammable hydrocarbons, like propane and butane, and hazardous substances, such as hydrogen sulfide. These are separated out before natural gas makes its way to your stove or furnace.

Campers and others in the forest were evacuated. While no one wants this kind of toxic explosion in a state forest, imagine if it were near a school or hospital? In this case, the Federal Aviation Administration even had to issue flight restrictions. These hazardous substances will be carried by the air and will settle on land and vegetation. It will be very important to know what chemicals were being used in this hydraulic fracturing operation. Will the company doing the hydraulic fracturing disclose this information to the public?"

LINK

David Rensink, the incoming president of the American Association of Petroleum Geologists, said gas well blowouts are very rare and can be very dangerous to control, since a spark can set off an explosion.

Typically, a blowout preventer - a series of valves that sit atop a well - allows workers to control the pressure inside, he said.

Just such a device figured into the massive oil spill off the coast of Louisiana. The oil rig's blowout preventer was supposed to shut off the flow of oil in the event of a catastrophic failure but failed to do so.

The Pennsylvania well is on the grounds of a hunting club in a heavily forested section of Clearfield County, near Interstate 80 and about 90 miles northeast of Pittsburgh.

Houston-based EOG, formerly part of Enron Corp., was drilling into the Marcellus Shale reserve, a hotly pursued gas formation primarily under Pennsylvania, West Virginia, New York and Ohio that some geologists believe could become the nation's most productive natural gas field.

There are more than 1,000 Marcellus Shale wells in Pennsylvania alone, some of them within view of homes, farmhouses and public roads.

There were no homes within a mile of the well, and polluted drilling water was prevented from reaching a waterway, said Spadoni, the department spokesman.

On Friday afternoon, a worker blocked a dirt road to the site, while trucks hauling tanks to remove the polluted water streamed past him. He said he was not allowed to talk about what had happened.

The accident happened just after the crew finished hydraulic fracturing. The crew was clearing out debris from the well when gas shot out of it, Spadoni said.

Workers evacuated the site and contacted county authorities before 10 p.m., said John Sobel, a Clearfield County commissioner. A Pennsylvania Emergency Management Agency spokeswoman said the agency got word after midnight and within the hour notified the DEP. The DEP said it wasn't notified until 1:30 a.m., more than five hours after the blowout.

The polluted water flowing out of the well and into the woods was stopped by a trench and a pump installed by a contractor, Spadoni said. Companies that specialize in securing blown-out wells were called in, he said. ...

LINK to complete report

DEP Plans Thorough Investigation in to Marcellus Shale Well Blowout in Clearfield County

FOR IMMEDIATE RELEASE
06/4/2010

COMMONWEALTH OF PENNSYLVANIA
Dept. of Environmental Protection
Commonwealth News Bureau
Room 308, Main Capitol Building
Harrisburg PA., 17120

CONTACT:
Neil Weaver, Department of Environmental Protection
717-787-1323

EOG Resources Well Released Fracking Fluid, Natural Gas for 16 Hours

HARRISBURG -- Department of Environmental Protection Secretary John Hanger said today that his agency intends to investigate aggressively the circumstances surrounding a blowout at a Marcellus Shale natural gas well in Lawrence Township, Clearfield County, and take the appropriate enforcement action.

At approximately 8 p.m. on Thursday, June 3, the operators of the well, which is owned by EOG Resources, Inc., lost control of it while preparing to extract gas after hydrofracturing the shale. As a result, the well released natural gas and flowback frack fluid onto the ground and 75 feet into the air. The well was eventually capped around noon on June 4.

“The event at the well site could have been a catastrophic incident that endangered life and property,” said Hanger. “This was not a minor accident, but a serious incident that will be fully investigated by this agency with the appropriate and necessary actions taken quickly.

“When we arrived on scene, natural gas and frack fluid was flowing off the well pad and heading toward tributaries to Little Laurel Run and gas was shooting into the sky, creating a significant fire hazard. That’s why emergency responders acted quickly to cut off electric service to the area.

“Right now, we’re focused on limiting any further environmental damage, but once that work is complete, we plan to aggressively look at this situation and see where things went wrong and what enforcement action is necessary. If mistakes were made, we will be certain to take steps to prevent similar errors from happening again.” (Once again... -Splashdown)

DEP learned of the leak at approximately 1:30 a.m. on Friday after it was informed by the Pennsylvania Emergency Management Agency. DEP immediately dispatched its Emergency Response and Oil and Gas program staff to the site.

PEMA, which elevated its activation level to coordinate resources among multiple state agencies, also worked with PennDOT to initiate an airspace restriction above the well, which the Federal Aviation Administration authorized on a temporary basis earlier today. The restriction prohibits flights at and below 1,000 feet of ground level within a three nautical mile radius of the well site. The restriction is in effect until further notice.

The EOG well pad is located in a rural area near the Penfield/Route 153 exit of Interstate 80 in northwestern Clearfield County. Three other wells on the same pad that have been drilled and fractured remain plugged and are not in danger.

