On May 4, 2012, the US Environmental Protection Agency (“EPA” or the “Agency”) released its draft guidance (the “Guidance”) explaining how federal permit writers should adapt existing underground injection control (UIC) requirements for Class II wells—which typically cover enhanced oil recovery, disposal of brines from oil and gas production, or hydrocarbon storage—to hydraulic fracturing using diesel fuel. The Guidance is limited to fracturing with diesel fuel because Congress excluded “the underground injection of fluids or propping agents (other than diesel fuels) pursuant to hydraulic fracturing operations related to oil, gas, or geothermal production activities” in 2005 from the relevant statutory definition of “underground injection” under the Safe Drinking Water Act.
For the threshold issue of what constitutes “diesel fuel,” the Guidance recommends considering whether any part of the injectate is (i) covered by any of the six Chemical Abstracts Service Registry Numbers (CASRNs) for fuels, diesel; fuels, diesel, no.2; fuel oil no. 2; fuel oil no. 4; kerosene; or distillates (petroleum), crude oil; or (ii) referred to by any of the synonyms commonly associated with those CASRNs. Biodiesel, however, is not to be included unless it is blended with petroleum-derived diesel. While EPA thus did not select any of the broader definitions based largely on boiling point range, the Agency is seeking comments on the alternatives as well as on whether a de minimis level of diesel fuel constituents should be included. The Agency also is looking for information on how diesel is used in fracturing and whether substitutes are available.
For covered wells, the Guidance explains how to apply Class II permit requirements for well construction, mechanical integrity, monitoring, reporting, closure, financial responsibility, and public participation. Specific permitting and operational issues on which EPA is requesting comment include the following:
- How should well closure, plugging, and abandonment be addressed? The Guidance suggests two approaches: short duration permits with wells converted out of the UIC program after diesel fuel fracturing is complete, and assigning wells “temporarily abandoned” status, which could facilitate later re-fracturing.
- How should the Area of Review (AoR) be defined? Before proceeding with injection, permit applicants must assess the AoR for conduits of potential fluid movement and take any necessary corrective action. EPA’s suggested AoR approaches take into account the horizontal section of the well to be fractured.
- What information should be included with the application? Should seismic surveys be included? Geomechanical data? The Guidance suggests the types of information that permit writers may, in their authorized discretion, request, including information about the extent and orientation of the expected fracture system, the results from previous fracturing, drinking water monitoring, the fracturing fluid composition, and geochemical information.
- What monitoring should be included? The Guidance suggests pressure limitations and recording, cement bond logs, post-fracture tracer logs with temperature logs, and mechanical integrity tests, but EPA also is interested in views on microseismic monitoring, tiltmeter monitoring, and baseline surveys that incorporate water quality monitoring.
The Guidance will not have the effect of law, and it is intended to apply only where EPA directly implements the UIC program, which currently includes Arizona, the District of Columbia, Florida, Hawaii, Iowa, Kentucky, Pennsylvania, Michigan, Minnesota, New York, Tennessee, Virginia, American Samoa, the Virgin Islands, and most tribal lands. Still, the concern for industry is that the Class II UIC requirements will become de facto standards for all hydraulic fracturing. Also controversial is EPA’s decision to proceed with guidance rather than rulemaking. Meanwhile, environmentalists are calling on the Agency to ban all use of diesel in fracturing fluids.
Public comments will be due 60 days after notice of the Guidance appears in the Federal Register.
For more information about the Guidance, or any other matter raised in this Legal Update, please contact Roger W. Patrick at +1 202 263 3343, or your regular Mayer Brown lawyer.