The proposed rules would provide for a minimum 330 feet from lease line spacing, no between-well spacing, and a minimum of 100 feet from lease line to the first and last take points in a horizontal well, a "box" rule, and a special rule for off-lease penetration of the producing formation.

The standard proration unit size for oil wells would be 80 acres, plus additional acreage for horizontal wells as allowed by RRC Rule 86. Under the proposed rules, an operator would be allowed to assign up to 360 acres to a horizontal well with a 5,000-foot lateral.

The impact of fracing in the Barnett Shale was a subject of study by the Texas Water Development Board in 2007. The TWDB concluded that 89% of the water supply for the region of the Barnett Shale field was supplied by surface water sources, and that groundwater used for Barnett Shale development accounted for only 3 percent of all groundwater used in the study area. In East Texas, underground water is more plentiful and using it to frac wells may not place a strain on aquifers. But the Eagle Ford Shale is generally in a more arid part of the state where surface water supplies are more scarce and underground water is a more precious resource. Where the mineral owner also owns the surface estate, attention needs to be paid to the impact of mineral development on underground water supplies.

Companies have developed recycling methods to re-use frac water, which have been tested on an experimental basis. Devon has reported that it has been able to recycle a small percentage of the frac water used in its Barnett Shale wells and in the last three years has recycled nearly 4 million gallons. One obstacle is cost. It was reported that it costs about 40 percent more to recycle the water than to dispose of it by underground injection. Devon has said that its cost of recycling water in Barnett Shale wells is $4.43 per barrel, vs. $2 to $2.50 per barrel for typical water disposal into an injection well. Devon said that less than 5% of Devon's revenue goes toward the cost of handling flow-back water. For a good article on recycling frac water, go to this link.

Fox's movie has come under criticism by others. Energy in Depth, an industry website, calls his movie "heay on hyperbole, light on facts." Fox blames much of the pollution depicted in the movie on hydraulic fracturing. The movie shows water coming out of a faucet charged with methane and lit on fire.

Richard Stoneburner, President of Petrohawk Energy, commenting on the environmental opposition to hydraulic fracturing, has written that natural gas often occurs naturally in fresh water sands.

America's Natural Gas Alliance, another industry group, has posted an entry on its website titled "The Truth About Gasland," rebutting allegations in the film:

In the film's signature moment Mike Markham, a landowner, ignites his tap water. The film leaves the viewer with the impression the flaming tap water is a result of natural gas drilling. However, according to the Colorado Oil and Gas Conservation Commission, which tested Markham's water in 2008, at his request, methane in his water supply had "no indications of oil & gas related impacts to water well." Instead the investigation found that the cause was "biogenic" in nature, meaning it was naturally occurring due to the fact that his water well had been drilled into a natural gas pocket.

Professor Don Siegel at Syracuse University  told reporters in an interview that anti-drilling activists like Fox are distorting the facts about natural gas drilling. "As a hydrogeologist, I really am almost offended by some of the opposition that's trying to paint a picture of what groundwater resources are like that is completely wrong." He proceeded to list the "not-truths" about hydraulic fracturing.

The TCEQ has taken extraordinary measures over the past several months to test air quality in and around Fort Worth after Al Amendariz, then an engineering professor at Southern Methodist University and now regional administrator for the Environmental Protection Agency, published a report that air emissions from oil and gas activity in the Barnett Shale play were significantly contributing to reduced air quality in the DFW area. The concerns were exacerbated by reports from the town of DISH, in Denton County, that air emissions from oil and gas facilities were causing health problems in that community.

The TCEQ has also come under more general criticism and scrutiny by the EPA since Armendariz's appointment. The EPA has contended that the TCEQ's air-permitting program violates federal law, and the EPA has threatened to take over the program from the TCEQ. The Texas Attorney General has filed a legal challenge to the EPA's efforts to pre-empt the State's permitting program. The TCEQ and the EPA are in discussions to try to resolve the dispute.

Field rules are adopted by the Railroad Commission to govern the spacing of wells in a field. They specify how far wells must be from each other, how far wells must be from the nearest lease line, and how much acreage must be assigned to a well in order to obtain a permit to drill a well. The acreage assigned to a proposed well is known as a "proration unit." Well spacing and density rules were developed by the Commission after it was given jurisdiction over oil and gas operations in Texas in the early days of the oil industry, principally because of unregulated drilling in the East Texas Field. Because of unregulated drilling in that field, wells were being drilled that were not necessary for the efficient development of the field, and oil prices plummeted. The Commission was also given authority to "prorate" production from a field -- that is, to limit production, and to allocate or "prorate" the specified limit of production from a field among the wells in a field. The stated purposes of spacing and density rules are to avoid waste and protect the correlative rights of producers in the field. Theoretically, field rules should designate a size for proration units that approximates the amount of acreage in the field that can be efficiently drained by a single well.

The field rules proposed by EOG would provide:

PDEP also ordered C.C. Forbes, a unit of oilfield services contractor Forbes Energy Services, a Canada drilling company, to stop all work on Marcellus Shale wells. Forbes provided post-hydraulic fracturing services for EOG on the well that blew out. Forbes has idled to rigs in the Marcellus Shale.

This is the second time PDEP has banned an operator from drilling wells in the Marcellus Shale.  Previously, PDEP banned Cabot Oil and Gas from conducting hydraulic fracturing operations in Susquehanna County after three spills of a chemical used in hydraulic fracturing at Cabot wells. PDEP also fined Cabot $56,650 and ordered the company to submit a new Pollution Prevention and Contingency Plan and Control Disposal Plan for its wells.

