With millions, if not billions, of dollars hanging over the ledge, the boom in the oil patch would go into a free-fall if drilling suddenly stopped.
Thousands of workers unemployed overnight, housing starts abandoned, businesses shuttered and bustling oil towns from Williston to Belfield emptying out instead of filling up are all part of a future few would prefer — even if they despair of the changes to land and lifestyle wrought by the upswing of oil.
Even with oil near $100 a barrel and 200 rigs drilling in North Dakota last week, the specter of some sort of free-fall caused by a federal push to regulate hydraulic fracture treatment weighs heavily on Lynn Helms. He’s the director of the Department of Mineral Resources, the one man most in charge of this seemingly unstoppable surge centered on the Bakken.
Every single well in the Bakken and associated formations is fracture-treated. By now, that amounts to 3,000 wells, a fraction of future oilfield development. Fracking, with high-pressure injections of water, sand and chemicals, has so far proved the only successful way to make oil flow from the dense source rock.
Helms believes the Environmental Protection Agency is on track to stop fracking as soon as January, when state regulators must write new rules for fracture treatment based on an EPA guidance document that is under review by the Office of Management and Budget.
The document will tell states how to comply with the federal Safe Drinking Water Act and write permits under the act’s underground injection control Class II well program when diesel fuels are used in fracking fluids, an authority the EPA said it has in a statement to the Tribune.
Here’s how Helms said he sees that evolving.
In January, the EPA will release the guidance document to states. Then, his department will write a new section of state rules to comply with the document. Those are referred to the State Industrial Commission for adoption, but first are opened for public hearing.
By January 2013, the state would be able to complete its rulemaking, which the EPA must first publish in the Federal Register, possibly in the first quarter of that year, before the state could begin permitting hydraulic fracturing.
In the meantime, Helms said, he believes there will be a moratorium on fracking because of the history of many-months moratoriums in Alabama, when the EPA, because of an environmental lawsuit, revoked Alabama’s underground injection program until the state wrote new rules specific to fracking under Class II well standards.
“I believe it will be stopped cold for 12 to 24 months. The best case is 15 months and that’s only if we red-lighted everything else and got nothing else done,” Helms said.
Three separate fracking moratoriums came and went in Alabama as the situation went through courts and appeals that were based on the reasoning that fracking is a temporary injection leading to production, unlike Class II saltwater disposal wells, which are injection wells for their lifetime.
Helms said drilling in Alabama never regained its pre-moratorium vigor.
Once the regulatory dust settles and the rules are in place, the process to permit fracking as Class II wells will be lengthy, at least if it must follow the same protocol as saltwater disposal well permitting.
Helms said there’s an area of review around saltwater wells, requirements to sample all existing water wells, surface rules that come into play, public hearings — all followed by an Industrial Commission order, a process that takes 60 to 90 days.
His message: Once any moratorium is over and rules are in place, the result will be a lengthy red-tape process for each and every fracture treatment.
This begs the question: If the EPA is using diesel as its handle to regulate fracking as a Class II well under the Safe Drinking Water Act, why not just eliminate the diesel? It’s a relatively small part of what goes into fracking fluid.
Helms said — and so does the national FracFocus Chemical Disclosure Registry for some 7,000 wells, including many in North Dakota — the typical amount of diesel is around .088 percent of the fracture fluid. That amounts to 4,400 gallons in 5 million gallons of fracking fluid.
Monte Besler, a fracture treatment consultant with a company called FracN8tr, said many companies have already eliminated diesel and use mineral or vegetable oil as the gelling agent that helps suspend sand particles in the injection fluid.
Diesel or some distillate gets used only when it’s very cold and other oils would freeze or when there’s no available alternative.
“If you didn’t have cold in North Dakota, probably no one would use diesel,” Besler said.
Helms said it may not be that simple.
The EPA has indicated it will define diesel fuel based on its physical and chemical characteristics, not with a precise Chemical Abstract Services number. A definition that broad could throw a blanket over any oil, even canola oil, if it has the same characteristics as diesel, Helms said. Mineral oil, used in fracking instead of diesel as well as for many household purposes, is a highly-refined petroleum product.
The State Industrial Commission recently sent a letter to the EPA that underscores its opposition to federal regulation.
The letter said, in part, “As late as 2008, EPA had done nothing with regard to nationwide regulation of hydraulic fracturing operations utilizing diesel fuels and continued to stand by its 2004 study finding that hydraulic fracturing poses little or no threat to Underground Sources of Drinking Water. The typical North Dakota Bakken frac contains 0.088% petroleum distillates. If EPA persists with regulation of diesel fuel hydraulic fracturing under UIC Class II along with a new and unique definition of diesel fuel, North Dakota oil and gas investment and jobs would come to a standstill, and potentially never return to the activity and growth we are seeing today.”
No one at the EPA returned phone calls for this story, including Ann Codrington, the acting director for EPA’s Safe Drinking Water Act program.
An EPA spokeswoman issued a statement in response to questions from the Tribune, but said it was attributable to the agency, not her.
The statement explained the agency’s authority and goals in developing guidance for fracking under the Class II underground injection control program. It said that the “EPA has not made a decision on the definition of diesel fuels at this time.”
The Legislature allocated $1 million in the recent special redistricting session for a legal challenge against the EPA. Helms said it’s likely North Dakota will band with other oil- and gas-producing states for an injunction while it asks the court to weigh in.
The EPA is once again studying the effects of fracking on drinking water, and aquifers at a well near Killdeer that blew out during fracture treatment have been sampled as part of the study.
At the very least, the EPA should await its own study results before proceeding with fracture treatment regulation, the Industrial Commission said in its letter.
Helms said, “The EPA needs to stop this until they finish their study, and then we can talk about who should regulate how.”