[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]




           UNCONVENTIONAL FUELS, PART I: SHALE GAS POTENTIAL

=======================================================================

                           OVERSIGHT HEARING

                               before the

                       SUBCOMMITTEE ON ENERGY AND
                           MINERAL RESOURCES

                                 of the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                         Thursday, June 4, 2009

                               __________

                           Serial No. 111-22

                               __________

       Printed for the use of the Committee on Natural Resources



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                     COMMITTEE ON NATURAL RESOURCES

              NICK J. RAHALL, II, West Virginia, Chairman
          DOC HASTINGS, Washington, Ranking Republican Member

Dale E. Kildee, Michigan             Don Young, Alaska
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii             Jeff Flake, Arizona
Frank Pallone, Jr., New Jersey       Henry E. Brown, Jr., South 
Grace F. Napolitano, California          Carolina
Rush D. Holt, New Jersey             Cathy McMorris Rodgers, Washington
Raul M. Grijalva, Arizona            Louie Gohmert, Texas
Madeleine Z. Bordallo, Guam          Rob Bishop, Utah
Jim Costa, California                Bill Shuster, Pennsylvania
Dan Boren, Oklahoma                  Doug Lamborn, Colorado
Gregorio Sablan, Northern Marianas   Adrian Smith, Nebraska
Martin T. Heinrich, New Mexico       Robert J. Wittman, Virginia
George Miller, California            Paul C. Broun, Georgia
Edward J. Markey, Massachusetts      John Fleming, Louisiana
Peter A. DeFazio, Oregon             Mike Coffman, Colorado
Maurice D. Hinchey, New York         Jason Chaffetz, Utah
Donna M. Christensen, Virgin         Cynthia M. Lummis, Wyoming
    Islands                          Tom McClintock, California
Diana DeGette, Colorado              Bill Cassidy, Louisiana
Ron Kind, Wisconsin
Lois Capps, California
Jay Inslee, Washington
Joe Baca, California
Stephanie Herseth Sandlin, South 
    Dakota
John P. Sarbanes, Maryland
Carol Shea-Porter, New Hampshire
Niki Tsongas, Massachusetts
Frank Kratovil, Jr., Maryland
Pedro R. Pierluisi, Puerto Rico

                     James H. Zoia, Chief of Staff
                       Rick Healy, Chief Counsel
                 Todd Young, Republican Chief of Staff
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                


              SUBCOMMITTEE ON ENERGY AND MINERAL RESOURCES

                    JIM COSTA, California, Chairman
           DOUG LAMBORN, Colorado, Ranking Republican Member

Eni F.H. Faleomavaega, American      Don Young, Alaska
    Samoa                            Louie Gohmert, Texas
Rush D. Holt, New Jersey             John Fleming, Louisiana
Dan Boren, Oklahoma                  Jason Chaffetz, Utah
Gregorio Sablan, Northern Marianas   Cynthia M. Lummis, Wyoming
Martin T. Heinrich, New Mexico       Doc Hastings, Washington, ex 
Edward J. Markey, Massachusetts          officio
Maurice D. Hinchey, New York
John P. Sarbanes, Maryland
Niki Tsongas, Massachusetts
Nick J. Rahall, II, West Virginia, 
    ex officio
                                 ------                                
                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Thursday, June 4, 2009...........................     1

Statement of Members:
    Costa, Hon. Jim, a Representative in Congress from the State 
      of California..............................................     1
        Prepared statement of....................................     3
    Lamborn, Hon. Doug, a Representative in Congress from the 
      State of Colorado..........................................     3
        Prepared statement of....................................     4

Statement of Witnesses:
    Appleton, Albert F., Infrastructure and Environmental 
      Consultant, Former Director of the New York City Water and 
      Sewer System...............................................    27
        Prepared statement of....................................    29
    Duncan, Douglas, Research Geologist, U.S. Geological Survey, 
      U.S. Department of the Interior............................     6
        Prepared statement of....................................     7
    Helms, Lynn D., Director, Oil and Gas Division, North Dakota 
      Industrial Commission......................................    21
        Prepared statement of....................................    23
    John, Mike, Vice President of Corporate Development and 
      Government Relations, Eastern Division, Chesapeake Energy 
      Corporation................................................    15
        Prepared statement of....................................    17
    Kell, Scott, President, Ground Water Protection Council......    12
        Prepared statement of....................................    14

Additional materials supplied:
    List of documents retained in the Committee's official files.    61

 
    OVERSIGHT HEARING ON ``UNCONVENTIONAL FUELS, PART I: SHALE GAS 
                              POTENTIAL''

                              ----------                              


                         Thursday, June 4, 2009

                     U.S. House of Representatives

              Subcommittee on Energy and Mineral Resources

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Subcommittee met, pursuant to call, at 10:05 a.m. in 
Room 1334 Longworth House Office Building, Hon. Jim Costa, 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Costa, Lamborn, Faleomavaega, 
Holt, Boren, Heinrich, Hinchey, Sarbanes, Gohmert, Fleming and 
Lummis.
    Also Present: Representative DeGette

   STATEMENT OF THE HONORABLE JIM COSTA, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Costa. Good morning. The Subcommittee on Energy and 
Mineral Resources, as part of the larger Natural Resources 
Committee, will now come to order.
    The hearing this morning is on, I believe, an important 
topic as we look at the full panoply of, as I like to say, 
energy tools that are in our energy toolbox as we look in the 
21st Century to developing a comprehensive energy policy we 
hope will deal with the challenges that we face in this 
country--both at home and abroad. This relates to America's 
efforts to improve the quality of our air from a region-to-
region standpoint, to reduce our dependence on foreign sources 
of energy, and to deal with the transition of all the various 
energy options that are out there as we try to build a robust 
renewable energy portfolio. At the same time, we need to take 
advantage of those more traditional energy resources, like oil 
and gas, that have been really the backbone of our economy in 
the 20th Century--and how we deal with using all of those 
efforts in a smart, common-sense way that is economically 
effective as America rebuilds its economy dealing with a needed 
comprehensive energy package.
    The way this morning's hearing fits into all of that is by 
focusing more on whether or not these various fuels--while 
natural gas is not a new fuel--how the development of this fuel 
from shale fits with our newer options on fuels. In fact, do we 
need more time for research and development as we look at these 
new technologies? What are the benefits and tradeoffs that are 
associated with various fuels, such as, in this case, the 
efforts to deal with water use, cost competitiveness and the 
impacts on climate?
    Shale gas actually is not new. I am told that the 
development has been for almost some 50 years, but its 
application and its potential is, I think, exciting as we look 
at the prospects. Shale gas could be developed as a sizable 
part of this energy portfolio that I spoke of a moment ago. 
When you look at the map of the United States, we believe the 
technological advances already are unlocking potentially huge 
reservoirs of that natural gas from shale.
    Just in one shale play located in Texas called the Barnett 
Shale play, it produces six percent of all the natural gas that 
is developed in the United States today. The Barnett could soon 
be dwarfed by other shale gas plays that have been identified 
in other regions of the United States. The Marcellus Shale 
Formation alone may contain enough natural gas to supply the 
Nation with its current use for 15 years at the current rate of 
consumption of natural gas. That is incredible when you think 
about it.
    Capitalizing on this vast resource without, I think, a 
complementary, proactive effort as we look at how that is 
developed between state laws and the Federal energy policy, how 
we deal with questions of commercial, technical and 
environmental issues that are all a part of that discussion, is 
what we would like to examine here today. There are clearly 
business risks that have been associated with shale gas and, of 
course as we know, natural gas prices certainly influence the 
development.
    In certain regions of the country, we have tradeoffs that 
are very important--air quality, for example. In California, we 
have two regions, the South Coast Basin, which most people are 
familiar with--the Los Angeles area. That is a nonattainment 
area. The area that I represent, the San Joaquin Valley, is a 
nonattainment area as well. We have sanctions. We have air 
quality issues that we have to meet. Natural gas, therefore, in 
those kinds of regions where you have nonattainment is today 
the energy de jour because, in fact, of its clean-burning 
qualities.
    We also have issues that impact land use, and we will hear 
about some of those this morning, and as I mentioned a moment 
ago--water. Some states are considering limits on drilling 
until the issues of water and wastewater supply are resolved. 
What we want to look at is what solutions are available as we 
develop this shale gas, what is the appropriate role between 
states and the Federal government as we capitalize on shale 
gas.
    We look forward to this panel's expertise this morning that 
includes geologists, a business perspective, a perspective on 
regulations, on water and sustainability concerns. I hope I 
have framed the debate and the testimony this morning and look 
forward to the questions that Members will ask and raise as it 
relates to this important fuel that seems to be available in 
significant amounts in the United States. I will defer now to 
my Ranking Member, Mr. Doug Lamborn, from Colorado for an 
opening statement that he may have, and then we will get to the 
witnesses.
    [The prepared statement of Mr. Costa follows:]

            Statement of The Honorable Jim Costa, Chairman, 
              Subcommittee on Energy and Mineral Resources

