America's soaring natural gas reserves offer the promise of cheap, secure, low-carbon energy for decades to come. But the buzz in Washington is how to regulate the "fracking" process that unlocks this bounty.
Green groups warn that fracking could contaminate groundwater. The evidence for that is lacking, though states have already taken the lead in setting new rules. But that hasn't stopped the regulatory push in Washington.
The Environmental Protection Agency is conducting a major fracking study that isn't expected to be released until next year. But bureaucrats, industry lobbyists, green groups and lawmakers all assume regulations are coming and are jostling for position.
"I assume the EPA will be very aggressive. Probably overly aggressive," Sen. Joe Manchin, D-W.Va., told IBD.
The industry fears that onerous oversight could increase the time for permits and give NIMBY opponents more chances to stall or block production.
Manchin argues that Congress needs to pass fracking legislation before the EPA acts on its own.
Robin Roy, director of clean energy strategy for the Natural Resources Defense Council, says federal regulations are needed as a "backstop" for state ones. But Roy conceded they weren't even certain what the best practices related to fracking were.
"The whole issue kind of snuck up on us," he told IBD.
The fracking process was developed only in the mid-1990s, rapidly taking off in the last few years. It extracts natural gas from shale rock deep underground by literally cracking them apart with bombardments of water, sand and chemicals.
Scientists had long known of substantial natural gas deposits underground in North America, but before fracking there was no economical way to reach them.
Cheap, Clean
Though a fossil fuel, natural gas is much cleaner burning than coal or oil. It is less volatile, and easily transportable and storable.
The Energy Information Administration estimates proven reserves at 2,552 trillion cubic feet, up nearly 50% from 20 years ago thanks to fracking. And that may be conservative.
"There is enough (natural) gas in Canada and the United States to supply our energy needs for 100 years," said Russ Ford, executive vice president of Onshore Gas Americas for Shell (NYSE:RDSA - News) .
The largest such source is the Marcellus Shale formation, which is several thousand feet underground and sprawls underneath New York, Ohio, Pennsylvania and West Virginia.
Production is booming too. The EIA reports that it has grown 17% annually since 2000. Total production is expected to triple by 2035. Analysts predict fracking could provide hundreds of thousands of jobs.
Coal faces greater restrictions from the EPA while the Gulf oil spill and Japan's Fukushima meltdown have undermined support for domestic oil drilling and expanded nuclear power. With green technologies still a niche, subsidized field, natural gas has emerged as the answer to America's growing energy needs.
That doesn't sit well with green groups who still prefer renewable sources like wind and solar.
"(W)hen companies resist efforts to disclose chemicals used in their fracking fluid, people assume they are hiding something," wrote NRDC executive director Peter Lehner in a posting on the group's website.
Some companies presumably want to keep such trade secrets secret. But not all.
"We support this disclosure," said Sherri Stuewer, vice president for environmental policy and planning for Exxon Mobil (NYSE:XOM - News) .
There is little evidence of any damage despite thousands of new shale gas wells in recent years. So it is not clear what ? if any ? regulations are needed.
A 2008 study by the Groundwater Protection Council, a coalition of state environmental agencies found the "potential for impacts to surface water and groundwater ... are expected to be minimal."
A 2010 study by the Pennsylvania Department of Environmental Protection admitted the "theoretical possibility" of contamination, but after investigating all complaints concluded: "no groundwater pollution or disruption of underground sources of drinking water have been attributed to hydraulic fracturing of deep gas formations."
Most criticism of fracking cites Dimock, Pa., where leakage from wells did seep into local groundwater. The company was fined and required to provide the town's drinking water. The state environmental agency determined the leakage was caused by faulty well casings, not the fracking itself.
Green groups are not automatically opposed to natural gas. NRDC's Roy said it has "a vital bridge role to play" from high-emission coal to the renewable technologies they prefer. But he insisted that "regulation and enforcement have not kept pace" and there was little evidence the industry was using best practices.
Exxon Mobil's Stuewer said her company would prefer regulation remain at the state level, but greens oppose that too. Some industry groups may join the greens on this as well. Federal regulations do provide consistency over a patchwork of different rules.
"There are some groups who would like to see standardization," said Sen. John Hoeven, R-N.D.
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