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With 2011 in the rearview, businesses all over the country are looking forward to fresh start in 2012.  But the opportunity to start fresh will elude natural gas producers partaking in hydraulic fracturing operations, as recent events in Ohio have caused additional uproar concerning the practice.  On December 30, 2011, Ohio state officials ordered the indefinite closure of a fluid-injection well in Eastern Ohio.  The injection well, which is 9,200 feet deep and used for the disposal of used hydraulic fracturing fluids, was shut following a series of low-level seismic events in the area.

During the eight months preceding the closure, the Ohio Department of Natural Resources (ODNR) recorded ten seismic events within two miles of the well.  None of the seismic events registered above a magnitude of 2.7 (the threshold for surface damage is generally considered to be 4.0).  The ODNR acknowledged that there is no clear and direct correlation to drilling at the site of the injection well and seismic activity.  Nevertheless, the mere presence of the seismic activity was enough for Ohio officials to take action in light of the relatively low frequency of seismic activity traditionally occurring in the area.  Thus, the well was closed.  Then, on December 31, 2011, a 4.0 magnitude earthquake struck the area.  That prompted the Director of the ODNR and Ohio Governor John Kasich, who is a supporter of oil and gas exploration and spearheaded the opening of Ohio’s state parks and other public lands  to hydraulic fracturing operations in 2011, to halt the planned opening of four nearby injection wells indefinitely.

Scientists have opined that the cause of the seismic activity could be that some of the wastewater injected into the well may have migrated into deeper rock formations, allowing an ancient fault to slip .  While similar links between disposal wells and earthquakes have been suspected in Arkansas and Texas, this issue is the first of its kind in Ohio.

The events in Ohio represent yet another blow to hydraulic fracturing operations and may be representative of a tough year for the industry in 2012.

Last month, I looked at the EPA’s November 2011 plan to study the potential impacts of hydraulic fracturing on drinking water resources and the implications of that plan for oil and gas producers. A new draft report issued by the EPA may be an early indicator that the EPA will, indeed, find that hydraulic fracturing adversely impacts those resources.

On December 8, the EPA released a draft report concerning its analysis of groundwater contamination near Pavillion, Wyoming.  The EPA began studying contamination in the area three years ago at the request of residents in the area who were concerned about contamination in private drinking water wells.  According to the draft report, the contamination likely was caused by the hydraulic fracturing process utilized in a nearby gas field.

To conduct its analysis, the EPA obtained samples from (1) two deep monitoring wells it constructed in the aquifer from which the drinking water in the area is obtained and (2) Pavillion area drinking water wells.  In short, the samples from the deep monitoring wells in the aquifer showed high methane levels, synthetic chemicals consistent with gas production, and hydraulic fracturing fluids that exceeded Safe Drinking Water Act standards.  The samples from drinking water wells also showed methane, other petroleum hydrocarbons and other chemical compounds, which the EPA concluded was consistent with migration from areas of gas production. Detections in drinking water wells are generally below established health and safety standards.

If the EPA’s findings from Wyoming are confirmed, the Safe Drinking Water Act, the Clean Water Act, the Oil Pollution Act of 1990, and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) all could be implicated.  The EPA could even seek to utilize these existing statutes, which contain significant penalty provisions, to address the investigation or cleanup of groundwater contamination caused by hydraulic fracturing. And while the EPA recognizes that the findings in Wyoming are specific to Pavillion where the hydraulic fracturing is taking place in and below the drinking water aquifer and in close proximity to drinking water wells – it did not exclude the possibility of similar findings in different production conditions in other areas of the country. Accordingly, this issue should be monitored by oil and gas producers that use or plan on using hydraulic fracturing in their production operations.

The EPA’s draft report is open to a 45-day public comment period and subject to a 30-day peer-review process led by a panel of independent scientists.  The public comment period ends on January 27, 2012.  If you would like to chime in, instructions for doing so can be found here.