    Today is the first of a series of hearings on unconventional fuels. 
I expect this series will provide opportunities to examine such 
critical questions as: which unconventional fuels are ready for prime 
time in our energy portfolio, which need more time for research and 
technological development, and what are the benefits and tradeoffs 
associated with various unconventional fuels, such as water use, cost-
competitiveness, and climate impacts?
    Shale gas is the first resource we will examine. Shale gas could be 
a sizeable part of our energy portfolio in just a few years. 
Technological advances are already unlocking huge reserves of natural 
gas from shale. Just one shale play, the Barnett in Texas, produces 6% 
of all U.S. natural gas. Yet the Barnett could soon be dwarfed by other 
shale gas plays. Here in the east, the Marcellus Shale formation alone 
may contain enough natural gas to supply the nation for 15 years at 
current rates of consumption.
    However, capitalizing on this vast resource may be delayed without 
proactive efforts to answer questions--commercial, technical, 
environmental. For example, there are business risks associated with 
shale gas. Natural gas prices influence development. Landowner concerns 
are emerging. And, some states are considering limits on drilling until 
water supply and wastewater issues are resolved.
    Today, I hope we will learn about solutions that are available to 
help citizens, states, and the federal Government capitalize on shale 
gas. I look forward to today's panel, including geologists, the 
business outlook, and perspectives on regulations and water and 
sustainability concerns.
                                 ______
                                 

 STATEMENT OF THE HONORABLE DOUG LAMBORN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF COLORADO

    Mr. Lamborn. Thank you, Mr. Chairman, and I want to thank 
you also for holding this important hearing today on the 
potential of the nation's shale gas resources and the role they 
can play in meeting our country's energy needs now and in the 
future. While we are here to discuss the importance of this 
unconventional resource in meeting part of our current and 
future energy needs, I found it interesting to learn that the 
first natural gas well completed in the U.S. was in New York 
State more than 185 years ago and was a shale gas well.
    Today, shale gas and other unconventional natural gas 
sources, such as tight sands and coalbed methane, provide more 
than 47 percent of the natural gas consumed in the U.S. 
annually. According to the Energy Information Administration, 
by 2030 these unconventional natural gas resources will provide 
56 percent of the natural gas consumed by the United States.
    All of this was made possible through the development of 
the Barnett Shale in Texas in the 1980s and 1990s, as was 
alluded to by the Chairman, where innovative drilling 
techniques--horizontal drilling combined with the safe, 
longstanding practice of hydraulic fracturing--demonstrated 
that this unconventional fuel could be produced on a large 
scale economically. Development of the Barnett Shale gas play 
paved the way and sparked interest in other shale gas basins 
throughout the U.S.
    The Bakken in South Dakota, the Haynesville in Louisiana, 
and the Marcellus in the northeastern U.S., to name a few. 
While this is a great opportunity for the country to have 
access to a significant reserve of clean-burning fuel well into 
the future, for some unfamiliar with the oil and gas industry 
it has raised concerns about the practice of hydraulic 
fracturing. Hydraulic fracturing has been used by the oil and 
gas industry since the late 1940s.
    More than one million fracturing jobs have been completed 
in the U.S. since the technique was first developed, and there 
have been no demonstrated adverse impacts to drinking water 
wells from the fracking process or by the fluids used in the 
process.
    Testifying before us today, we have Mr. Scott Kell, 
President of the Groundwater Protection Council, which recently 
completed two reports for the Department of Energy: ``Modern 
Shale Gas Development in the United States: A Primer'' for the 
U.S. and ``State Oil and Gas Regulations Designed to Protect 
Water Resources,'' and Mr. Lynn Helms, Director of the Oil and 
Gas Division for the North Dakota Industrial Commission.
    I anticipate that their testimony will address some of the 
concerns that people have about the practice of hydraulic 
fracturing and the level of environmental protection and 
regulations specific to oil and gas development. I also look 
forward to hearing from our other witnesses, Mr. Duncan, Mr. 
John and Mr. Appleton.
    Before I finish my remarks, I would like to thank the 
Chairman of this Subcommittee for considering holding a hearing 
on oil shale as part of the series on unconventional fuels. In 
the future, oil shale will play a significant role in our 
energy mix. While estimates vary, the United States Geological 
Survey says the oil shale in Colorado, Wyoming and Utah 
contains more than one trillion barrels of recoverable oil, a 
crucial fuel for the transportation sector.
    By the way, that would be three to four times the reserves 
of Saudi Arabia, and I am not just talking about cars, but 
planes, trains, trucks and ships. As some people have pointed 
out, there are no hybrid jet engines. I believe for the United 
States to improve both its economic and national security, we 
will have to develop more of our own resources, renewable 
resources, such as wind and solar, other renewable resources 
such as hydropower, geothermal, biomass as well as nuclear, but 
also our conventional and unconventional energy resources.
    We must recognize that we will need to use our fossil fuels 
well into the future. Whether we like it or not, the rest of 
the world and ourselves are highly dependent on these fuel 
sources, and they are fully integrated into our society today. 
These are the energy resources that fuel our nation's economy 
and the economy of the world. This is an undeniable fact.
    Thank you again, Mr. Chairman, for holding this hearing 
today and exploring this important topic in the future for 
unconventional fuels. I look forward to hearing from our 
witnesses on this great natural resource, and I yield back.
    [The prepared statement of Mr. Lamborn follows:]

     Statement of The Honorable Doug Lamborn, Ranking Republican, 
              Subcommittee on Energy and Mineral Resources

    I want to thank you Mr. Chairman for holding this important hearing 
today on the potential of the Nation's shale gas resources and the role 
they can play in meeting our country's energy needs now and in the 
future.
    While we're here to discuss the importance of this unconventional 
resource in meeting part of our current and future energy needs, I 
found it interesting to learn that the first natural gas well completed 
in the U.S. was in New York state more than 185 years ago and was a 
shale gas well.
    Today shale gas and other unconventional natural gas sources such 
as tight sands and coal bed methane provide more than 47 percent of the 
natural gas consumed in the U.S. annually. According to the Energy 
Information Administration, by 2030 these unconventional natural gas 
resources will provide 56 percent of the natural gas consumed by the 
United States.
    All of this was made possible through development of the Barnett 
Shale in Texas in the 1980s and 1990s, as you alluded to, where 
innovative drilling techniques, horizontal drilling, combined with the 
safe long standing practice of hydraulic fracturing, demonstrated that 
this unconventional fuel could be produced on a large scale 
economically.
    Development of the Barnett shale gas play paved the way and sparked 
interest in other shale gas basins throughout the U.S.--the Bakken in 
South Dakota, the Haynesville in Louisiana, and the Marcellus in the 
Northeastern U.S. to name a few.
    While this is a great opportunity for the country to have access to 
a significant reserve of clean burning fuel well into the future, for 
some unfamiliar with the oil and gas industry, it has raised concern 
about the practice of hydraulic fracturing.
    Hydraulic fracturing has been used by the oil and gas industry 
since the late 1940s. More than 1 million fracturing jobs have been 
completed in the U.S. since the technique was first developed. And 
there have been no demonstrated adverse impacts to drinking water wells 
from the ``fracking'' process or by the fluids used in the process.
    Testifying before us today we have Mr. Scott Kell, President of the 
Ground Water Protection Council which, recently completed two reports 
for the Department of Energy: ``Modern Shale Gas Development in the 
United States: a Primer for the U.S.'' and ``State Oil and Gas 
Regulations Designed to Protect Water Resources'' and, Mr. Lynn Helms, 
Director of the Oil and Gas Division for the North Dakota Industrial 
Commission.
    I anticipate that their testimony will address some of the concerns 
that people have about the practice of hydraulic fracturing and the 
level of environmental protection and regulations specific to oil and 
gas development.
    I also look forward to hearing from our other witnesses: Mr. 
Duncan, Mr. John and Mr. Appleton.
    Before I finish my remarks I would like to thank the chairman of 
the subcommittee for considering holding a hearing on oil shale as part 
of the series on Unconventional Fuels.
    In the future, oil shale will play a significant role in our energy 
mix. While estimates vary, the United States Geological Survey says the 
oil shale in Colorado, Wyoming and Utah contains more than 1 trillion 
barrels of recoverable oil--a crucial fuel for the transportation 
sector. And I'm not just talking about cars--but planes, trains, trucks 
and ships. As some people have pointed out there are no hybrid jet 
engines.
    I believe for the United States to improve both its economic and 
national security, we will have to develop more of our own resources--
renewable resources such as wind and solar, other renewable resources 
such as hydropower, geothermal, biomass, and nuclear--but also our 
conventional and unconventional energy resources.
    We must recognize that we will need to use our fossil fuels well 
into the future. Whether we like it or not we and the rest of the world 
are highly dependent on these fuel sources and they are fully 
integrated into our society. These are the energy resources that fuel 
our Nation's economy and the economy of the world. This is an 
undeniable fact.
    Thank you again Mr. Chairman for holding this hearing today and 
exploring this important topic in the future. I look forward to hearing 
from our witnesses on this great national resource.
                                 ______
                                 
