UPDATE 1-EPA asked to study gas-drilling technique

* Environmental groups seek hydraulic fracturing study

* Some fear contaminants but energy firms say method safe (Adds EPA reaction, details of process)

By Jon Hurdle

PHILADELPHIA, March 2 (Reuters) - Dozens of environmental groups have urged the U.S. Environmental Protection Agency to study the hydraulic fracturing technique of extracting natural gas, amid concerns it contaminates drinking water with toxic chemicals.

The 63 groups -- including the influential Sierra Club, Natural Resources Defense Council and Earthjustice -- asked the federal agency to expand a current probe of coal-bed methane extraction to include hydraulic fracturing and other forms of oil and gas exploration.

The groups made the request to the EPA last week and disclosed it in a statement on Tuesday.

The EPA said it will work with Congress to study fracturing "as soon as possible" because it may be dangerous.

"There are compelling reasons to believe that hydraulic fracturing may impact ground water and surface water quality in ways that threaten human health and the environment, which demands further study," the agency said in a statement.

Some residents who live near gas rigs in states from Pennsylvania to Wyoming say their water has become undrinkable since drilling companies fractured the wells and they complain of sickness and skin rashes after using the water.

Energy companies say the process is safe and there is no proven link between fracturing and water contamination.

Jeff Eshelman, a spokesman for the Independent Petroleum Association of America, said he had not seen the proposal but argued there is no need for another study. The EPA did a study in 2004 and concluded hydraulic fracturing was safe, he said.

"If another study is done, we are certainly not worried about it," he said.

On its website, the EPA says hydraulic fracturing involves injecting a fluid under high pressure that opens or enlarges cracks in the rock.

"Hydraulic fracturing allows the oil or natural gas to move more freely from the rock pores to a production well so that it can be brought to the surface," it says.

BOOM IN DRILLING

The proposed EPA study would improve understanding of the process, said Deborah Goldberg, an attorney for Earthjustice.

"The dearth of research is not evidence that there is no problem," Goldberg said in a statement. "Rather, it is evidence of how successful the gas industry has been at impeding serious study."

A boom in drilling for natural gas in U.S. shale deposits has prompted calls for tighter regulation of the industry.

Congress is considering a bill that would require gas companies to disclose the chemicals used in fracturing and would give the EPA oversight of the industry, which now is regulated by the states.

The latest initiative, which also was backed by two landowners' associations, was prompted by the EPA's biennial review of its effluent guidelines. It follows a congressional call for the agency to conduct a study of fracturing.

The study sought by the environmental groups could go further than the one requested by Congress by covering issues such as dealing with waste water and drilling mud, which are separate from the fracturing question, Goldberg said.

She said the EPA had asked the environmental groups to request expansion of the coal-bed methane study, indicating a willingness to investigate fracturing.

In its first tests in response to concern over contamination from gas drilling, the EPA last year found some private water wells near gas facilities in Pavillion, Wyoming, were contaminated.

The agency did not identify the source of the pollution and is expected to issue its conclusions later this year. (Editing by John O'Callaghan)