Wed August 3, 2011

Oil and Gas Industry Warms to Hickenlooper Plan

Governor John Hickenlooper wants to force oil and gas companies in Colorado to publicly disclose the chemicals in their hydraulic fracturing fluids.  The practice known widely as “fracking” has been subject to scrutiny lately as reports of groundwater contamination near gas wells have escalated around the country.  The Governor made the surprise announcement of his plans while delivering the opening speech yesterday at a Colorado Oil and Gas Association conference in Denver. 

For most of the speech, Hickenlooper was his folksy, at-ease self, reminding the crowd that he once sat in their shoes as a petroleum geologist. He stressed the economic importance of the oil and gas industry to the state, and he even went as far as to say that there is little, if any, chance of groundwater pollution from wells that are hydraulically fractured in Colorado.  Hickenlooper said unlike in eastern states, the fracking here mostly occurs in tight-sand formations thousands of feet below the water table.

"It’s almost inconceivable that we would ever contaminate, through a fracking process, groundwater," the Governor said.  "And yet some of the reports have created the impression that this happens and it’s something that we should be fearful of." 

But then he dropped this small bomb:  regardless of there being no apparent danger, his administration plans to implement a mandatory disclosure rule anyway; one that requires companies to reveal to the public the chemical ingredients in their fracking fluids.  Right now, companies only have to disclose that to state regulators. 

Hickenlooper said this would put a skeptical public at ease while allowing the industry to more efficiently go about their business.

"We don’t have to say what the percentages are, but we should say what the components are because that becomes a key part of building this trust and this relationship," Hickenlooper said.

Mandatory over Voluntary

The call was seen as a surprise in some corners of the conference, in others, an astute political move to coax the industry into a rule they’ve long despised. 

Hickenlooper put it this way to reporters after the speech: "What I keep saying is, it’s for the benefit of the oil and gas industry to have this trust and this relationship with the public."

Indeed, the oil and gas industry that once called such mandatory disclosure laws anti-business because they forced companies to give up proprietary information, has begun to soften its stance of late. 

This was especially apparent during a news conference later in the afternoon when Colorado Oil and Gas Association president Tisha Conoly-Schuller noted that most of her members are already voluntarily reporting the chemicals used in fracking fluids to a state-run website.

"We’d like to make sure that landowners know that that information is available right now," Conoly-Schuller said. "They don’t need to wait and see if a rulemaking process happens."

But Conoly-Schuller said her group would be at the table should the state look to formally change the reporting rules from voluntary to mandatory.  

Some companies are already on board. 

State-based Regulation

Texas-based Anadarko Petroleum Corporation is one of the biggest operators in gas-rich northeast Colorado and spokesman John Christiansen said the Governor’s push makes sense.

"If you want to build trust in new communities where you’re starting to do business, you need to be transparent in how you do it," Christiansen said. "You need to share the operations and explain how they’re done."

Along that theme yesterday, the industry announced its own water quality initiative whereby companies will voluntarily take part in a baseline groundwater sampling program near their gas wells.  Data comparing water quality before and after the wells are fracked will then be sent to state regulators and made public.  The industry expects about 90% of the wells drilled this year alone to get tested. 

'Head in the Sand'

Conservationist Frank Smith with the Grand Junction-based Western Colorado Congress applauds the industry’s proactive move.

"However this is voluntary, and mandatory is where we should be starting and no it should not only be on one well, we should be looking at our 43,000 wells," Smith said. 

Smith offered an equally skeptical rebuttal to Governor Hickenlooper’s assessment that fracking isn’t a risk to Colorado’s groundwater.

"We’re a little concerned about that cavalier attitude and we think that judgment should be reserved until after additional data is collected," Frank said.  "How can the ostrich find a problem with the weather when his head is in the sand?"

Smith and other conservationists want a national public disclosure law with more teeth, something much of the industry still vehemently opposes.  A bill by Colorado Democrat Diana DeGette doing just that faces an uncertain future in the current, polarized Congress. 

Meanwhile, a timeline for Colorado’s plans is too uncertain.  No formal rulemaking process has been set. But Governor Hickenlooper said Tuesday he’d like the state disclosure rule to be enacted by year’s end.