    Mr. Costa. Thank you very much, Ranking Member. I 
appreciate your comments on the way we are trying to frame the 
hearing this morning.
    Planes, trains and automobiles. Maybe we want to make a 
movie. No. I guess it has already been done. Members of the 
Subcommittee, I want to thank you very much for your 
participation here this morning in advance, and it is the 
intention of the Chairman to get right into the heart of the 
testimony by having our witnesses testify, and that way we can 
ask our questions based upon their comments. I think that is a 
good way to get into it.
    Our witnesses are Mr. Douglas Duncan, the Associate 
Coordinator of the Energy Resources Program for the United 
States Geological Survey; Mr. Scott Kell, President of the 
Ground Water Protection Council; Mr. Mike John, Vice President 
of Corporate Development and Government Relations for the 
Eastern Division of the Chesapeake Energy Corporation; Mr. Lynn 
Helms, the Director of Oil and Gas Division for the North 
Dakota Industrial Commission.
    Our fifth witness is Mr. Albert Appleton, an Infrastructure 
and Environmental Consultant and the former Director of the New 
York City Water and Sewer System. Those make up the five 
members of this panel that we look forward to their testimony. 
For those who are testifying this morning who have not had that 
opportunity before, the archaic system of the House is that we 
keep you to five minutes, so the Chairman looks kindly on those 
who stay within the five minutes.
    The green light is on for the first four minutes, and then 
the yellow light gives you a minute to kind of summarize your 
comments, and if the red light is on for too long, you will 
incur the disfavor of the Chairman, so you are on your own, 
gentlemen. Let us begin first with Mr. Douglas Duncan, the 
Associate Coordinator of the Energy Resources Program for the 
United States Geological Survey. Mr. Duncan.

  STATEMENT OF DOUGLAS DUNCAN, ASSOCIATE COORDINATOR, ENERGY 
       RESOURCES PROGRAM, UNITED STATES GEOLOGICAL SURVEY

    Mr. Duncan. Thank you very much. Mr. Chairman and Members 
of the Subcommittee, thank you for the opportunity to appear 
here today to discuss with you the U.S. Geological Survey's 
role in studying, understanding and assessing the 
unconventional gas resources of the Nation exclusive of the 
Federal offshore and the world.
    Mr. Costa. Could you bring that mic a little closer to you.
    Mr. Duncan. I am sorry. I can do that. Is that better?
    Mr. Costa. We want everybody to hear you.
    Mr. Duncan. All right. Do I need to start over, or are you 
cool? OK.
    Mr. Costa. We got your name.
    Mr. Duncan. All right. The U.S. currently consumes about 21 
percent of the energy resources produced in the world, and thus 
the volumes, quality and availability of domestic and foreign 
energy resources are of critical importance to the U.S.
    The USGS Energy Resources Program provides research and 
assessment on the conventional oil, gas and coal resources, 
emerging resources such as gas hydrates, under-utilized 
resources, such as geothermal, and unconventional resources, 
such as shale gas and oil shale. We also provide research on 
the effects associated with energy resource occurrence, 
production and utilization of the Nation exclusive of the 
Federal offshore waters and the world.
    The USGS distinguishes between conventional and continuous 
petroleum accumulations for purposes of research and resource 
assessment. Briefly stated, conventional accumulations are 
described in terms of discrete fields or pools localized in 
traps by the buoyancy of oil or gas and water. Now, in 
contrast, continuous accumulations are oil or gas accumulations 
that have large spatial dimensions and indistinctly defined 
boundaries and exists more or less independently of the water 
column.
    Examples of continuous accumulations are shale gas and 
coalbed gas, which are among the fastest growing domestic 
energy resources. Now, results from the current USGS effort to 
update our national assessments for undiscovered, technically 
recoverable continuous gas resources are estimated to be a mean 
of 364 trillion cubic feet. This is exclusive again of Federal 
waters.
    With respect to the Energy Resources Program work outside 
of the United States, the USGS has conducted assessments on 
conventional oil and gas resources only as little data exists 
on global continuous or unconventional accumulations. 
Currently, the USGS is conducting a screening exercise, which 
will evaluate the availability of information for estimates of 
continuous petroleum resources outside the U.S.
    Continuous resources have the potential to significantly 
contribute to the global petroleum endowment, but 
scientifically vetted characterization and quantitative 
estimates of those resources must be available before their 
true potential can be evaluated. As the nation's energy mix 
evolves, the USGS will continue to adapt its research and 
assessment portfolio. USGS resource assessments in research are 
an integral part of the public and government discourse about 
the energy resource future of the Nation and allow science to 
inform and advise and engage decisionmakers.
    The USGS stands ready to assist Congress as it examines 
these challenges and opportunities. Thank you for this 
opportunity to provide an overview of the USGS research and 
assessments of natural gas and other energy resources. I would 
be happy to answer your questions.
    [The prepared statement of Mr. Duncan follows:]

   Statement of Douglas Duncan, Research Geologist, U.S. Geological 
                Survey, U.S. Department of the Interior

