E2-Wire

OVERNIGHT ENERGY: Long-awaited ‘fracking’ rules coming soon

by Andrew Restuccia and Ben Geman - 05/02/12 10:00 PM ET

Republicans and business groups have mounted an aggressive lobbying campaign against the rules, arguing that states are better prepared to oversee fracking. The GOP will likely use the regulations to paint the Obama administration as an opponent of oil-and-gas development, a tactic Republicans hope will pay off amid concern about high gasoline prices.

American Petroleum Institute CEO Jack Gerard told The Hill Tuesday that he expects the Interior Department to issue the regulations very soon.

“I expect they will be out tomorrow or Friday,” he said.

Two other industry officials said they expect Interior to unveil the regulations as soon as Thursday. An Interior Department spokesman would not comment on when the proposal will be released.

{mosads}The proposal would regulate the oil-and-gas development method known as fracking, in which water, chemicals and sand are injected at high pressure into rock formations to open up seams that enable trapped oil and natural gas to flow.

The rules, which only pertain to fracking on public land, are expected to require the disclosure of chemicals used in the drilling technique, along with regulations on well integrity and wastewater management.

Interior has been promising the regulations for months. Interior Secertary Ken Salazar told reporters last week that the department was continuing to refine the rules.

“We want to make sure we get them right and we want to make sure the rules are well understood. So we are doing the kind of editing on them that makes sure they will be clear when they are issued,” he said.

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Gerard sees Keystone pressure building, won’t rule out lawsuit

American Petroleum Institute President Jack Gerard expressed optimism Wednesday that Capitol Hill pressure on President Obama to approve the Keystone XL pipeline is building, but he’s not ruling out turning to the courts either.

“I am still optimistic that the President will approve the Keystone pipeline, perhaps even this year. I believe that issue is only growing in intensity,” Gerard told The Hill Wednesday of the proposed pipeline to bring Canadian oil sands crude to Gulf Coast refineries.

He noted that 69 House Democrats voted last month in favor of a transportation bill that authorizes the pipeline (although a number backed the bill as a way to launch House-Senate negotiations on the stalled extension of transportation programs).

Eleven Senate Democrats backed a failed amendment to approve the pipeline when the Senate debated its transportation package in March, but Gerard believes the number of Democrats who may back Keystone is higher.

“We are hearing there are yet others that would like this to happen, so I think the pressure is building on the President to make a policy decision surrounding the Keystone XL pipeline,” Gerard said. “I am still optimistic something could yet happen in a favorable fashion.”

The oil industry and a number of powerful business and industry groups back TransCanada’s proposed pipeline, calling it a way to boost energy security and create jobs.

Environmentalists bitterly oppose the project due to greenhouse gases from oil sands extraction and use, forest damage and water pollution from the massive projects in Alberta, and other concerns.

The Obama administration in January rejected a permit for the pipeline. But the White House stressed that its decision was based not on the “merits” but instead because Republicans had demanded an “arbitrary” permit deadline in a late 2011 payroll tax cut bill.

The administration has invited developer TransCanada Corp. to reapply for the cross-border permit, which the company intends to do.

Gerard, when the administration rejected the permit in January, suggested litigation was an option. He’s still keeping it on the table as a way to spur construction of the pipeline, noting that it’s “usually the last resort” but that “we will continue to pursue all avenues.”

Gerard spoke to The Hill in Columbus, Ohio, after a half-day conference on shale oil and natural gas development.

Nelson seeking DOJ probe of Chesapeake Energy

Reuters reported Wednesday night that Sen. Bill Nelson (D-Fla.) will press the Justice Department to investigate natural gas giant Chesapeake Energy.

Nelson’s request comes as Chesapeake CEO Aubrey McClendon has come under fire over his financial dealings stemming from a program that gives the executive a personal financial stake in the company’s oil-and-gas wells, known as the Founder Well Participation Program (FWPP).

Reuters reported last month that McClendon took $1.1 billion in loans to help finance his stakes in the wells. The wire service reported Wednesday that McClendon ran “a $200 million hedge fund that traded in the same commodities Chesapeake produces.”

Amid the ongoing firestorm over McClendon, Chesapeake’s board of directors announced an agreement Tuesday to end the FWPP on June 30, 2014. McClendon also agreed to step down as chairman of the company. But he will maintain his role as CEO.

McClendon apologized to Chesapeake stakeholders Wednesday for the “distractions” the controversy over his financial dealings has caused.

NRC to examine post-Fukushima reforms

The Nuclear Regulatory Commission will again examine recommendations stemming from Japan’s Fukushima Daiichi power plant disaster. The agency will examine proposed rules pertaining to the effects of earthquakes on nuclear power plants, among other things.

House panel to examine land management

A House Natural Resources Committee panel will hold a field hearing in Colorado on Thursday on legislation pertaining to federal land management.