AMERICAN LAW AND JURISPRUDENCE ON FRACING
| Jurisdiction | United States |
Michael J. Mazzone
Mary S. Mendoza
Christopher S. Kulander
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Acknowledgements
The primary authors wish to thank the following people at Haynes and Boone, LLP who conducted research, provided comments, and contributed to this report: Ben Allen, Misty Barham, Jeff Civins, Buddy Clark, Austin Frost, Kraig Grahmann, Kendall Hollrah, Elizabeth Klingensmith, Erin LeBaron, Greg McEldowney, Chris Perez, Mike Raab, Adam Sencenbaugh, Teresa Tien-Lin and Alan Wright.
Introduction
The substantial growth of domestic unconventional shale resources in recent years has partially been a result of the increase in the use of hydraulic fracturing. Hydraulic fracturing is generally viewed as a completion technique that is a practical necessity to promote development of unconventional "tight" shale reservoirs, particularly gas-shale. Hydraulic fracturing entails treating water, oil, or gas wells to stimulate more production than otherwise would have been achieved using standard drilling and production techniques. This report deals with hydraulic fracturing and the legal and technical issues associated with it.
This report first covers what hydraulic fracturing is and why it is done. It identifies the current location of the largest shale gas fields where hydraulic fracturing is common and the effect of hydraulic fracturing on domestic production. It then covers the environmental issues, focusing on the anecdotal and evidentiary call and response among environmental groups, regulators, landowners, and producers. It then discusses how traditional oil and gas jurisprudence impacts hydraulic fracturing, emphasizing both surface versus mineral estate issues and disputes that arise between two adjoining mineral owners.
We examine the regulatory frameworks currently in place in thirteen (13) states where hydraulic fracturing is common. This state-level analysis is made with an eye towards regulations specific to hydraulic fractioning and the fluids used, as well as more overarching regulations that include hydraulic fracturing among other exploration and production activities, such as general pollution disposal regulations that cover used hydraulic fracturing fluid as well as other liquid waste from drilling. In several instances, this report describes bills under consideration, as well as
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important opinions from state courts. We also consider hydraulic fracturing on semi-sovereign tribal land.
Finally, this report analyzes the current and contemplated laws and regulations governing hydraulic fracturing on the federal level. In particular, it discusses the history of the litigation and legislative efforts challenging the current federal exception enjoyed by hydraulic fracturing. It also highlights the friction between state and federal oversight.
Hydraulic Fracturing--an Overview
Most people are familiar with the "gusher" well where reservoir pressure underground pushes oil up the wellbore. Oil and gas are harder to extract from "tight" rock formations, which do not allow passage of oil and gas through and up a well. Such formations, often shale or coal, may be filled with gas or oil, but allow those fluids to flow only along preexisting cracks or "fractures."
Naturally-occurring fracture patterns have long been used to heighten development in otherwise uneconomic formations. One example is the Austin Chalk, a tight fossiliferous chalk and marl formation found in the Gulf Coast region of the United States. The Austin Chalk in Texas and coal seams in Appalachia are marked by zones of natural fractures which trend in a common direction.1 While the Austin Chalk is often saturated with hydrocarbons, it typically remains uneconomic unless a horizontal borehole intersects a number of the fractures. Therefore, seismic and surfacial mapping techniques were developed to find these natural fracture zones and orientations.2
The usefulness and application of hydraulic fracturing only became apparent with the discovery that "tight" shale formations could be economically developed with hydraulic fracturing techniques--that is, by making artificial fractures. Now, instead of relying on natural fractures zones, developers made their own fractures.
Hydraulic fracturing--known colloquially as "fraccing," "fracking"
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and, in this report, as "fracing"--is a process in which fluid is injected into a well at very high pressures in order to either widen and deepen existing cracks or create new fractures in the tight formation.3 Generally, increased fracturing will allow more oil or gas to be produced from a well previously thought dry or in decline. Petroleum companies vary the type of fluid used for fracing depending on the rock type, depth or other factors. The fluids used can include water, water mixed with solvents, or drilling mud. The fluid is mixed with the "proppant," which is typically sand, ceramic pellets or other small granular material that is carried into the fractures where it remains to prop the crack open thereby allowing the oil or gas to flow.