    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to appear here today to discuss with you the U.S. 
Geological Survey's role in studying, understanding, and assessing the 
unconventional gas resources of the Nation (exclusive of the Federal 
offshore) and the World.
Introduction
    Adequate, reliable, and affordable energy supplies obtained using 
environmentally sustainable practices are essential to economic 
prosperity, environmental and human health, and political stability. 
National and global consumption of fossil fuels are projected to 
increase over the next several decades, though at a slower rate than in 
recent years. The projected increase in U.S. consumption is due, in 
part, to greater anticipated domestic unconventional gas supplies. The 
Energy Information Administration (EIA) Annual Energy Outlook 2009 
projects substantial increases in domestic production of oil, natural 
gas, and coal, with renewable resources accounting for a rapidly 
increasing, but still smaller, proportion of the total energy mix under 
the current policy baseline. Although the impact of new policies aimed 
at creating a low-carbon economy may increase the speed of this 
transition to renewable sources, conventional energy resources are 
expected to remain an important component of our energy mix for some 
time to come.
    The United States currently consumes about 21 % of the energy 
resources produced in the world. Thus, the volumes, quality, and 
availability of domestic and foreign energy resources are of critical 
importance to the United States. The Nation continues to face important 
decisions regarding the competing uses of public lands and offshore 
waters, the supply of energy to sustain development and enable growth, 
and the environmental effects of energy resource development.
Role of the U.S. Geological Survey
    The U.S. Geological Survey (USGS) Energy Resources Program (ERP) 
provides the information needed to address these challenges by 
conducting scientific investigations of geologically based energy 
resources, including research and assessment on the geology of 
conventional oil, gas, and coal resources; emerging resources such as 
gas hydrates; underutilized resources such as geothermal; and 
unconventional resources such as shale gas and oil shale, as well as 
research on the environmental effects associated with energy resource 
occurrence, production, and (or) utilization. The mission of the ERP 
is: (1) to understand the processes critical to the formation, 
accumulation, occurrence, and alteration of geologically based energy 
resources; (2) to conduct scientifically robust assessments of those 
resources; and (3) to study the impact of energy resource occurrence 
and (or) production and use on both environmental and human health. The 
results from these geoscientific studies are used to evaluate the 
quality and distribution of energy resource accumulations and to assess 
the energy resource potential of the Nation (exclusive of Federal 
offshore waters) and the World. (Federal offshore waters are assessed 
by the Minerals Management Service of the Department of the Interior.)
    The results from these USGS studies provide impartial, robust 
scientific information about energy resources that directly supports 
the U.S. Department of the Interior's (DOI's) mission of protecting and 
responsibly managing the Nation's natural resources; USGS information 
is used by policy and decision makers, land and resource managers, 
other federal and state agencies, the domestic energy industry, foreign 
governments, nongovernmental groups, academia, other scientists, and 
the public. As one example, current findings from the USGS National Oil 
and Gas Assessment (NOGA) provide updated scientific information on the 
mean estimates for undiscovered, technically recoverable oil and gas 
resources underlying the onshore U.S. and State-owned waters. They 
indicate that the total 47.5 billion barrels of oil and 743 trillion 
cubic feet of gas, respectively (Figure 1A & B).
    Collectively, information from USGS research advances the 
scientific understanding of energy resources, contributes to plans for 
a balanced and secure energy future, and facilitates the strategic use 
and evaluation of resources.
USGS National Resources Research and Assessment Activities
    The overall goal of USGS domestic energy activities is to conduct 
research and assessments of all geologically based energy resources. 
This includes undiscovered, technically recoverable oil and natural gas 
resources, both conventional and continuous (also referred to as 
unconventional), of the United States (exclusive of the Federal 
offshore). These are resources that have yet to be found (drilled), but 
if found, could be recovered using currently available technology and 
industry practice (without regard to economic viability). The purpose 
of USGS assessments is to develop robust, geology-based, statistically 
sound, well-documented estimates of quantities of energy resources 
having the potential to be added to reserves, and thus contribute to 
the overall energy supply. The USGS uses resource assessment 
methodologies that are thoroughly reviewed and externally vetted so as 
to maintain the transparency and robustness of the assessment results.
    In recent years, the USGS has distinguished between conventional 
and continuous petroleum accumulations for purposes of research and 
resource assessment (Figure 2). Briefly stated, conventional 
accumulations are described in terms of discrete fields or pools 
localized in structural or stratigraphic traps by the buoyancy of oil 
or gas in water. In contrast, continuous accumulations are petroleum 
accumulations (oil or gas) that have large spatial dimensions and 
indistinctly defined boundaries, and which exist more or less 
independently of the water column. Examples of continuous accumulations 
are shale gas and coalbed gas, which are among the fastest growing 
domestic energy resources.
    The current USGS effort to update national (onshore and State 
waters) assessments of oil and gas resources is done in support of the 
Energy Policy and Conservation Act (EPCA) Amendments of 2000 (P.L. 106-
469 Sec. 604). The USGS assesses the potential volumes of conventional 
and continuous (unconventional) resources (e.g. coalbed gas, shale gas, 
tight gas sands) in each priority province using established, 
externally reviewed and vetted methodologies, and provides this 
information to the appropriate land and resource management agencies 
for subsequent analysis. The Energy Policy Act of 2005 (P.L. 109-58) 
re-authorized EPCA 2000 assessment activities by the USGS, emphasizing 
the unique role of the USGS, and specifically mandated that ``the same 
assessment methodology across all geological provinces, areas, and 
regions [be used] in preparing and issuing national geological 
assessments to ensure accurate comparisons of geological resources.'' 
The current mean estimate for the United States as a whole for 
undiscovered, technically recoverable continuous gas resources is 364 
trillion cubic feet (Figure 3).
    The amount of undiscovered, technically recoverable resources 
changes over time. There are several reasons for this, including 
scientific and technological developments regarding petroleum resources 
in general, improvements to the geologic understanding in numerous 
settings, and reserve growth. These advances in geologic understanding, 
as well as changes in technology and industry practices, necessitate 
that resource assessments be periodically updated. This is especially 
true for continuous (unconventional) resources. New technological 
developments increase the recoverability of this challenging resource, 
and our geologic understanding of these resources is evolving. One 
example of this change is the recently updated USGS assessment of the 
Bakken Formation in the U.S. portion of the Williston Basin. This 
assessment, released in 2008, shows an estimated 3.0 to 4.3 billion 
barrels of undiscovered, technically recoverable, continuous oil 
compared to the agency's 1995 mean estimate of 151 million barrels of 
oil. Assessments of unconventional natural gas resources, including the 
Barnett Shale, the Marcellus Shale, and others, have shown the same 
type of increase as our understanding of the geology increases. Much of 
the technology developed for production of the gas in the Barnett Shale 
is being used to extract the oil in the Bakken Formation, and these 
technological advances accounted for the large change in what was 
considered technically recoverable. The Barnett Shale Newark East field 
now ranks second in the United States in terms of annual gas production 
(EIA, http://www.eia.doe.gov/pub/oil_gas/natural_gas/data_publications/
crude_oil_natural_gas_reserves/current/pdf/appb.pdf ). Cumulative gas 
production from January 1993 to January 2006 from the Barnett Shale 
Newark East field was about 1.8 trillion cubic feet; in 2005, gas 
production was about 480 billion cubic feet compared to less than 11 
billion cubic feet in 1993 (Texas Railroad Commission, 2006, available 
at http://www.rrc.state.tx.us/data/fielddata/barnettshale.pdf ).
U.S. Geological Survey International Energy Studies
    Our Nation depends heavily on imported energy resources: about 57 
percent of the oil and 16 percent of the natural gas consumed in the 
United States come from imports. Given the significance of imported oil 
and gas to the U.S. energy mix, scientifically valid, unbiased 
assessments of the world's remaining endowment of petroleum 
accumulations are very important. For this reason, global petroleum 
resource assessments are a core USGS research activity and have 
significant global visibility. The USGS world oil and gas resource 
estimates are used as a standard reference by many organizations 
including the Energy Information Administration (EIA) and the 
International Energy Agency (IEA).
    The overall objectives of USGS studies of international petroleum 
resources are to continue providing high-quality, comprehensive 
petroleum assessments and to update previous assessments as needed. A 
major focus of recent USGS research in this area is the global Circum-
Arctic Resource Appraisal, the primary emphasis of which is to provide 
a comprehensive, unbiased probabilistic estimate of potential future 
additions to conventional oil and gas reserves in the high northern 
latitudes. The Arctic is an area of high petroleum resource potential, 
low data density, high geologic uncertainty, and sensitive 
environmental conditions. The assessment is the first publicly 
available petroleum resource estimate of the entire area north of the 
Arctic Circle. Results indicate that the area north of the Arctic 
Circle has an estimated mean of 90 billion barrels of undiscovered, 
technically recoverable oil, 1,670 trillion cubic feet of technically 
recoverable natural gas, and 44 billion barrels of technically 
recoverable natural gas liquids in 25 geologically defined areas 
thought to have potential for petroleum. These resources account for 
about 22 percent of the undiscovered, technically recoverable resources 
in the world. The Arctic accounts for about 13 percent of the 
undiscovered oil, 30 percent of the undiscovered natural gas, and 20 
percent of the undiscovered natural gas liquids in the world. About 84 
percent of the estimated resources are expected to occur offshore.
    Outside of the United States, the USGS has conducted assessments on 
conventional oil and gas resources only, as little data exist on global 
continuous (unconventional) accumulations. Currently the USGS is 
conducting a screening exercise to evaluate the availability of 
information for resource estimates of continuous petroleum resources 
outside the United States. Continuous resources have the potential to 
significantly contribute to global petroleum resources, but 
scientifically-vetted characterization and quantitative estimates of 
these resources must be available before their true potential can be 
evaluated.
Conclusion
    During the next decade, the Federal Government, industry, and other 
groups will need to better understand the domestic and global 
distribution, genesis, use, and consequences of using geologically 
based energy resources to address national security issues and climate 
change, manage the Nation's domestic supplies, predict future needs, 
anticipate as well as guide changing patterns in use, facilitate 
creation of new industries, and secure access to appropriate supplies. 
Energy resources research and assessments are a traditional strength of 
the USGS, and these activities provide impartial, robust information 
necessary for the many needs just outlined. As the Nation's energy mix 
evolves, the USGS will continue to adapt its research and assessment 
portfolio to include a comprehensive suite of energy sources that 
reflects the highest priority needs of the nation. USGS resource 
assessments and research are an integral part of the public and 
government discourse about the energy resource future of the Nation, 
and allow science to inform, advise, and engage decision makers. The 
USGS stands ready to assist Congress as it examines these challenges 
and opportunities.
    Thank you for this opportunity to provide an overview of USGS 
research and assessments of natural gas and other energy resources. I 
would be happy to answer your questions.


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 ______
                                 
    Mr. Costa. Thank you very much, Mr. Duncan. I hoped that 
the U.S. Geological Survey would have gotten into a little more 
of the detail in terms of the impacts and the understandings 
with regards to natural gas from shale, but we will get back to 
that in terms of the questions. The Chairman will be noted for 
your brevity. Our next witness is Mr. Scott Kell, who is the 
President of the Ground Water Protection Council.

