Jun 15, 2012 - By Martin Reed, Staff WriterA legislative committee on Friday morning unanimously supported extending the comment period for a proposed federal rule governing the controversial practice of hydraulic fracturing.
Meeting at Riverton City Hall, the Wyoming Legislature's Joint Minerals, Business and Economic Development Committee decided to make the extension request to the Bureau of Land Management after hearing concerns about the proposal's effect on state industry.
"The economic impact is a huge concern of ours," Shawn Reese, Gov. Matt Mead's policy director, told the committee. "What we really need to know is what the economic impact to the state of Wyoming will be."
Bruce Hinchey, president of the Petroleum Association of Wyoming, told lawmakers the state's Office of Management and Budget indicated the proposed rule would carry "very little" fiscal impact.
Hinchey said a different study showed "that was not, in fact, the case," with the cost to Wyoming energy producers as much as $60 million in additional costs a year.
Reese said the figure could be as much as $130 million annually.
"We are reviewing the economic analysis that shows the cost to industry in Wyoming," he said.
The concern is the rule's extra financial burden on producers who are already facing multiple federal regulatory hurdles that cause them vast delays and ultimately threaten the industry's success in the state.
The practice of hydraulic fracturing that involves injecting liquids at high pressures into the ground to extract gas is a focal point of national debate stemming from concerns surrounding an energy field near Pavillion.
The U.S. Environmental Protection Agency, in a draft report released in December, pointed to a likely connection between hydraulic fracturing and groundwater contamination in the area several miles east of Pavillion.
The Bureau of Land Management on May 4 released its proposed rule on hydraulic fracturing that would require public disclosure of chemicals used in the process after operations have ended.
The federal agency has noted existing regulations governing hydraulic fracturing operations on public lands are more than 30 years old and do not address modern activities.
Hinchey told the legislative group that his organization has sent comments to the state Office of Management and Budget to request an additional 90 days of comment.
"We're working on that very diligently," he said about drafting comments to submit to the BLM. He said the current deadline is around July 11 or 12.
"We still feel it should be left in the hands of the state's oil and gas commission" to regulate fracking, Hinchey said. He recommended that federal agencies "allow the commission to regulate the industry as it has done. That's what we would prefer to see."
Reese pointed out the lengthy delays producers in Wyoming already encounter at the hands of Bureau of Land Management officials in charge of conducting complex analytical reports called environmental impact statements.
Between 1994 and 2005 the average report took between two and a half to three years, he said.
"Now we haven't had one approved since 2008," Reese said, noting the time has increased to between five and eight years.
With the new proposed rule, the "huge concern is what is going to be the delay and the cost of the delay," he said.
Because the federal government is in no position to increase staff at the regulatory agencies, "are we not compounding a pre-existing problem?" he asked.
State Sen. Chris Rothfuss, D-Laramie, questioned whether the bulk of the additional costs would result from delays or additional rules from the BLM.
Hinchey said the added costs are due to "a little bit of both." For instance, added costs would come from companies needing a registered engineer to certify and stamp all documents provided to the agency, he said.
"But the delays are certainly a big impact," Hinchey said.
"One of them was once you cemented a well, you needed to wait for BLM" to begin fracking, he said. "There's not a lot of engineers on the BLM staff. ... I can just see the backlog on that."
The proposed rule also requires that one individual from a company must certify to the BLM that a well is 100 percent correct, "so that becomes problematic in itself," Hinchey said.
Rothfuss questioned if the proposed rule targeted Wyoming or other states. "Most of the other states -- Wyoming, Colorado, New Mexico, Texas -- all have developed their own hydraulic fracturing rules," Hinchey said, complimenting Wyoming's policies.
Reese said Mead is actively considering the issue as well as a request for an extension on the comment period. The state is "evaluating the economic impact and the rules themselves and structuring comments," he said.
State Sen. Eli Bebout, R-Riverton, the committee's co-chairman, said the letter to request the extension would not comment about the proposed rule.
"We're not going to take a position whether we support or don't support the rules right now," Bebout said.
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