EOG Resources, formerly known as Enron Oil & Gas Co., operates approximately 265 active wells in Pennsylvania, 117 of which are in the Marcellus Shale formation.

For more information, call visit www.depweb.state.pa.us.

DEMAND ACCOUNTABILITY!

Chorus of operators calling for frac fluid disclosure grows

(But What Does It Mean???)
Fort Worth Business Press
By JOHN-LAURENT TRONCHE
April 26, 2010

When the nation’s largest oil and gas exploration and production company offered its support for making the chemicals used in hydraulic fracturing public, concerned U.S. residents who want transparency got perhaps their biggest boost from a somewhat unlikely source.

In a U.S. Securities and Exchange Commission filing, Irving-based ExxonMobil Corp. said it would support the disclosure of chemicals used in hydraulic fracturing. ...the injection of millions of gallons of water, sand and chemicals – so far not publicly disclosed by oilfield services companies – into the ground to break up porous shale and allow for enhanced recovery of natural gas and oil.

“ExxonMobil supports the disclosure of the identity of the ingredients being used in fracturing fluids at each site,” according to the April 13 filing. “While we understand the intellectual property concerns of service companies when it comes to disclosing the proprietary formulations in their exact amounts, we believe the concerns of community members can be alleviated by the disclosure of all ingredients used in these fluids.”

The company’s stance is seen as a move aimed at curbing possible federal regulation of fracing, which so far has been overseen by state agencies, such as the Railroad Commission of Texas. ExxonMobil’s statement also echoes similar stands by two other companies: Chesapeake Energy Corp. and Range Resources Corp., whose top executives last year offered their support for disclosure.

Although several big names support disclosure, transparency isn’t their decision to make. The oilfield services companies perform the process for the operators, and therefore must choose to make the chemicals public information, which isn’t likely.

...

The top three firms – Halliburton, Schlumberger and BJ Services Co. – either did not return multiple requests for comment by the Business Press’ time of publication or skirted the question of whether they would consider disclosing the chemicals used.

ExxonMobil can’t force services companies to disclose, said Lisa K. Vaughn, a partner in the Fort Worth office of Shannon, Gracey, Ratliff & Miller LLP, “but as they and the other bigwigs of the world put more pressure on the suppliers to disclose that might lead the,” push toward disclosure.

Operators “are beginning to feel legislative pressure against their potential environmental contaminants,” she added...

Insistence on safety

A driving force behind the move toward disclosure is public pressure.

“Part of what’s going on is this recognition by the oil and gas companies that there’s this fear by the public about what’s in the frac fluid, and this fear is caused by not knowing,” Vaughn said.

Despite public fears, the Railroad Commission of Texas insists the process is safe and effectively regulated.

Yadda yadda yadda:

“Even with the recent intense hydraulic fracing activity in the Barnett Shale of more than 13,000 gas wells, there have been no documented cases of groundwater pollution caused by fracing in Texas,” said Ramona Nye, a commission spokeswoman. “One reason for this is that the commission has strict well construction requirements that require several layers of steel casings and cement to protect groundwater. Another reason is that most of the fracing that is occurring, such as in the Barnett Shale, for example, occurs in geologically confined formations that are more than a mile deep. In contrast, the groundwater in the Barnett Shale region goes no deeper than 500 feet.

Meanwhile...

Although the Texas officials say no contamination has yet occurred, last week, about 135 Caddo Parish, La., families were evacuated after an EXCO Resources Inc. drilling crew reported “irregular pressure readings and signs of natural gas in the air” at a well site, according to KSLA-TV, a local news organization. Two wells of the three wells at the Dallas company’s site were cemented shut as a result; however, testing of private water wells also revealed at least 10 wells contaminated with natural gas, according to the Louisiana Department of Environmental Quality.

Little data available because chemicals untracked

The Railroad Commission of Texas does not require operators to list the specific chemicals used in their frac jobs; however, in the commission’s Form G-1, required for each well drilled, companies fill out how much water and sand they used, according to a commission spokeswoman. For example: 2.3 million barrels of water (which would include the chemicals) and 250,000 pounds of sand. (Each well’s drilling data is accessible to the public via the commission’s Web site.)

While the commission does not track how many wells drilled are fractured, “it is safe to assume that all of the more than 13,000 wells in the Barnett Shale have been hydraulically fractured at least once,” Nye said.

Both the state agency and the federal government are in the dark. The U.S. Occupational Safety and Health Administration requires companies to keep a list of the chemicals used at drill sites in case of accidental spills or an incident in which someone is exposed to the chemicals; however, OSHA itself does not have the information.

Oilfield services companies have resisted disclosure because they argue their formulas are proprietary.

“It’s the same concept as Coca-Cola – water, sugar and natural flavors,” said Vaughn, adding it’s that last vague component other companies want to know.

Couldn’t companies patent their recipes?

“It can be hard to get intellectual property protection for the recipes they’re using because those recipes can change day to day, week to week (and) site to site due to all these different variables,” she said.

