Uncertainty continues to surround federal regulation of fracking


The Bureau of Land Management has been unable to clarify when new rules for oil and gas wells on federal lands will be finalized.

U.S. Interior Secretary Sally Jewell recently announced that there is "no date certain" for the finalization of a slew of highly anticipated regulations that will govern the use of hydraulic fracturing on federal lands. Although there are already rules in place for conventional oil and gas wells, this will mark the first time the federal government imposes rules that are specifically focused on "fracking."

Criticism of proposed rules coming from all quarters

Federal officials say the rules are badly needed, as the vast majority of drilling sites on federal lands now host fracking operations. However, many stakeholders contend that the current system – in which regulation of fracking is handled at the state level – is preferable, as implementing rules at the federal level risks forcing producers to cope with the poorly-suited restrictions of a "one-size-fits-all" standard.

Both stakeholders in the industry and environmental activists have taken issue with the proposals put forward by the Bureau of Land Management (BLM), which have been under development for years. After receiving nearly 200,000 comments on its first draft, which was released in 2012, the BLM was so overwhelmed by the issues raised by commenters that it withdrew its proposal altogether and began again with a "blank slate."

The agency's updated proposal, published in May, has drawn even more scrutiny from the public, with more than 1 million comments submitted to the Interior Department. Speaking to reporters after giving a speech at the National Press Club, Secretary Jewell explained that it will take time for her staff to review all of the comments, many of which are "very detailed and very long."

"The team is going through those comments right now to figure out how they need to take them into consideration," Jewell said. "We have to make sure we take the time to review the information and factor that in before we take action."

She added that although the department expects "that we will have rules out next year, we don't have a particular month." The interior secretary explained that the 16-day government shutdown had caused matters to pile up, which meant officials had to sort out a myriad of issues before they could get back to work on the fracking regulations.

New restrictions will heighten focus on operational efficiency

Jewell is right that it is essential to think through these regulations and avoid placing unnecessary constraints on the use of a practice that has delivered stunning economic results in recent years. However, it is also important to make expectations clear to the industry so companies can begin accounting for new requirements in their long-term strategic planning.

An industry-commissioned study found that maintaining compliance with the BLM's proposed rules could add almost $100,000 to the cost of completing and operating a well.

With this expense cutting into oil and gas companies' profit margins, well operators will be under more pressure than ever to ensure that all aspects of production, including frac flowback and drill stem testing, are handled with a high degree of efficiency. Having the right technological solutions in place will be essential in this regard.

The hydraulic jet pump could prove to be a particularly valuable addition to many well operators' tool kits. This solution is widely recognized for its power, efficiency and versatility.

The unit can be deployed in straight, horizontal or deviated wells and can even be successfully used at sites where problems with the completion of well casing would render other types of artificial lift solutions ineffective. Furthermore, with no downhole moving parts, the pump has minimal maintenance needs. It can be easily retrieved for optimization through reverse circulation of fluids and places less demand on power sources than many other products.