  STATEMENT OF SCOTT KELL, PRESIDENT, GROUND WATER PROTECTION 
                            COUNCIL

    Mr. Kell. Mr. Chairman, thank you for the opportunity to 
testify here today. My name is Scott Kell. I am President of 
the Ground Water Protection Council and appear here today on 
its behalf. I am also deputy chief of the Ohio Division of 
Mineral Resources Management, and in that capacity, I implement 
the regulations for oil and gas exploration and development 
within the State of Ohio.
    As a state program director and as a member of the Ground 
Water Protection Council, who works with other state program 
directors, I can assure you that in the exercise of our 
authorities that the state directors are committed to the 
stewardship of water resources. The Ground Water Protection 
Council, or GWPC, is a non-profit association of state agencies 
responsible for the environmental safeguards related to 
groundwater.
    The GWPC provides a forum through its state members, work 
with Federal scientists and regulators, environmental groups, 
industry and other stakeholders to advance protection of 
groundwater resources through the development of policy and 
regulation that is based on sound science. The GWPC understands 
that the nation's water and energy needs are intertwined, and 
that the demand of both resources is increasing. We believe 
that smart energy policy will consider and minimize the impacts 
to water resources.
    With respect to the protection of water resources, the 
Ground Water Protection Council recently published two reports 
of note that were referenced before. The first of these reports 
is called ``Modern Shale Gas Development in the United States: 
A Primer.'' The Primer discusses the regulatory framework, 
policy issues and technical aspects of developing 
unconventional shale gas resources. As you know, there are 
numerous deep shale gas basins in the United States, which 
contain trillions of cubic feet of natural gas.
    Recently, however there has been concern raised about the 
methods to tap these valuable resources. Technologies, such as 
the practice of hydraulic fracturing have been characterized as 
environmentally risky and inadequately regulated. The Primer is 
designed to provide accurate technical information to assist 
policymakers in the understanding of these issues.
    In recent months, the states have become aware of press 
reports and websites alleging that six states have documented 
over 1,000 incidents of groundwater contamination resulting 
from the practice of hydraulic fracturing. Such reports are not 
accurate. Attached to my testimony are signed statements from 
state officials representing Ohio, Pennsylvania, New Mexico, 
Alabama and Texas, five of the six states responding to and 
refuting these allegations.
    From the standpoint of the GWPC, the most critical issue is 
protection of water resources. As such, our goal is to ensure 
that oil and gas development is managed in a way that does not 
create unnecessary or unwarranted risk to water. As a state 
regulatory official, I can assure you that our regulations are 
focused on this task, and that leads me to the second report 
the GWPC has recently published entitled ``State Oil and Gas 
Regulations Designed to Protect Water Resources.'' This report 
evaluates regulations implemented by state oil and gas agencies 
as they relate to the protection of water.
    As a result of the review and analysis, the GWPC concluded 
that state oil and gas regulations are adequately designed to 
directly protect water resources. While state regulations are 
generally adequate, the GWPC report includes the following 
recommendations: First, the GWPC recommends that states, in 
conjunction with other stakeholders, should develop best 
management practices. A special concern would be involving the 
practice of hydraulic fracturing in close vertical proximity to 
underground sources of drinking water, as determined by the 
state regulatory authority.
    Second, the GWPC recommends that the state review process 
conducted by the national non-profit organization STRONGER, be 
recognized as an effective tool in assessing the capability of 
state programs to properly manage exploration and production 
waste and in measuring the program improvement over time. The 
STRONGER process we believe should be expanded where 
appropriate to include state oil and gas programmatic elements 
that are currently not covered, including the practice of 
hydraulic fracturing.
    STRONGER is currently convening a stakeholder workgroup to 
consider drafting guidelines for the state regulation of 
hydraulic fracturing. We also appreciate the funding assistance 
of United States Department of Energy and the ongoing efforts 
to develop data management systems that include more 
environmental and water-related data. In conclusion, Mr. 
Chairman and Members of the Committee, we believe that the 
state regulations are designed to provide a level of water 
protection that is needed to assure water resource viability 
and availability.
    The GWPC will continue to assist the states in the 
implementation of effective regulations. Thank you.
    [The prepared statement of Mr. Kell follows:]

  Statement of Scott Kell, President, Ground Water Protection Council

    Mr. Chairman, thank you for the opportunity to testify today. My 
name is Scott Kell. I am President of the Ground Water Protection 
Council (GWPC) and appear here today on its behalf. I am also Deputy 
Chief of the Ohio Department of Natural Resources Division of Mineral 
Resources Management. With me today are Mike Paque, Executive Director 
of the GWPC, Dave Bolin, Assistant Director of the Alabama Oil and Gas 
Board, and Lori Wrotenbery, Director of the Oklahoma Corporation 
Commission's Oil and Gas Conservation Division. Within our respective 
States, we are responsible for implementing the state regulations 
governing the exploration and development of oil and natural gas 
resources. First and foremost, we are resource protection professionals 
committed to stewardship of water resources in the exercise of our 
authority.
    The GWPC is a non-profit association of state agencies responsible 
for environmental safeguards related to ground water. The members of 
the association consist of state ground water and underground injection 
control regulators. The GWPC provides a forum through which its state 
members work with federal scientists and regulators, environmental 
groups, industry, and other stakeholders to advance protection of 
ground water resources through development of policy and regulation 
that is based on sound science. I have included a list of the GWPC 
Board of Directors in our written submission.
    The GWPC understands that our nation's water and energy needs are 
intertwined, and that demand for both resources is increasing. Smart 
energy policy will consider and minimize impacts to water resources.
    With respect to the protection of water resources, the GWPC 
recently published two reports of note. The first of these reports is 
called Modern Shale Gas Development in the United States: A Primer 
(http://www.gwpc.org/e-library/documents/general/
Shale%20Gas%20Primer%202009.pdf). The primer discusses the regulatory 
framework, policy issues, and technical aspects of developing 
unconventional shale gas resources. As you know, there are numerous 
deep shale gas basins in the United States, which contain trillions of 
cubic feet of natural gas. The environmentally responsible development 
of these resources is of critical importance to the energy security of 
the U.S. Recently, however, there has been concern raised about the 
methods used to tap these valuable resources. Technologies such as 
hydraulic fracturing have been characterized as being environmentally 
risky and inadequately regulated. The primer is designed to provide 
accurate technical information to assist policy makers in their 
understanding of these issues.
    In recent months, the states have become aware of press reports and 
websites alleging that six states have documented over one thousand 
incidents of ground water contamination resulting from the practice of 
hydraulic fracturing. Such reports are not accurate. Attached to my 
testimony are signed statements from state officials representing Ohio, 
Pennsylvania, New Mexico, Alabama, and Texas, responding to these 
allegations.
    From the standpoint of the GWPC, the most critical issue is 
protection of water resources. As such, our goal is to ensure that oil 
and gas development is managed in a way that does not create 
unnecessary and unwarranted risks to water. As a state regulatory 
official, I can assure you that our regulations are focused on this 
task. This leads me to the second report the GWPC has recently 
published.
    This report, entitled State Oil and Gas Regulations Designed to 
Protect Water Resources, (http://www.gwpc.org/e-library/documents/
general/Oil%20and%20Gas%20
Regulation%20Report%20Final%20with%20Cover%205-27-2009.pdf) evaluates 
regulations implemented by state oil and gas regulatory agencies as 
they relate to the protection of water. To prepare this report, the 
GWPC reviewed the regulations of the twenty-seven states that, when 
combined, account for more than 99.8% of all the oil and natural gas 
extracted in the U.S. annually. To prepare this report, each state's 
regulatory requirements were studied with respect to their water 
protection capacity. The study evaluated regulated processes such as 
well drilling, construction, and plugging, above-ground storage tanks, 
pits and a number of other topics. The report also contains a 
statistical analysis of state regulations. As a result of our 
regulatory review and analysis, the GWPC concluded that state oil and 
gas regulations are adequately designed to directly protect water 
resources through the application of specific programmatic elements 
such as permitting, well construction, hydraulic fracturing, waste 
handling, and well plugging requirements. While State regulations are 
generally adequate, the GWPC report makes the following 
recommendations.
    First, a study of effective hydraulic fracturing practices should 
be considered for the purpose of developing Best Management Practices 
(BMPs) that can be adjusted to fit the specific conditions of 
individual states. A one-size-fits-all federal program is not the most 
effective way to regulate in this area. BMPs related to hydraulic 
fracturing would assist states and operators in ensuring the safety of 
the practice. Of special concern are zones in close proximity to 
underground sources of drinking water, as determined by the state 
regulatory authority.
    Second, the state review process conducted by the national non-
profit organization State Review of Oil and Natural Gas Environmental 
Regulations (STRONGER) is an effective tool in assessing the capability 
of state programs to manage exploration and production waste and in 
measuring program improvement over time. This process should be 
expanded, where appropriate, to include state oil and gas programmatic 
elements not covered by the current state review guidelines. STRONGER 
is currently convening a stakeholder workgroup to consider drafting 
guidelines for state regulation of hydraulic fracturing.
    Finally, the GWPC concludes that implementation and advancement of 
electronic data management systems has enhanced state regulatory 
capacity and focus. However, further work is needed in the areas of 
paper-to-digital data conversion and inclusion of more environmental, 
or water related data. States should continue to develop comprehensive 
electronic data management systems and incorporate widely scattered 
environmental data as expeditiously as possible. Federal agencies 
should provide financial assistance to states in these efforts.
    In conclusion, Mr. Chairman and Committee Members, we believe that 
state regulations are designed to provide the level of water protection 
needed to assure water resources remain both viable and available. The 
states are continuously striving to improve both the regulatory 
language and the programmatic tools used to implement that language. In 
this regard, the GWPC will continue to assist states with their 
regulatory needs for the purpose of protecting water, our most vital 
natural resource.
    Thank you.
    [NOTE: Attachments have been retained in the Committee's official 
files.]
                                 ______
                                 
    Mr. Costa. Thank you very much, Mr. Kell. I will want to 
get back in the question areas about what you consider best 
management practices, but our next witness is Mr. Mike John, 
Vice President of the Corporate Development and Government 
Relations for the Eastern Division of the Chesapeake Energy 
Corporation.

