Natural-Gas Drilling Endangers Groundwater Supplies

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“Halliburton (HAL) and other gas-service giants
are fighting to keep secret the potentially
hazardous chemicals they use …”

“Halliburton threatened to cease natural-gas
operations in Colorado if regulators there
persisted in demanding the chemical recipe …”

” … regulators have only lately sought to learn more …”
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Business Week
November 11, 2008

Does Natural-Gas Drilling Endanger Water Supplies?
A debate is heating up over whether the
fracturing technique used in natural-gas drilling
could result in chemicals contaminating drinking
water

By Abrahm Lustgarten

Natural-gas operations are proliferating from
Wyoming to New York. At the same time,
Halliburton (HAL) and other gas-service giants
are fighting to keep secret the potentially
hazardous chemicals they use to split thick
layers of rock and release the fuel beneath.

Some regulators and many environmentalists worry
that the fluids injected into many U.S. gas
fields could be contaminating drinking water with
benzene, methanol, and other toxic substances.
The industry counters that its methods are safe.
Drillers point to a 2004 study by the U.S.
Environmental Protection Agency that supports
their position, as well as a key legislative
exemption from federal oversight they won in 2005.

The debate is heating up as reports of water
pollution near gas drill sites accumulate and the
incoming Obama team considers reversing a recent
Bush Administration move to permit more drilling
in Utah. A close look at the EPA’s 2004 study
reveals that the agency may have played down
evidence of health dangers. And now some regional
EPA officials say it’s time for the industry to
disclose precisely what it’s pumping into the
ground.

Energy companies are taking a tough stance. Last
summer, Houston-based Halliburton threatened to
cease natural-gas operations in Colorado if
regulators there persisted in demanding the
chemical recipe used in a common drilling process
known as hydraulic fracturing. Using this method,
drillers shoot vast quantities of water, sand,
and chemicals into the earth to break up rock and
release gas. “A disclosure to members of the
public of detailed informationŠwould result in an
unconstitutional taking of [Halliburton’s
intellectual] property,” the company said in a
filing to Colorado’s Oil & Gas Conservation
Commission. The industry has adopted similar
positions in New York, Wyoming, and New Mexico.

“Competitive Advantage”

Halliburton says its reluctance to release
information about drilling chemicals reflects
only a desire to protect valuable trade secrets.
“If these formulas were to become available to
other companies, it is possible that we could
lose our competitive advantage with respect to
those companies, not only in Colorado but
throughout the world,” says Halliburton
spokeswoman Diana Gabriel. Rival drillers have
similar motives for their secrecy, according to
the Independent Petroleum Association of America,
a Washington trade group.

In Colorado, Halliburton recently reached a
compromise with regulators, but it’s one that
appears to favor the industry. The company agreed
in August to disclose the chemicals it uses in
hydraulic fracturing to state health officials
and regulators, though not to the public. But the
agreement applies only to chemicals stored in
drums that contain 50 gallons of drilling fluid
or more. As a practical matter, drilling workers
in Colorado and Wyoming say in interviews that
the fluids are often kept in smaller quantities.
That means at least some of the ingredients still
won’t have to be disclosed. Halliburton didn’t
respond to questions about the Colorado
compromise.

Regulators “will never get [the chemical data],”
predicts Bruce Baizel, a lawyer with the Oil &
Gas Accountability Project, a nonprofit in
Durango, Colo. “Not unless they are willing to go
through a lawsuit.” So far such a suit hasn’t
been filed in Colorado-or anywhere else-since
regulators have only lately sought to learn more
about the effects of hydraulic fracturing.

Three companies-Halliburton, Schlumberger (SLB),
and BJ Services (BJS)-control the vast majority
of the $15 billion hydraulic-fracturing market.
They work as subcontractors for the world’s
largest natural-gas developers, including BP
(BP), Shell (RDSA), Chesapeake Energy (CHK), and
Chevron (CVX). The drillers have zealously
refused to reveal the combinations of chemicals
they use in fracturing. “It’s like Coke
protecting its syrup formula for many of these
service companies,” says Scott Rotruck,
Chesapeake’s vice-president for corporate
development. Chesapeake and its contractors are
facing disclosure demands from New York state
officials before they can drill in a massive
Appalachian gas reserve known as the Marcellus
Shale. Schlumberger and BJ Services didn’t
respond to requests for comment.

