Inside-the-Beltway Standard for American Energy

Last week, the Department of Interior released Bureau of Land Management’s proposed rules for hydraulic fracturing operations and well construction on federal lands. The fact is that states have been successfully regulating oil and natural gas operations for decades and are the best equipped to do so. A national standard for hydraulic fracturing and well construction makes me raise a few questions:

  1. Which state operations are these national standards closest to?
  2. How can one standard take into account the vast geologic differences between states?
  3. If oil and natural gas producers are operating according to a certain state’s standard that is more stringent, does this incentivize them to lower their standard?
  4. If it is more stringent, does this standard allow for flexibility that is often needed at the wellbore?
  5. Does a national standard override the progress being done at the state level?
  6. Does the federal government have the necessary funding and expertise to regulate?
  7. Will these new rules make it harder for America’s independent producers to gain access to America’s federal lands?

The answer to these questions will be determined in the rules and the application of these rules. But these problems could all be avoided if the administration let the states do what they have been doing – regulate oil and natural gas development safely and responsibly. When the federal government inserts itself into the process, there will inevitably be primacy issues. IPAA President Barry Russell also pointed out that America’s independent producers are already having a tough time gaining access and developing U.S. federal lands because of the burdensome bureaucracy of federal regulations.

The draft rules are an improvement from leaked drafts we have seen in the past, which did not utilize and proposed that operators would have to disclose their hydraulic fracturing additives before the fracturing process. This would be extremely difficult for operators, since the additives are finely tuned and often have to be changed right before fracturing for best results. 

However, the concern still stands that these new draft regulations, “which mandate one-size-fits-all regulations on hydraulic fracturing operations on public lands, will indubitably insert an unnecessary layer of rigidity into the permitting and development process.”

IPAA President Barry Russell continued,

“America’s public lands are extraordinarily diverse. Independent producers and state regulators understand the geographic and geologic differences of their states and have had a long and successful history in safely dealing with them. The federal government’s role should be to further empower the states to continue their safe regulation of hydraulic fracturing.”

IPAA’s position was referenced in the New York Times, Reuters, Pittsburgh Post-Gazette, CNBC, Bloomberg, San Francisco Chronicle, E&E News, The Hill, Platts’ Gas Daily, The State Journal, Gas Business Briefing, and more media outlets.

The final, most important question I pose to Interior is this and should be the question on which the administration’s energy policy rests: Will this new standard help or hurt production of America’s oil and natural gas resources?