The People of America's Oil and Natural Gas Indusry

New Study on Hydraulic Fracturing

Jane Van Ryan

Jane Van Ryan
Posted June 9, 2009

API urged Congress to consider the ramifications of applying new regulations to the process of hydraulic fracturing today, just as members of the House and Senate introduced legislation to regulate the process under the Safe Drinking Water Act.

According to a study commissioned by API and conducted by Global Insight, new federal regulations could cause a sharp drop in U.S. oil and natural gas production.

The study, "Measuring the Economics and Energy Impacts of Proposals to Regulate Hydraulic Fracturing," found that the number of new U.S. wells drilled would plummet 20.5 percent over a five-year period, and natural gas production would potentially be reduced by about 10 percent from 2008 levels by 2014. As a result, jobs could be lost, government revenues from energy production would fall and the United States would become more reliant on imported sources of oil and natural gas.

"Hydraulic fracturing is a safe, proven, 50-year-old technology that is critical to developing the natural gas used to heat homes, generate electricity and create basic materials for fertilizers and plastics," said API President and CEO Jack Gerard. "More than one million wells have been completed using this technology."

More dramatic decreases in production of both natural gas and oil could occur if Congress enacts restrictions on hydraulic fracturing fluids. And elimination of the use of this technology would nearly shut down the development of unconventional domestic resources, where oil and natural gas are being produced in shale, tight sands and coalbed formations. More than 95 percent of these wells are routinely treated using fracturing. Ron Hyden of Halliburton explained the importance of hydraulic fracturing in a recent podcast.

Today, hydraulic fracturing is regulated at the state level. The Ground Water Protection Council released a study a few days ago that found that regulation of oil and gas field activities, including hydraulic fracturing, is best accomplished at the state level.

For more information about hydraulic fracturing, read a blog post from last week and watch a video about the process.


Update on June 12, 2009: Read today's blog post from The Oil Drum for more information on the potential federal regulation of hydraulic fracturing