FARMINGTON — Industry groups are fighting a proposed U.S. Bureau of Land Management rule that would expand federal regulation of hydraulic fracturing, a key process in oil and gas drilling in the San Juan Basin and across the nation.

The Independent Petroleum Association of America and the Western Energy Alliance filed joint comments Sept. 10 that blasted the proposed rule.

Kathleen Sgamma, a Washington-based lobbyist for the IPAA, said the rule would add burdens to drillers in public lands-heavy states such as New Mexico.

“Overall, the rule is premature,” Sgamma said. “Right now, EPA is conducting a supposedly scientific study to determine if more regulation of fracking is necessary. Yet we have another federal agency jumping ahead to regulate fracking without being informed by that study.”

Hydraulic fracturing, or “fracking,” involves injecting thousands of gallons of water, sand and chemicals underground to pry apart rock formations, releasing oil and natural gas deposits. Drillers in the San Juan Basin have used the technique for decades, but its use expanded as drillers put to work new horizontal drilling techniques to access previously inaccessible formations.

The public comment period closed Sept. 10. The BLM is expected to release a final rule in several months.

The proposed rule would require drillers to:
• Report the specific source of water used in well completions.
• Perform a successful mechanical integrity test.
• Submit detailed engineering design and other plans to the BLM for approval. Producers must also specify how they will handle or treat recovered fracking fluids.

The rules contain numerous other requirements.

“There's a whole set of added requirements in this rule,” Sgamma said. “It's a complex rule, and it's a far-reaching rule.”

An economic study commissioned by the industry groups and conducted by John Dunham and Associates, a New York-based firm, estimated the rules would cost about $1.5 billion a year.

Local BLM officials and San Juan Basin operators are looking into how the rule could affect oil and gas production here.

“This is a draft rule,” said Dave Evans, BLM district manager of the Farmington district office. “We highly encourage industry to provide comments concerning this. We recognize that industry could potentially have concerns with the impacts associated with this.”

Drillers in the San Juan Basin have been fracking here for decades. But as the practice spread East with the discovery of large shale deposits, media attention grew.

“Fracking has been going on here in the basin for many, many years,” Evans said. “It is not a new technology or a new process. It is just receiving concerns in other parts of the country.”

Hydraulic fracturing is used on the vast majority of wells in the San Juan Basin.

Kevin McCord, operational manager for Robert L. Bayless, Producer LLC, a Farmington independent oil and gas firm, said fracking is already well regulated.

“The federal government is trying to make a one-size-fits all (rule),” he said. “In reality, one size fits nobody.”

McCord said local BLM officials have a better understanding of fracking than do their counterparts in Washington.

“The local areas of the BLM understand what is happening in their area,” he said. “Believe me, the oversight is already there.”

The basin has had no significant problems with fracking, Evans said. “A lot of the techniques or procedures were developed right here in the basin,” he said.

However, environmental groups continue to have issues with potential groundwater contamination and other concerns. Mike Eisenfeld, New Mexico energy coordinator for San Juan Citizens Alliance, said the BLM is too close to the industry it regulates.

“The BLM is in partnership with these companies,” Eisenfeld said. “They're driving royalties.”

The National Resources Defense Council said the rules don't go far enough. That group urged baseline water testing, physical setbacks for wells and putting sensitive areas off limits, among other measures.
Evans argued fracking has some environmental benefits. Because highly stimulated horizontal wells tend to be more productive, fewer wells are needed.

“We see it as a benefit just due to a lesser number of wells, greater recovery and a smaller footprint for these operations,” he said.