Chesapeake, Halliburton, and others in the energy
industry say hydraulic fracturing is entirely
safe. They point to the 2004 EPA study concluding
that the process was not dangerous and did not
warrant further study. Fracturing fluids aren’t
necessarily hazardous, can’t travel far
underground, and there is “no unequivocal
evidence” of a health risk, the EPA concluded.

The report’s release followed years of industry
lobbying to limit study of hydraulic fracturing.
After the EPA’s study, Congress in 2005 exempted
hydraulic fracturing from the Safe Drinking Water
Act. That effectively eliminated EPA jurisdiction
over the drilling technique and left oversight to
state regulators and, in the case of federally
owned land, the U.S. Bureau of Land Management
(BLM), an agency often characterized as friendly
to industry.

“I think fracturing has been given a clean bill
of health,” contends Kenneth A. Wonstolen, an
attorney who represents the Colorado Oil & Gas
Assn. “You have intervening rock in between the
area that you are fracturing and the areas that
provide water supplies. The notion that fractures
are going to migrate up to those shallow
formations-there is just no evidence of that
happening.”

Thanks in large part to hydraulic fracturing, which is a

less expensive way to get at deep deposits,
natural-gas drilling has vastly expanded across
the U.S. in recent years. In 2007 there were
449,000 gas wells in 32 states, 30% more than in
2000. Domestic gas is widely viewed as one
potential means to wean the nation off imported
oil. Burning natural gas, which is primarily used
to heat homes and make electricity, emits 23%
less carbon dioxide than burning oil. Gas is the
country’s second-largest domestic energy
resource, after coal.

But as gas drilling has spread-and encroached on
residential areas in some states-new questions
are surfacing about whether the fluids used in
fracturing cause water contamination. According
to the Interstate Oil & Gas Compact Commission, a
multistate government agency, nine out of 10 gas
wells in the U.S. rely on the fracturing
technique. The concern is that dangerous
chemicals may escape from some well sites as a
result of leaky waste pits, spills caused by
worker negligence, or underground leaching.
Evidence of Contaminated Wells

Serious episodes of water contamination near
drilling sites have been documented in seven
states: Alabama, Colorado, Montana, New Mexico,
Ohio, Texas, and Wyoming, according to public
records and interviews with state and federal
officials. Numerous incidents of contamination
have occurred in western Colorado, where drilling
has expanded swiftly. In 2004 a well casing
shattered beneath a rig at Divide Creek, a
tributary of the Colorado River, which supplies
water to seven states. Dangerous levels of
benzene turned up in groundwater and stream
samples, state records show. Benzene is a
carcinogen, according to the EPA, and has been
linked to aplastic anemia and leukemia.

“The gas companies tell us it’s impossible for
the water to become contaminated,” says Lisa
Bracken, a resident of Silt, Colo., who draws her
drinking water from Divide Creek. “But it’s
increasingly common.ŠWe have no idea what to
protect ourselves from.”

In June a rancher in Parachute, Colo., was
hospitalized after he drank well water from his
tap. Tests showed benzene in his water. The
Colorado Oil & Gas Conservation Commission blamed
four gas operators in the area for spilling waste
fluids. An investigation is continuing.

Pointing to such episodes, several experts in the
EPA’s regional office in Denver have begun to
raise questions about the agency’s conclusion in
its 2004 report that hydraulic fracturing is
safe. “We’ve kind of reached the tipping point
where the impacts are there,” says Joyel Dhieux,
an EPA scientist in Denver who reviews the
effects of industrial projects.

