There’s never been federal regulation of hydraulic fracturing,” said Lee Fuller, IPAA vice president of government relations. “There is no framework to anticipate what would happen if it were to fall under the Safe Drinking Water Act. We can only look at recommendations being made by various interest groups.”

A bill recently introduced into both the US House of Representatives and the US Senate, known as the Fracturing Responsibility and Awareness of Chemicals (FRAC) Act, seeks to repeal the exemption in the 2005 clarification of the Safe Drinking Water Act that placed fracturing fluids outside the regulatory purview of the Environmental Protection Agency (EPA) and the bill’s underground injection control (UIC) program.

In responding to what many in the oil and gas industry see as the “green” lobby’s efforts to severely restrict domestic petroleum production, some of the cost projections coming out of industry organizations, if exemption were repealed, seem so astronomical as to at first glance seem wantonly exaggerated. Unfortunately, that may not be the case.

A study conducted by IHS Global Insight compares costs associated with three possible scenarios: ending all hydraulic fracturing; restrictions on fluids that can be used for hydraulic fracturing; and implementation of additional federal underground injection control (UIC) compliance regulations.

Looking only at the consequences of the UIC-compliance alternative, IHS sees petroleum imports surging 14% by 2018; GDP losses of $84-billion by 2014; nearly 700,000 jobs lost by 2015; increased federal deficit of $32 billion by 2014; and a trade balance widening by $46 billion by 2014.

Fuller said the big numbers make more sense when the potential scope of the regulations is considered based on legislative and judicial efforts already under way at the state level. “The result of a negotiation that took place in Alabama was that fracturing had to be done with water that met tap standards. That wouldn’t just raise costs, but put oil companies in competition with communities for drinking water supplies.”

Another possible scenario for UIC compliance would be that construction and monitoring standards comparable to those for Class II waste management sites would be applied to gas wells. “That would raise cost per well by $100,000 to $150,000, according to IHS,” Fuller said. If Class I waste management standards are enforced (which are for disposal of hazardous wastes), cost would go up $1-million per well.

A third area that might be addressed by legislation is the composition of fracturing fluids. “There is a class of chemicals that make up less than one percent of the fluid composition, which the environmental lobby has focused on. If use of these chemicals, which have never been an issue, were prohibited or the kinds of chemicals used restricted, the fracturing process wouldn’t be viable, and recovery would be restricted, meaning more wells would need to be drilled.”

Finally, it can’t be estimated what the cost of delays would be if permitting structures changed.

Fuller said IPAA doesn’t presume to predict whether the legislation in Congress will pass. “The particular venues for it to pass are limited, and there is a provision in a bill coming up for vote that calls for a new study of hydraulic fracturing, and that could delay further legislative activity for this year.”

To some extent that’s beside the point. Fuller said that in every state where shale gas development is being pursued there have been calculated efforts to raise questions in regard to environmental assessments or permitting, including in New York and Pennsylvania. And to some extent, it’s really not about hydraulic fracturing at all. It’s about the future of the domestic oil and gas industry.

“I’ve worked on environmental issues most of my career,” said Fuller, “and I’ve never seen a practice with less potential for environmental impact draw so much opposition. That tells me we’re not dealing with an environmental issue, but rather with the question of whether we should produce gas or oil domestically.”

Admittedly, any time oil or gas is produced there is some hazard involved. The question is whether there is a suitable regulatory regime in place. In Fuller’s view, the states have taken the necessary steps to protect drinking water from well bores that penetrate water reservoirs. “Additional steel casing is used as a barrier between the well bore and the drinking water,” he said. “It’s been proven that this protects the drinking water from both the well’s produced water and production fluids.”