U.S. fracking firms may have broken environmental law: probe

WASHINGTON Mon Jan 31, 2011 6:51pm EST

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WASHINGTON (Reuters) - Several energy companies may have violated environmental rules by injecting diesel into the ground without permits as part of a controversial natural gas drilling technique, according to findings from Congressional probe released on Monday.

The probe of diesel use in hydraulic fracturing, a practice that has allowed drillers to tap abundant shale gas, found that oil services firms such as Halliburton and BJ Services, which was bought by Baker Hughes Inc, injected millions of gallons of fluids containing the fuel into wells between 2005 and 2009. A total of 12 companies were cited in the probe for using diesel without proper permits.

Critics say the chemicals used in the process, called "fracking," can contaminate drinking water.

In 2003, the Environmental Protection Agency entered into a voluntary agreement with Halliburton, BJ Services and Schlumberger to eliminate the use of diesel fuel in hydraulic fracturing fluids injected into coalbed methane wells.

In addition, a 2005 energy law exempted hydraulic fracturing, or fracking, from regulation under the Safe Drinking Water Act, except when diesel is used.

Still, the probe found that no oil and gas service companies sought or were issued permits for the use of diesel fuel in fracking between 2005 and 2009.

Democrats who sponsored the probe in the House of Representatives urged the EPA to look into this matter.

"This appears to be an area of significant noncompliance with the requirements of the Safe Drinking Water Act," House Democrats Henry Waxman, Edward Markey and Diana DeGette said in a letter to the EPA outlining their investigation.

The fracking probe was initiated by House of Representatives' Energy and Commerce Committee last year when it was headed by Waxman.

"EPA has embarked on an expeditious effort to clarify the permitting process as it relates to diesel use in hydraulic fracturing operations," the agency said in a statement in response to the investigation.

EPA said it hopes to put in a clear framework for permitting, so firms using diesel in fracking "receive the review required by law."

EPA modified its website to address fracking operations using diesel in the summer of 2010, a Halliburton spokeswoman said in a statement. But Halliburton does not believe that these changes "constitute proper rulemaking," she said.

Halliburton said there are currently no federal requirements that companies obtain permits for the use of diesel in fracking and therefore it does not believe its "activities have resulted in a violation of the Safe Drinking Water Act or any other federal environmental law."

Gary Flaharty, a Baker Hughes spokesman, said BJ Services no longer uses diesel in its fracking operations, but during the period in question there were no federal rules regarding diesel and fracking.

The EPA's position in the past has been that federal regulations do not expressly address or prohibit the use of diesel in fracturing fluids, Flaharty said. "Retroactively imposing a permit requirement is clearly improper," he said.

Fracking injects a mixture of water, sand and chemicals into rock formations at high pressure to force out oil and natural gas.

The spread of the technique to new areas has prompted a backlash from homeowners near shale gas developments who complain the practice has contaminated their drinking water.

Some lawmakers have called for federal regulation of the practice beyond the use of diesel fuel, but with Republicans now in control of House such legislative action appears unlikely.

In their letter to the EPA, the lawmakers said Halliburton, Schlumberger and BJ Services told the committee they no longer use diesel fuel in coalbed methane formations located in underground sources of drinking water.

(Additional reporting by Timothy Gardner, Editing by Lisa Shumaker and Sofina Mirza-Reid)

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