In rural Sublette County, Wyo., an area the size
of Connecticut with two mountain ranges but no
stoplights, recent testing by federal and state
officials near one of the nation’s largest gas
fields found 88 contaminated water wells
stretching over 28 miles. Fifteen contained
benzene, in one case at more than 1,500 times the
amount the EPA says is safe, according to the
Bureau of Land Management. Wyoming regulators and
the BLM, which both assessed the situation,
minimize the significance of the contamination.
They attribute the spills to leaky trucks, saying
improved valves would address the problem.

But the EPA’s Denver-based regional water expert,
Gregory Oberley, isn’t convinced: “You’ve got
benzene in a usable aquifer, and nobody is able
to verbalize well, using factual information, how
the benzene got there.” In written statements,
regional EPA officials formally rebuked the BLM
for not requiring a more thorough cleanup and
investigation of the contamination. In September,
the BLM approved 4,400 new wells in Sublette
County.

A list of some of the ingredients for fracturing
fluids has been pieced together by
environmentalists and regulators who have scoured
drillers’ patent applications and government
records, such as worker-safety forms required by
the U.S. Occupational Safety & Health
Administration. Of the more than 300 chemicals
thought to be in use by drillers, more than 60
are listed as hazardous by the federal government.

But the exact recipes drillers use, including
chemical concentrations and volumes, aren’t
publicly known. Researchers say that without that
information, they can’t vouch for the safety of
the drilling process or precisely track the
effects of hydraulic fracturing. “I am looking
more and more at water- quality issues [related
to natural-gas drilling],” says the EPA’s Dhieux.
“But if you don’t know what’s in [the fracturing
fluid], I don’t think it’s possible.”

The gas industry says disclosure would only make
people nervous. “We have a proven process in
place to protect groundwater,” says Doug Hock, a
spokesman for Encana, a Canadian company that
drills in Wyoming and Colorado. Information about
the chemicals used in fracturing is complex and
could unnecessarily frighten the public, he adds.
“Given that [environmental groups] have used this
information to create fear without scientific
basis, it’s little wonder that industry is
reluctant to provide further information.”

The industry relies heavily on the 2004 EPA
study. But that 424-page report’s conclusions
appear, on close examination, to ignore some of
its own findings. The report actually notes that
fracturing fluids migrated unpredictably through
rock layers in half the cases studied in the U.S.
The agency characterized some of the chemicals as
biocides and lubricants that “can cause kidney,
liver, heart, blood, and brain damage through
prolonged or repeated exposure.” The report also
noted that as much as a third of injected fluids
used in hydraulic fracturing remains in the
ground and is “likely to be transported by
groundwater.”

In connection with the report’s release, service
companies voluntarily agreed to stop using diesel
fuel in fracturing fluid because it is one
possible source of benzene. But that agreement,
according to the EPA, isn’t legally enforceable,
and the agency acknowledges that it hasn’t
checked to see whether diesel is still being used.

Top officials at the agency’s headquarters in
Washington stand by the study’s conclusions, says
Roy Simon, associate chief of the Prevention
Branch of the EPA’s Drinking Water Protection
Div. “Since the agency has not conducted a more
comprehensive study for all hydraulic fracturing,
we do not have further opinion,” Simon explains
in an e-mail. Asked whether the EPA can
confidently say that drilling is safe, Simon
adds: “The EPA does not deny that oil and gas
production can result in the types of complaints
noted in your examples. However, addressing these
types of complaints, including hydraulic
fracturing and its associated fluids (other than
diesel fuel), is beyond the authorities of the
Safe Drinking Water Act.”

One of the report’s three main authors, Jeffrey
Jollie, an EPA staff hydrogeologist, cautions
that the study was narrowly focused and has been
misconstrued by the gas-drilling industry. The
study looked at the effects of fracturing in
so-called coalbed methane deposits; it did not
consider the above-ground impact of drilling or
what goes on in many of the large new gas
reserves being developed today.

“It was never intended to be a broad, sweeping
study,” Jollie says. “I don’t think we ever
characterized it that way.”

Lustgarten is a reporter with ProPublica, a
nonprofit journalism organization in New York.
For more on the controversy surrounding
natural-gas drilling, go to
http://www.propublica.org and to
http://bx.businessweek.com/oil-and-gas.

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