STATEMENT OF MIKE JOHN, VICE PRESIDENT OF CORPORATE DEVELOPMENT 
 AND GOVERNMENT RELATIONS, EASTERN DIVISION, CHESAPEAKE ENERGY 
                          CORPORATION

    Mr. John. Thank you, Mr. Chairman and Members of the 
Committee, for the opportunity to discuss the enormous economic 
and environmental potential of natural gas production from deep 
shale formations in the United States and around the world. I 
am Mike John, Vice President of Corporate Development for 
Chesapeake Energy Corporation, the largest independent producer 
of and most active explorer for clean natural gas in the United 
States.
    While our company is based in Oklahoma City, I am based in 
our West Virginia Office, which is focused on the development 
of what we believe may be one of the world's largest natural 
gas deposits--underlying parts of West Virginia, Pennsylvania, 
New York and other Appalachian states. This high potential play 
is called the Marcellus Shale. I would like to thank in 
particular some of the members of your Committee and 
Subcommittee from key areas for Chesapeake.
    First, Committee Chairman, Nick Rahall, from my home State 
of West Virginia, Congressman Dan Boren from Oklahoma, 
Congressman John Fleming from Louisiana and the Louisiana 
portion of the Haynesville Shale, and Congressman Louie Gohmert 
from East Texas and the Texas portion of the Haynesville Shale. 
The topic of this hearing is very exciting because shale gas no 
longer just has potential. It is real, and it is a game-changer 
not only for America's natural gas industry but also 
potentially for our nation, our economy and our environment.
    In fact, North America's natural gas supply is so plentiful 
it has been described recently by some experts as a virtual 
ocean of natural gas. As such, this shale gas revolution has 
made greater energy independence, enhanced national security 
and significantly cleaner environment attainable goals today. 
The real issue is no longer whether there is adequate supply, 
but rather whether there is adequate demand for this clean-
burning domestically produced fuel to continue the development 
of these enormous resource plays.
    In fact, Standard & Poor's analysts said earlier this week 
we have really got too much supply. Supply was up about seven 
percent in 2008 relative to 2007, and this is because the 
industry has finally been able to unlock some of the 
challenging unconventional resource plays. It is indeed an 
extraordinary time for our industry. Let me begin by providing 
some background on this highly successful company and industry 
leader that I proudly work for, Chesapeake Energy Corporation.
    Chesapeake has grown from a startup just 20 years ago to 
become the largest explorer for and independent producer of 
natural gas in the nation. Today, Chesapeake has 94 rigs 
operating--80 percent, or 76 of these rigs, are operating in 
the big four shale plays. Amazingly, we are responsible for 
drilling of almost one out of every eight natural gas wells 
being drilled, and through the wells we participate in and 
other operated wells we collect an estimated 20 percent of all 
daily drilling information generated in the U.S. today.
    To give Committee members a better sense of the scale of 
our operations currently, Chesapeake is responsible for more 
exploration activity in the United States than the five super 
majors, BP, Chevron, Conoco-Phillips, Exxon/Mobile and Shell, 
combined. The key to our success has been the application of 
cutting edge geoscience technology to discover new areas like 
the Haynesville, seismic and petrophysical analysis to define 
so-called sweet spots and refine drilling and completion design 
to enhance economic viability.
    We then transfer all that knowledge internally to ensure 
maximum learning-curve benefits from other similar deep shale 
formations. We also have state-of-the-art technology and 
resources at Chesapeake that enable us to drill more accurately 
and precisely, including a reservoir technology center, which 
we can generate on-site core analysis, and we have our own 3-D 
seismic visualization center where we can display robust and 
vivid subsurface images making it possible for our geologists 
to pinpoint natural gas prospects miles below the surface.
    We and other industry leaders have known for years about 
the existence of natural gas in deep shale formations. 
Unfortunately, we did not know how to economically extract the 
gas in commercial quantities from this very hard, non-porous 
and low-permeability sedimentary rock until recently, until the 
development of the Barnett Shale in the Dallas/Ft. Worth area 
of Texas. George Mitchell pioneered the Barnett Shale play 
starting in the 1980s after combining hydraulic fracturing and 
horizontal drilling techniques.
    While natural gas prices rose off their historic lows, the 
play took off in 2003, and today it is the most prolific 
producing natural gas field in the country. I have included a 
map of the deep shale gas plays in your packet. You will see 
that the gas shale plays are located in various areas across 
the United States.
    It is also interesting and telling to note that major and 
international companies like Exxon/Mobile, BP and StatoilHydro 
are recognizing the enormous potential of shale resource plays 
throughout North America and are starting to refocus their 
capital investment into the United States in the very same 
shale projects that we have introduced above.
    We believe the potential from these four major shale basins 
is enormous and believe that depending upon price signals and 
supportive Federal policies that shale gas production could 
increase four-fold from an estimated seven to eight BCF per day 
in 2009 to a level approaching 30 BCF per day exclusively from 
these four major deep shale basins by 2020. Putting these 
production figures into context, they would provide 50 percent 
of all U.S. natural gas production from a source that was 
virtually non-existent 10 years ago.
    With that, I will conclude my oral testimony, and I want to 
thank the Committee for holding this important hearing, and I 
look forward to answering any questions.
    [The prepared statement of Mr. John follows:]

   Statement of Mike John, Vice President of Corporate Development & 
          Government Relations, Chesapeake Energy Corporation

