American Oil and Gas Reporter - April 2015 - 54

BLM Fracture Rule

Regulation Adds Layer Of Complexity
By Larry Nettles,
Jay Rothrock
and Corinne Snow

HOUSTON-The U.S. Department of
Interior's new rule regulating hydraulic
fracturing establishes many new requirements that increase the regulatory burden
for wells drilled on federal and Indian
lands, and may ultimately make drilling on
those lands less attractive than similar projects on nearby lands that are subject only
to state regulation.
DOI's Bureau of Land Management released its much anticipated final rule for
regulating hydraulic fracturing activities
on federal and Indian lands on March 20.
It includes new wellbore integrity requirements, imposes standards for interim storage of recovered waste fluids, and
requires notifications and waiting periods
for key parts of the fracturing process. The
rule also mandates disclosure of the
chemicals used in the fracturing process,
which can be done through the industrysupported FracFocus.org website. The
rule will take effect on June 24.
BLM regulates roughly 6 percent of domestic onshore crude oil production and
13 percent of onshore natural gas production. There are more than 100,000 oil and
gas wells on federally managed
lands-more than 90 percent of which
employ hydraulic fracturing. BLM estimates the new rule will impact 2,800 hydraulic fracturing operations a year, but
that it could impact up to 3,800 operations
a year, based on previous levels of activity on federal lands and growing activity
on Indian lands.
The final rule applies only to hydraulic fracturing, which it defines as
"those operations conducted in an individual wellbore designed to increase the
flow of hydrocarbons from the rock formation to the wellbore (by) modifying the
permeability of reservoir rock by applying fluids under pressure to fracture it."
The definition does not include enhanced secondary recovery such as waterfloods, tertiary recovery, recovery through
steam injection, or other types of well stimulation operations such as acidizing. The
same requirements apply when a well is
hydraulically fractured for the first time or
for any subsequent stimulation.
The rule is the first revision to BLM's
hydraulic fracturing regulations since
1988. The agency published its first proposal to update those rules on May 11,
2012. In the three years since, the agency
54 THE AMERICAN OIL & GAS REPORTER

has reviewed more than 1.5 million public comments, and revised the rule several times.
The 2012 proposal was met with heavy
opposition from industry members, who
argued it was unnecessarily onerous and
duplicative of state regulatory regimes already addressing these issues. BLM withdrew its 2012 proposal and issued a revised
proposal in 2013. On March 20, 2015-almost two years after the previous proposal and nearly three years after the initial
proposal-BLM issued its final rule, which
tracks the 2013 proposal in most respects, although it contains a few key
changes.

Prefracturing Submissions
Operators must obtain BLM approval
before beginning hydraulic fracturing activities on federal or Indian lands. The final rule sets forth two ways for operators
to request BLM's approval for hydraulic
fracturing activities:
* An application for a permit to drill;
and
* A sundry notice and report on wells
as a notice of intent.
Operators also may submit a "master
hydraulic fracturing plan" for a group of
wells in formations with substantially
similar geologic characteristics. These
operators also must obtain an approved
APD for each well in order to satisfy other BLM requirements.
For wells that are already in various
stages of permitting, drilling and completion, the rule sets forth a detailed table clarifying exactly which provisions are applicable, based on the timing of various administrative and operational milestones in
relation to the final rule's effective date.
Operators with wells already in the permitting, drilling or completion phases
should review this table carefully, as
well as the associated preamble text, to determine what portions of the rule apply to
their operations and what specific vehicles
are available to obtain BLM approval before beginning hydraulic fracturing activities.
Operators must submit various types of
information as part of their prefracturing
submissions, including:
* The measured or estimated depths
of usable water based on a drill log from
the specific well or type well;
* The top and bottom depths of the
formation where the hydraulic fracturing
fluids will be injected; and
* The "confining zones," which are

defined as "a geological formation, group
of formations, or part of a formation that
is capable of preventing fluid movement
from any formation that will be hydraulically fractured into a usable water zone."
The prefracturing submission also
must include information about the source
of the water used in the operation; the anticipated access route and transportation
method for bringing the water to the site;
the volume of fluid to be used; the maximum anticipated surface pressure; wellbore trajectory; the estimated direction and
length of fractures; and the locations, trajectories and depths of existing wellbores within one-half mile of the wellbore;
as well as information about how the operator will handle recovered fluids, the estimated volume of fluids to be recovered,
and the proposed disposal method.
Operators also must submit a map
showing the location, orientation, and
extent of any known or suspected faults or
fractures within one-half mile (horizontal
distance) of the wellbore trajectory that
may transect the confining zone(s).
Testing And Flowback
BLM generally encourages base-line
testing of waters near oil and gas operations, and considers such testing a best
management practice. However, BLM
explicitly chose to reject commenters' suggestions that its final rule incorporate baseline water testing in its final hydraulic fracturing rule, primarily because of complicated split-estate ownership issues and the
wide variety of hydrogeological conditions
across BLM lands that, in its view, would
make administering base-line testing
"confusing and of limited value."
The agency does note that it may consider base-line testing prior to drilling as
a "condition of approval" in cases where
it also manages the surface. The preamble to the rule notes that the process
BLM undertakes to comply with the National Environmental Policy Act includes
assessing impacts to water quality. If any
impacts are not addressed sufficiently,
BLM may impose mitigation measures, including base-line testing and monitoring
requirements developed on a case-by-case
basis, as a condition for approving a
project.
Before beginning fracturing operations, operators must submit for BLM approval a plan for managing and containing all fluids recovered during the process.
This plan includes a description of the pro-



American Oil and Gas Reporter - April 2015

Table of Contents for the Digital Edition of American Oil and Gas Reporter - April 2015

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