Fracing is not a new technology. Hydraulic fracing was first tested in 1903 and first used commercially in 1948. By 1988, hydraulic fracturing had been applied to one million wells.4 It has also been used to enhance production from water wells. Currently, about 35,000 wells per year undergo some measure of hydraulic fracturing and a majority of oil and gas wells have undergone some form and level of fracturing during their productive lifetime.5 The prevalence of horizontal drilling has also increased the importance of fracing as boreholes can now traverse through a much longer portion of a targeted horizon instead of the interval covered by vertical or slant drilling, making the return to the operator in increased production worth the cost of mobilization of a fleet of fracing equipment. Because fracing can be conducted all along the interval the borehole is in the productive zone, more gas can be drained from each well, meaning one horizontal well can replace multiple vertical wells, cutting back on the surface footprint necessary to exploit the gas assets in a given area.
Drilling and Groundwater Protection
To understand how fracing operations work and the relationship between fracing fluids and groundwater, it is first necessary to understand
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the fundamentals of how drillers set casing, cement boreholes, and set up a production zone. Fracing fluids are not the first fluids to be introduced to a wellbore during drilling. During drilling operations, drilling fluid is circulated down and around the drill bit and stem connecting the bit to surface--the "drill string"--then out the bottom of the drill string through a hole in the drill bit and back up the space between the drill string and the surrounding rock. The drilling fluid prevents formation fluids from entering into the well bore, keeps the drill bit cool and clean during drilling, carries out drill cuttings (which help mud loggers determine what formation is currently being drilled through), and helps support the hole while drilling is paused and the drilling assembly is brought in and out of the hole. Drilling fluid can be either water, oil or synthetic-based and is generally a mixture of clays, fluid loss control additives, density control additives such as barite, and other fluid-thickeners.6
A main goal of any well is to ensure safe production of oil and gas in a way that protects groundwater and heightens production by keeping hydrocarbons inside the well and isolating the productive formations from aquifers and other formations. Sound well design and drilling ensure that no significant leakage will occur between any casing joints and that fluids introduced to the casing string at the surface or produced from the production zone must travel directly from the production zone to the surface inside the wellbore.7
Drilling a modern oil and gas well involves placement of tubes of steel, fitted together, into a borehole. These tubes are called "casing" and they are used to seal off the drilling and formation fluids from migrating into groundwater aquifers and to keep the wellbore from caving in.8 The deeper one goes in the well, the smaller the diameter of the drill stem--complete wells are similar to an extended sea captain's monocular. The first hole to be drilled is for the biggest tube of steel, the conductor pipe. The conductor pipe can also be driven into place, like a structural caisson, by a cable-tool rig. This pipe is followed by (i) the surface casing, (ii) the intermediate casing (if necessary), and (iii) the production-zone casing. Each of these has a progressively smaller diameter.9 (See Figure No. 1)
TABLE
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The conductor pipe keeps out loose sediment at and near the surface and separates the groundwater zones from the drilling fluids. After the conductor pipe is installed and cemented into place, drilling continues and the surface casing is centered into the hole and cemented in place. Like the conductor pipe, the main purposes of the surface casing and cement are to provide stability for the subsequent deep drilling and completion operations and separation of potable groundwater found in near-surface aquifers.10
These first and second phases of drilling--constituting the "surface hole" portions of drilling--are often completed with a smaller, cheaper drill rig and are commonly drilled using freshwater-based drilling fluids to prevent groundwater contamination. The surface hole is usually drilled to a
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predetermined depth established by the deepest occurrence of groundwater resources and can range from a couple hundred feet to 1000 feet deep or more. State regulations dictate the minimal setting depth of surface casing, with nearly all states requiring the surface...
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