    Thank you Mr. Chairman and members of the Committee for the 
opportunity to discuss the enormous economic and environmental 
potential of natural gas production from deep shale formations in the 
United States and around the world. I am Mike John, vice president for 
Corporate Development and Government Relations for Chesapeake Energy 
Corporation, the largest independent producer of and most active 
explorer for clean natural gas in the United States. While our company 
is based in Oklahoma City, I am based in our West Virginia office, 
which is focused on the development of what we believe may be one of 
the world's largest natural gas deposits, underlying parts of West 
Virginia, Pennsylvania, New York, and other Appalachian states. This 
high-potential area is called the Marcellus Shale.
    I would like to thank, in particular, some of the members of your 
subcommittee from key areas for Chesapeake--first, Committee Chairman 
Nick Rahall from my own West Virginia, Congressman Dan Boren from 
Oklahoma, Congressman John Fleming from Louisiana and the Louisiana 
portion of the Haynesville Shale and Congressman Louie Gohmert from 
East Texas and the Texas portion of the Haynesville Shale.
    The topic of this hearing is very exciting because shale gas no 
longer just has ``potential.'' It is real, and it is a game-changer not 
only for America's natural gas industry but also potentially for our 
nation, our economy and our environment! In fact, North American 
natural gas supply is so plentiful it has been described recently by 
some experts as a virtual ``ocean of natural gas. As such, this shale 
gas revolution has made greater energy independence, enhanced national 
security and a significantly cleaner environment, attainable goals 
today. The real issue is no longer whether there is adequate supply, 
but rather whether there is adequate demand for this clean-burning, 
domestically produced fuel to continue the development of these 
enormous resources bases.
    In fact, Standard & Poor's analysts said earlier this week, ``We've 
really got too much supply. Supply was up about 7% in 2008 relative to 
2007, and this is because the industry has finally been able to unlock 
some of these challenging unconventional resource plays.'' It is indeed 
an extraordinary time in our industry.
    First, let me begin by providing some background on this highly 
successful company and industry leader I proudly work for, Chesapeake 
Energy Corporation. Chesapeake has grown from a start-up just 20 years 
ago this year to become the largest explorer for and independent 
producer of U.S. natural gas in the nation. Today, Chesapeake has about 
94 rigs currently operating--80 percent or 76 rigs of which are 
operating in the ``Big 4'' shale plays. Amazingly, we are responsible 
for the drilling of almost one out of every eight natural gas wells 
being drilled and, through the wells we participate in and other 
operated wells we collect an estimated 20 percent of all daily drilling 
information generated in the U.S. today. To give committee members a 
better sense for the scale of our operations currently, Chesapeake is 
responsible for more exploration activity in the United States than the 
five super majors BP, Chevron, ConocoPhillips, ExxonMobil and Shell 
combined.
    We are even more proud that our company has emerged as America's 
leader in high-potential deep shale gas exploration and production. 
Chesapeake had been one of the early entrants into the first two major 
deep shale basins, the Barnett Shale in north central Texas and the 
Fayetteville Shale in north central Arkansas. In 2008, our company 
proudly discovered the prolific Haynesville Shale in northwest 
Louisiana and east Texas in what has the potential to become the 
largest natural gas field in the United States. In addition, to those 
three major producing basins we are now ramping up our advanced 
technology shale drilling program in the Marcellus Shale in the 
Appalachian Basin.
    The key to our success has been the application of cutting-edge 
geoscience technology to discover new areas like the Haynesville, 
seismic and petrophysical analysis to define so-called ``sweet spots'', 
and refined drilling and completion design to enhance economic 
viability. We then transfer all that knowledge internally to ensure 
maximum learning curve benefits from other similar deep shale 
formations.
    We also have state-of-the-art technology and resources at 
Chesapeake that enable us to drill more accurately and precisely, 
including a Reservoir Technology Center, where we can generate on-site 
core analysis, and we have our own 3-D seismic visualization center 
where we can display robust and vivid subsurface images, making it 
possible for our geologists to pinpoint natural gas prospects miles 
below the surface. Our company has an unparalleled inventory of more 
than 20 million acres of 3-D seismic data, as well as U.S. onshore 
leasehold of about 15 million acres. In short, we believe no single 
corporate entity has more knowledge about America's subsurface as it 
relates to natural gas than Chesapeake. Additionally, it is important 
to note that over the past decade we have reinvested more than 100 
percent of our operating cash flow back into producing domestic natural 
gas supply. It is independent producers such as Chesapeake that are 
leading the way in discovering and producing these new domestic and 
abundant sources of clean natural gas.
    We and other industry leaders have known for years about the 
existence of natural gas in deep shale formations. Unfortunately, we 
did not know how to economically extract the gas in commercial 
quantities from this very hard, non-porous and low-permeability 
sedimentary rock.
    And then along came the Barnett Shale in the Dallas-Fort Worth area 
of Texas.
    George Mitchell pioneered the Barnett Shale play starting in the 
1980s, but after combining hydraulic fracturing with horizontal 
drilling techniques while natural gas prices rose off their lows the 
play took off in 2003, and today, is the most prolific producing 
natural gas field in the country.
    I have included a map of the major deep shale gas plays in your 
packet. You will see that shale gas is found across much of the United 
States, but primarily throughout the eastern, southern and west-central 
part of the country within major sedimentary basins. Chesapeake 
believes there are four major shale gas reservoirs today--the Barnett 
Shale, the Fayetteville Shale in Arkansas, the Haynesville Shale in 
Louisiana and Texas, and the Marcellus Shale in the Appalachian region, 
including West Virginia, Pennsylvania and New York, as well as possibly 
parts of other contiguous states. We have either a top one or two 
position in each of these high-potential basins.
    It is also interesting and telling to note that major and 
international companies like ExxonMobil, BP and StatOil Hydro are now 
recognizing the enormous potential of shale resource plays throughout 
North America, and are starting to refocus their capital investment 
into the United States in the very same shale projects we've introduced 
above. For instance, our company has major joint ventures with BP in 
the Fayetteville Shale in Arkansas and StatOil, a major international 
player based in Norway, in the Marcellus Shale.
    We believe the potential from these four major shale basins is 
enormous and believe that, depending on price signals and supportive 
federal policies, that shale gas production could increase four-fold 
from an estimated 7 to 8 billion cubic feet (BCF) of gas per day in 
2009 to a level approaching 30 BCF per day, exclusively from these four 
major deep shale basins in 2020. Putting these production figures in 
context they would provide virtually 50% of all U.S. natural gas 
production from a source that was virtually nonexistent in the past 10 
years!
    As mentioned, this shale gas production revolution is due to key 
well design and completion technique advances, primarily horizontal 
drilling and hydraulic fracturing.
    First, horizontal drilling--while not a new process--has been 
greatly improved, and is the process of drilling vertically and then 
deviating the well bore at an ``entry point'' to drill horizontally, in 
some case to up to a mile away. Modern horizontal drilling can make a 
near 90-degree turn with the drillbit which allows much increased 
exposure of the drillbit to the ``sweet spot'' of a geologic formation 
and the ability to extract much greater quantities of natural gas than 
a vertical well. In addition, it provides a much more environmentally 
friendly technique because the number of surface locations is 
dramatically reduced, thus minimizing the surface footprint, which 
allows us to safely drill in urban areas such as Fort Worth, Texas, 
near Shreveport, Louisiana and in other well-populated areas where 
surface locations and surface disturbances want to be kept to a 
minimum.
    Second, although somewhat controversial of late, hydraulic 
fracturing, or ``fracking'', has been utilized since the 1940s but is 
now used on nearly all producing natural gas wells drilled today. 
Performed once a well has been drilled, this process creates fissures 
in very tight shale formations deep underground, many thousands of feet 
below the surface and fresh water aquifers. Water and sand and 
``proppants'' are pumped down the well bore at high pressure to 
fracture the rock, so natural gas will flow into the wellbore. In 
addition to these primary elements a small percentage of other 
additives are used in fracturing fluids to protect target formations 
and increase recoveries. It is very important to reiterate that these 
deep shale formations exist thousands of feet below the land surface 
and are separated from freshwater supplies by layers of steel casing, 
protected by concrete barriers as well as millions of tons of hard, 
dense solid rock geologic formations.
    On that issue, which has been a subject of some concern to those 
not familiar with this industry practice, I have provided all members 
of the Committee in their packets with a copy of a fact sheet we use to 
inform and educate the public about hydraulic fracturing, including a 
list of common compounds found in fracturing fluids. Education is the 
key to addressing and allaying anxieties of all our stakeholders--
including you--and we want to set a high standard for environmental 
stewardship and community protection.
    In the end, very creative and hard-working scientists worked to 
``crack the code'' to produce natural gas from the Barnett Shale, and 
fortunately, the process actually is becoming more ``manufacturing'' of 
natural gas than ``exploring and producing'' for it. In other words, 
this has become a safer, lower-risk, lower-cost process. Rapid progress 
can be made when you find great rock and apply great science to it
    Independent supply studies are confirming the results that industry 
is proving on the ground. The much acclaimed Navigant study, released 
in July 2008 reflects the great abundance of the North American supply 
resource base. This chart, which is in your packet, reflects that, even 
before the Haynesville and Marcellus is developed sufficiently to add 
their massive reserve content, that U.S. natural gas reserves are 
sufficient to provide approximately 120 years of reliable supplies at 
current production levels or can be scaled up dramatically with 
supportive federal policy.
    Finally, another independent study to be issued later this month by 
the Colorado School of Mines' Potential Gas Committee is projected to 
show another significant growth spurt caused by new deep shale gas 
discoveries.
    To conclude here, I want to acknowledge that the Energy Information 
Administration, or EIA, plays a major role in providing information 
about overall energy statistics and forecasts. They provide an 
invaluable resource. Historically, EIA's estimate of the overall U.S. 
natural gas resource has been consistent with the PGC study, arriving 
in 2006 at a resource base that would last 82 years at that year's 
production levels. However, EIA's forecasts of actual production have 
been consistently outdistanced by industry performance especially in 
the unconventional supply area.
    Every year, from 1998 through 2008, EIA reflected the history of 
unconventional supply increasing on a very steep slope, with 
projections by EIA or a flattening of the supply curve. It has not done 
so. Instead between 2005 and 2008, we have added secure, onshore, 
domestic production of natural gas that exceeds the energy content of 
all the oil we import from Saudi Arabia. EIA is coming around--in their 
2009 estimate, they show domestic unconventional supply at much higher 
levels, and show it displacing most of the imported liquefied natural 
gas (LNG) they used to think we would be relying on. We appreciate 
their recognition of our industry advancements.
    It is also imperative that I share with this Committee that 
challenges exist for our industry and those who we must co-exist where 
we produce natural gas. As some of you know, today, we are drilling 
more frequently in non-traditional but potentially prolific 
environments, including challenging topographic environments and more 
urban settings.
    In areas where there is a lack of infrastructure and an existing 
workforce, we complement experienced workers who are brought in from 
traditional producing areas with focused recruiting and training 
programs, and, as in our Fayetteville Shale training facility provide 
housing for employees. The success formula in all areas is consistent, 
import skilled and highly experienced workers while developing training 
programs to recruit local team members, and collaborate with local 
community leaders to develop best practices and procedures to minimize 
the temporary inconvenience caused by our drilling and completion 
operations.
    The long-term benefits; high-quality job creation, royalty 
disbursements to mineral owners in the area, taxes paid on products and 
services purchased in the area and the creation of new businesses that 
provide services to our industry are all economic stimulators that 
provide a windfall profit in new resource rich areas.
    These are all vital to being a responsible corporate citizen, and 
we take the responsibility very seriously and hold our operations to 
the highest standards.
    To be even more specific, in today's challenging economy, it is 
instructive to quantify for the Committee the projected economic 
benefits and high-paying jobs provided by the natural gas industry. The 
average rig provides an estimated 80 direct and indirect jobs, as well 
as the aforesaid royalty payments, various tax payments, and infusion 
of significant capital investments in these key areas of exploration 
activity.
    In fact, in two of the areas where deep shale drilling is currently 
being conducted, northwest Louisiana and east Texas, substantial 
economic development, significant tax revenues and high job creation is 
resulting from the current high-tech exploration boom. Similar job 
creation and royalty-payment disbursement is occurring today in 
Arkansas in the Fayetteville Shale as well. These two areas in 
particular have been shining stars in a otherwise very bleak economic 
picture throughout the country.
    I am proud to say, as a native West Virginian, that I expect the 
next area to benefit from this intersection of capital, advanced 
technology, and natural gas reserve recovery will be here at home in 
Appalachia including West Virginia, Pennsylvania, and New York. In 
fact, as I mentioned previously it would not surprise me to see the 
Marcellus Shale underlying that area grow into the most prolific basin 
of all the four major shale basins.
    And today, for you as policy makers, as Congress strives to deal 
with issues of climate change, national security and energy policy, now 
abundant, American, clean natural gas stands ready to be a low-carbon 
affordable answer that is scalable and ready to heed the call to reduce 
CO2 emissions and respond to climate change concerns. 
Chesapeake and I believe natural gas is the right fuel, and today is 
the right time for its increased usage.
    As many of you know, but I will reiterate here today, natural gas 
provides many environmental benefits to alternative fuels. Notably, as 
a fuel for natural gas vehicles (NGVs), natural gas emits approximately 
30 percent less carbon dioxide and up to 90 percent fewer pollutants 
than gasoline. With gasoline prices beginning to escalate once again 
and our nation searching for a way to save our domestic automobile 
industry, we are excited to share with the Committee that natural gas 
can provide an immediate low-cost solution to higher gasoline prices 
and an environmental answer for America's large trucks, buses, and 
SUVs.
    It would be appropriate for me right now to take this opportunity 
to thank chief co-sponsor Congressman Dan Boren, on the Committee 
today, who--along with Congressional leader John Larson--together have 
introduced important and supportive NGV legislation that has the 
potential to increase the domestic market for a cleaner, lower-emitting 
automobile. I am hopeful all of you on the committee today will 
consider supporting H.R. 1835 if you have not done so already.
    In this country and around the world there is great debate about 
how to respond to global warming and the impact that greenhouse gas 
emissions have in increasing atmospheric temperatures around the world. 
I would be remiss if I did not remind the panel that a modern combined-
cycle natural gas power plant is second only to a nuclear plant as the 
cleanest source of electrical generation. And the exciting new reality 
is that due to advanced drilling and completion technologies the U.S. 
has an enormous domestic natural gas resource base to support growth in 
existing power generation uses as well as use as a transportation fuel.
    As I close today, I would like to advise the panel that with 
supportive federal policy, natural gas can help reduce OPEC's financial 
stranglehold on the United States, reduce the U.S. trade deficit and 
enhance national security. More than 98 percent of the natural gas we 
use in the United States is produced in North America--as opposed to 
the more than 65 percent of oil we import from foreign counties--and 
our natural gas distributed through a highly integrated pipeline 
network that delivers natural gas everyday to about 64 million U.S. 
homes and businesses. Furthermore, 33 states produce natural gas, 
broadly distributing the benefits of using this cleaner fuel.
    While the coal industry has referred to the United States as the 
``Saudi Arabia of coal'', we believe the U.S. should now be referred to 
as the ``Saudi Arabia of natural gas.'' The new bottom line: The 
enormous natural gas resource base discoveries provide another, and in 
our mind the most attractive opportunities in decades to expand the use 
of this clean premium U.S. fuel in all arenas where the benefits of 
burning a cleaner, lower cost, dependable indigenous fuel can enhance 
the quality of life for all Americans.
    Thank you, Mr. Chairman and members of the Committee, and I look 
forward to answering any questions.
                                 ______
                                 
