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Fracking Regulations Likely

Written By Brianna Panzica

Posted August 11, 2011

Since the process of hydraulic fracturing began as a method of extracting natural gas from massive shale deposits in the United States, environmentalists and the public have been vocal about concerns of the effects.

The process nicknamed “fracking” consists of injecting large amounts of water mixed with sand and chemicals into shale deposits to break them up and release the natural gas within.

With it have come reports and complaints of drinking water contamination and air pollution.

To gain public confidence while continuing the extracting of this valuable natural resource, the Obama administration set up a panel to gather information and impose regulations on the process.

And on Thursday this panel issued a report detailing the regulations they feel to be necessary in order to continue the process.  Reuters reported the details.

Members of the panel indicated their belief, due to research and information gathered, that the process of fracking comes with a very low risk of drinking water contamination.

Yet as this is not enough to settle public fears, more regulations have been recommended.

The panel suggested a manifest system, in which the fracking waste would be tracked step by step to ensure proper disposal.

The report recommended that states create a more active system to measure the quality of water before and after fracking occurs.

It also called for a measurement of methane and other emissions that may pollute the air, such as equipment emissions.

The panel is looking to require drilling companies to release information about the ingredients in fracking fluids and to eliminate diesel as one of the ingredients.

It will put together a database to compile information about the fracking process and the wells.

The goal, chairman of the panel John Deutch told Reuters, is “measuring and disclosing the results of what they’re doing in the field.”

A better regulation of the field will increase public confidence and decrease the risks of the extraction process.

However, investors should be wary; the regulations run the risk of increasing the cost of the process, possibly even to points where it is no longer a profitable industry.

Reuters named major U.S. shale gas production companies ExxonMobil (NYSE: XOM), Chesapeake Energy (NYSE: CHK), Chevron Corp (NYSE: CVX), and Devon Energy (NYSE: DVN).

These companies hope to be able to work with the panel to prevent a high increase in the cost of extraction.

More harmony with the public in the process of fracking would be beneficial for the industry if a cost increase could be avoided, these companies believe.

Much development has been postponed by moratoria as states wait for more information before they will allow fracking to continue.

This has prevented development of the Marcellus shale in states such as New York and Maryland.

A final report with recommendations will be released by the panel in November.  At that time we will see what lies ahead for the industry.

That’s all for now,

Brianna

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