Although companies claim their specific formulas are trade secrets, operators have sought to dispel concerns by shedding some light on the process; for example, Chesapeake Energy created a Web site, hydraulicfracturing.com, that reveals some of the chemicals – though not the amounts in which they’re used.

“What is not fully disclosed are the specific quantities of each chemical used in the blending of frac mixtures on location. That varies, well-by-well, and is proprietary to the service providers,” according to a company spokesman. “We have encouraged the providers to be more transparent with this information but we respect that they are in a highly competitive industry and have trade secrets to protect.”

And this is, of course, more important than public health and safety or protecting our most vital, irreplacable resource (water), among other environmental concerns.

Possible federal regulation

Last summer, four legislators from Colorado, New York and Pennsylvania introduced a bill aimed at giving the federal government oversight into hydraulic fracturing, arguing a process being used in more than half of the United States requires even-handed regulation across the board. Industry groups counter the bill would result in thousands of lost jobs and billions in unrealized revenue.

The FRAC Act, or Fracturing Responsibility and Awareness of Chemicals Act, would amend the Safe Drinking Water Act of 1974 to require oil and gas companies to disclose the chemicals they use in their hydraulic fracturing processes.

If companies opt to disclose, it’s likely it would be an all or none approach, because if just one company offered its formula it would put itself “at a business disadvantage,” Thompson said. “If there’s governmental regulation, then they’re all going to have to disclose.”

ExxonMobil has an interest in thwarting federal oversight; a stipulation in its proposed about $30 billion acquisition of Fort Worth’s XTO Energy Inc. says the former can walk away from the deal if Congress passes federal regulation.

Not all operators support disclosure

While some companies have offered their support for disclosure, EOG Resources Inc. will not. A March 25 proxy statement includes a proposal, expected to be put forth April 28 at the company’s annual meeting by a group of stockholders owning about 245,000 shares, that calls for a study into using “less toxic fracturing fluids, recycling or reuse of waste fluids and other structural or procedural strategies to reduce fracturing hazards.”

EOG Resources’ Board of Directors opposes the proposal, calling the process “a well-established reservoir stimulation technique” that poses “minimal impact to the environment and to human health.” The board recommends shareholders vote against the proposal. (An EOG Resources spokeswoman said the company would not provide further comment.)

A virtually identical proposal in ExxonMobil’s proxy statement, submitted by San Francisco’s The Park Foundation, also will receive a no vote by the company’s board of directors; however, as previously noted, ExxonMobil does support disclosure. (It's an easy public relations ploy... looks good, costs nothing.)

Editorial comments by Splashdown in red.

LINK

DEMAND ACCOUNTABILITY!

Drilling company shareholders push for proxy votes for more company disclosure

A far-reaching shareholder effort seeks to put environmental issues front-and-center at annual meetings of oil and gas companies active in the Marcellus Shale region.

By David Falchek (Staff Writer)
thetimes-tribune.com
April 12, 2010

Shareholders from environmentally conscious mutual funds, foundations, investment houses and the New York State Common Retirement Fund have successfully put proposals on the annual meeting agenda that would urge more disclosure and transparency of the possible environmental effects and liability risks of hydraulic fracturing. Hydraulic fracturing involves pumping water with chemical additives into a rock formation under pressure to fracture the rock and release natural gas.

Cabot Oil & Gas Corp. and EOG Resources Inc. challenged the shareholder initiative claiming the requests were "micromanagement." The Securities and Exchange Commission backed the shareholder initiatives, which will be put to a shareholder vote.

Other companies receiving the proposal, but not having issued their proxies, include Chesapeake Energy Corp., XTO Energy Inc., and Ultra Petroleum.

The goal of the effort is not to get attention of the public, media, or policymakers. The groups want the attention of shareholders, and by extension, management.

...Typically, any shareholder with more than a $2,000 stake in a company can put certain proposals before shareholders.

Most companies resisted, first by refusing to respond to questions, then fighting to keep the proposal off the ballot. The measures ask management to prepare a report on the environmental impact of fracturing and to set a course for minimizing the chance of environmental harm.

...

Management tends to see such shareholder activism as a nuisance. But Rob Whalen, spokesman for $130 billion New York State Common Pension Fund, the force behind the Cabot initiative, said the push for environmental responsibility is in the best long-term interests of the company.

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The fund reached agreements with Range Resources Corp. and Hess Corp. Range plans to put extensive information on its company Web sites.

"Our hope is that other companies would work with their shareholders the way these companies have," Mr. Whalen said. The fund's negotiations with Chesapeake have collapsed and the company is trying to keep the proposal off the ballot, he said. Discussions with XTO, which is entertaining a takeover bid by Exxon Mobile Corp, have slowed.

In a letter to the fund, Hess agreed to show "public concern regarding the use of chemicals in fracturing and potential risks to the environment and human health." This is a departure from the industry position that conventional fracturing poses little, if any, environmental or health risks.

In their proxy statements, Cabot and EOG Resources Inc., expressed their objection to the proposal, denying any documented case of groundwater being contaminated by fracturing and depicting the process as posing little or no threat to human health or drinking water.

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