Arkansas Oil and Gas Commission Puts Hydraulic Fracturing Disclosure Rule Up for Comment

Following Wyoming’s lead, on September 28, 2010, the Arkansas Oil and Gas Commission initiated a rulemaking to require producers to disclose the constituents of hydraulic fracturing fluid. The proposed rule B-19 is up for public comment, and if adopted, it will make Arkansas the second state to require the disclosure of the chemical constituents of fracing fluid.

The proposed rule will apply to all new wells. The rule sets requirements on casing and cementing to protect freshwater aquifers. The requirements include specifications on casing strength, depth, and cementing. The operator will have a duty to report any change in annulus pressure that might indicate a casing failure or any exceeding of the rated casing pressure to the AOGC within 24 hours. Any incident from the prior month will be reported at the next monthly meeting of the AOGC. The commission will have the discretion to take action as it sees fit to remediate the incident and prevent future incidents.

The rule also addresses wastes not already regulated by the Arkansas Department of Environmental Quality. The rule regulates the use of RCRA exempt materials and fluids used in fracturing. This includes storage in leak free containment vessels, reporting of spills, and a report of any spill to the AOGC with immediate remediation.

Under the rule, following the completion of a frac job, the operator must report a considerable amount of physical data regarding the frac job. This includes maximum pump pressure, volumes of fluid, volume of proppant, type of fluid, type of proppant, calculated fracture height. The rule will require the operator to furnish the types of additives in the frac fluid, the name of the additive, MSDS sheets, Chemical Abstract Numbers (CAS), and concentrations of the additives.

Finally, the rule imposes requirements on contractors who engage in hydraulic fracturing. Specifically, the rule mandates that contractors be authorized to do business in Arkansas, file Organization Reports as required by the AOGC, and provide MSDS and CAS numbers for the chemicals used in fracing.

The Wyoming rule requires the operator to file a form prior to initiating a well fracing, and the state retains the right to require testing of the well casing prior to fracing. The operator must provide the state detailed information about the constituents of fracing fluid, but the operator may request confidentiality from public disclosure. Under the rule, the state will know the classification, CAS numbers, rate, and concentration of every constituent of fracing fluid. In addition, the rule requires the operator to keep records of each frac job, including physical measurements of pressure at the surface, downhole, and in the production casing annulus. The operator must report any annulus pressure that exceeds 500 psi immediately. The rule further requires the reporting of the disposition of any fluids recovered from the frac job.

The Arkansas and Wyoming rules are similar in many respects. Their purpose is to collect data regarding critical control points in the frac job which might lead to the intrusion of frac fluids into groundwater, to insure proper storage and disposal of frac fluids, and to inform the public of the exact composition of frac fluid. There is no doubt the new rule will go far to keep the public’s confidence, but it will be a burden on oil and gas producers.

For better or worse, hydraulic fracturing garners controversy. E&P companies should monitor the ongoing EPA study, the Waxman and Markey congressional investigation of fracing, and the any proposed fracing regulations of oil and gas producing states such as Arkansas, Louisiana, Texas, Oklahoma, North Dakota, Wyoming, Colorado, West Virginia, and Pennsylvania where there are active tight oil and gas plays. If the states take proactive measures to police fracturing and gain the public’s confidence, federal regulation might be avoided.

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