North American natural gas producers are facing tougher scrutiny and regulation from government, with the U.S. industry warning that new rules proposed by the U.S. Environmental Protection Agency could dampen the shale gas boom.
In Ottawa, the federal government is not yet looking at regulation, but has ordered an in-house study by Environment Canada officials, and asked the Council of Canadian Academies – a non-profit group – to assess the scientific knowledge regarding the impact of hydraulic fracturing .
In the United States, the EPA held hearings on Tuesday into proposed new rules that would force energy companies to better monitor and reduce emissions of methane and other air pollutants.
At the opening of the session in Pittsburgh, industry officials urged the EPA to proceed cautiously with its regulatory proposal.
"In the worst case, the result could be requirements that impose a virtual moratorium on developing U.S. oil and natural gas resources," Howard Feldman, of the American Petroleum Institute, said in a prepared opening statement.
The industry has revolutionized North American gas production by employing hydraulic fracturing and horizontal drilling to break open stubborn shale deposits and release gas from vast reservoirs. Fracking, as it's called, involves shooting chemically laced water under high pressure into the formation, a practice that has raised concerns about groundwater contamination and improper disposal of polluted waste water.
In Canada, the industry has welcomed the scientific reviews ordered by Environment Minister Peter Kent. While the federal government has said it plans to monitor development of shale gas projects, it has not threatened to regulate.
Talisman Energy Inc., a major gas producer in both the United States and Canada, said it already meets most of the regulations put forward by the EPA, but worries about a public backlash if sloppy environmental practices by some companies tarnish the entire industry.
"It could stop the industry in its tracks if we don't do it right," Talisman executive vice-president Robert Rooney said at an Ottawa conference. He said the industry needs effective regulations, though he suggested that could be accomplished at the provincial and state levels.
Talisman is a major operator in the Marcellus shale play – where production is booming in Pennsylvania but stalled over environmental concerns in neighbouring New York. Mr. Rooney said he believes the moratorium in New York may end following the release of an environmental impact statement there, and that the company could drill wells in the state next year.
Officials at the Canadian Association of Petroleum Producers said they are encouraged that Ottawa is studying the environmental impact of hydraulic fracturing, saying industry practices will stand up to fact-based scrutiny.
In areas of new development, "there is a lot of public concern and we certainly appreciate that," said Kerry Guy, CAPP's manager for natural gas.
"We welcome the opportunity to bring in some science-based knowledge because there has been a lot of unscientific comments and rhetoric out there. … Decisions should be made on the basis of science."
Matt Horn, a spokesman for the Pembina Institute, a Calgary-based environmental lobby group, said the federal government appears to have no interest in imposing regulations on the industry, but is content to monitor it and give the provinces the lead in regulating.
"The fact that they are doing a study is an acknowledgment that there are unaddressed questions about what the impacts on the environment and public health may be," Mr. Horn said. "But it is a bit frustrating that they are not acknowledging a role in dealing with them, depending on what that study reveals."