The failure of EOG's blowout preventer is reminiscent of the environmental disaster now taking place in the Gulf of Mexico.

As has been widely reported, the Mayor of Dish has been complaining that oil and gas operations around the town have resulted in exposure to airborne contaminants and health problems among citizens in the town. The town commissioned an air quality survey by a company named Wolf Eagle Environmental, which reported in December 2009 that the town "continues to show high levels of atmospheric VOCs known to have both carcinogenic and neurotoxin capabilities in concentrations that exceed TCEQ ESLs. High atmospheric concentractions of Methane were confirmed at various locations in both the August 2009 and December 2009 Air Quality Studies performed by Wolf Eagle." The town also conducted a health survey of its citizens, and the survey results were analyzed by Wilma Subra, a Louisiana chemist, for Earthworks' Oil and Gas Accountability Project. Ms. Subra's report concluded that a significant number of residents reported health effects associated with toxics measured in excess of TCEQ screening levels, and it recommended that the Texas Department of State Health Services (TxDSHS) test the blood of community members.

TxDSHS reported that, although elevated levels of volatile organic compounds were found in some of the blood samples, "the pattern of VOC values was not consistent with a community-wide exposure to airborne contaminants, such as those that might be associated with natural gas drilling operations," and could have come from other sources such as cigarette smoking, metal cleaners, degreaser and lubricants. TxDSHS also tested water samples from residents' homes and found one home with an elevated level of a chemical derived from chlorine added to drinking water. The TxDSHS report cautioned that its investigation was limited to a one-time sampling event, that VOC's stay in the body for only a short time, so the tests could reflect only recent exposures and not historical exposures.

Mayor Tillman, interviewed by the Fort Worth Star-Telegram, commented that he does not think the results of the tests should be taken to assume that drilling in the rest of the Barnett Shale is being conducted safely. "He is convinced that gas companies were severly polluting the air in Dish but cleaned up their act when they saw state regulators were starting to take an interest. "They've done something and I don't know what it is and I don't care,' Tillman said. 'All I care is the air is getting cleaner.'"

Gene Powell, Editor of the Powell Barnett Shale Newsletter, estimated that the tests conducted to investigate Mayor Tillman's complaints have cost the State $400,000, or $6,667 per resident. 

Josh Fox was recently interviewed about his film on the PBS program NOW. The film asserts that frac'ing of wells has caused underground aquifers to be charged with methane in Pennsylvania and Colorado and poses severe risks of contamination to the water supply. Josh Fox notes that hydraulic fracturing is exempt from federal regulation, and he advocates for passage of the FRAC Act now before Congress that would give the EPA jurisdiction over hydraulic fracturing.

The comments about the NOW story posted on its website evidence the growing controversy over frac'ing.

ConocoPhillips reported that it has completed the drilling of four horizontal wells in the Eagle Ford shale play, in its "liquids-rich" core. The first of these wells was put on production in March and flowed at an initial rate of 3.8 mmcf/day and 1,200 barrels/day of condensate.

All of the new shale gas production continues to put downward pressure on gas prices. Natural gas futures for June delivery fell 36.8 cents, or 8.5 percent on Thursday, April 29 on NYMEX. So far this year, natural gas futures have fallen 29 percent. The Energy Information Administration reported that the supply of gas in storage increased  by 83 Bcf for the week ended April 30. Gas in storage is 315 Bcf above the 5-year average.

Louisiana has a forced-pooling statute that allows an operator to propose to the Department of Conservation a unit for a well which, if approved, forces all mineral owners in the unit to pool their interests for the drilling and production of that well. According to the plaintiffs, this statute only authorizes the Department to approve units large enough to cover an area drained by one well. The practice in Lousiana for the Cotton Valley and Haynesville fields is to obtain orders for 640-acre units, and later obtain approval to drill additoinal "alternate unit wells" on those units. The suit contends that this practice is unfair to the owners of minerals and royalties in the unit, and violates state law. The suit seeks certification of a class action on behalf of all owners of mineral rights in Haynesville Zone in Louisiana. It seeks a declaration that the Department has no authority to establish a unit having an area in excess of the area drainable by one well, and that any such unit is "null and void." The suit also seeks unspecified damages against the defendant companies.

An interesting article describing the history of forced pooling in Louisiana and arguing that multiple-well units are illegal may be found at fairdrilling.com.

I have written previously about the proceeding before the Texas Railroad Commission for adoption of field rules for the Carthage (Haynesville Shale) Field. In that proceeding, the applicants sought and obtained field rules establishing a standard proration unit of 640 acres for wells in the field, with "optional" 40-acre units. The examiners who heard the evidence opined that Devon had produced no evidence that a well in the field could drain 640 acres, and they recommended a 320-acre standard unit, but the Commissioners overruled them and agreed to Devon's request for 640-acre units.

It appears that in both Lousiana and Texas the regulators are going along with the fiction advocated by operators that wells in the Haynesville should be developed with 640-acre units, despite the fact that everyone knows the wells will in fact be drilled with 160 or 80-acre spacing. Everyone understands that this fiction is intended to accommodate the desires of the operators to construct larger units in order to (i) have more flexibility in how they space their wells and (ii) hold more acreage with a single well. I have sympathy with the first objective, but not with the second. It is impossible to drill wells with horizontal legs of 5,000 feet or more unless fairly large units are created. Conversely, it is unfair to the mineral owners in a large unit for their leases to be held by production from a single well in the unit where several wells are necessary to fully develop the reservoir under their lands.