    Mr. Costa. Thank you very much, Mr. John, and we will look 
forward to the Q&A part as well. Our next witness is Mr. Lynn 
Helms, the Director of the Oil And Gas Division for the State 
of North Dakota Industrial Commission.

STATEMENT OF LYNN HELMS, DIRECTOR, OIL AND GAS DIVISION, NORTH 
                  DAKOTA INDUSTRIAL COMMISSION

    Mr. Helms. Good morning, Chairman Costa and Ranking Member 
Lamborn, other Members of the Committee. My name is Lynn Helms. 
As you heard, I am the Director of the Department of Mineral 
Resources for the Industrial Commission of the great State of 
North Dakota, and Earl Pomeroy said I should say it that way.
    Mr. Costa. Earl Pomeroy reminds us of that all the time.
    Mr. Helms. Very good. I am here today representing North 
Dakota and the 30-member states of the Interstate Oil and Gas 
Compact Commission who produce 99 percent of our domestic oil 
and gas. The mission of the IOGCC, which was formed in 1935, is 
two-fold: 1] to conserve our nation's oil and gas resources, 
and 2] to protect human health and the environment. Our current 
chairman is Governor Brad Henry of Oklahoma.
    In my testimony today, I am going to begin with some 
information on the Bakken Shale in North Dakota and the energy 
it is providing to this country. I will also provide some 
testimony as to the competency and commitment of state oil and 
gas regulators for protecting our drinking water while 
developing our shale energy resources. First, I will talk about 
the Bakken. Because of the Bakken, shale production in North 
Dakota now ranks No. 5 in the country in daily oil production.
    These plays are truly game-changing resources. Bakken 
Formation extends from North Dakota into Montana, Saskatchewan 
and Manitoba. The Geological Survey stated in an April 2008 
report it is the largest continuous resource they have ever 
assessed in the lower 48 states. It is expected to yield a 
remarkable 4 billion to 7 billion barrels of oil and 4 trillion 
to 7 trillion cubic feet of natural gas.
    Technology will ultimately decide what is recovered, but 
current estimates equal all of our U.S. crude oil imports from 
the Persian Gulf since 2000 and a full-year of residential 
natural gas consumption for our entire nation. That is a lot of 
energy for our country, and a lot of jobs for American people. 
Now I want to address the issue of how the development of shale 
is regulated to protect and preserve water resources.
    I will use a brief history of North Dakota's oil and gas 
regulation. Our original conservation law was enacted in 1911. 
It was updated in 1941, but then in 1953 when we joined the 
IOGCC, we updated it again to bring it into compliance with the 
model statute. Most states that produce oil and gas share a 
similar history. A critical part of every IOGCC meeting is what 
is called the Council of State Regulatory Officials.
    It allows the top regulators in each state and province to 
share important emerging issues. For example, within weeks of a 
home explosion in Ohio, state regulatory officials were able to 
discuss the Ohio investigation and the cementing failure that 
caused it, and I can't compliment Mr. Kell and his people 
enough on their quick response and their accurate response.
    As the head regulator of oil and natural gas in the State 
of North Dakota and an officer of IOGCC representing all oil 
and gas producing state regulators, I assure you we have no 
higher priority than protecting our state's water resources. I 
want to repeat no higher priority. Most of our regulatory 
framework is centered around measures to prevent any 
contamination of water resources. This includes hydraulic 
fracturing, which is thoroughly regulated by the states.
    I have included in my packet a diagram of a typical Bakken 
well, and we can use it during questions if anyone has further 
interest. Studies and surveys by GWPC, EPA and IOGCC over the 
last 11 years have found no real credible threat to underground 
drinking water from hydraulic fracturing. It is a common 
operation used in North Dakota and all the member states of the 
IOGCC, and it is my firmly held view and also that of IOGCC 
that the subject of hydraulic fracturing is adequately 
regulated by the states, and it needs no further study.
    The State of North Dakota and IOGCC are firmly committed to 
the premise that regulation of oil and gas activities is 
managed best at the state level. Regional and local conditions 
are understood there, and regulations can be tailored to fit 
the needs of the local environment. Even Federal regulatory 
programs have been most effective when they have been delegated 
to state regulatory agencies and funded through primacy 
programs, but regulations alone don't begin to provide the 
measure of a program.
    The North Dakota Oil and Gas Division utilizes eight 
performance measures to continuously monitor our activities. 
Five of those measures are directly related to protecting water 
resources. These are backed up by a staff of field inspectors. 
They visit the wells weekly from the time the drilling rig 
moves in until the well head is installed and quarterly after 
that.
    We participated in numerous groups whose purpose was best 
management practice and regulatory reviews, and these efforts 
have done a great job of documenting technology evolution, but 
they are snapshot views, not living documents that keep up. It 
is regular meetings of regulatory officials like our council of 
regulatory officials and the EPA task force that are most 
effective and the most effective way for regulators to keep 
pace with the rapid shifts in energy industry focus in real 
time.
    Thank you for inviting me here this morning. I look forward 
to answering any questions that come my way.
    [The prepared statement of Mr. Helms follows:]

Statement of Lynn D. Helms, Director, Department of Mineral Resources, 
              Industrial Commission, State of North Dakota

    Good morning Chairman Costa, Ranking Member Lamborn, and members of 
the Committee. My name is Lynn Helms. I am the Director of the 
Department of Mineral Resources of the Industrial Commission of the 
State of North Dakota. I am here today representing the Industrial 
Commission, the State of North Dakota, and other member states of the 
Interstate Oil and Gas Compact Commission (IOGCC) to express my views 
as a state regulator on development of shale gas in the United States 
and as to the outstanding job that states are doing in regulating the 
development of this most important national resource.
    The 30 member states of the IOGCC are responsible for more than 99% 
of the oil and natural gas produced onshore in the United States. 
Formed by Governors in 1935, the IOGCC is a congressionally chartered 
interstate compact. The organization, the nation's leading advocate for 
conservation and wise development of domestic petroleum resources, 
includes 30 member and 8 associate states. The mission of the IOGCC is 
two-fold: to conserve our nation's oil and gas resources and to protect 
human health and the environment. Our current chairman is Governor Brad 
Henry of Oklahoma.
    In my testimony today I propose to begin with some information on 
the Bakken shale formation in North Dakota and, how, thanks to recent 
technological advances, it is providing this country with an abundant 
and critical domestic energy resource. I will also provide testimony as 
to the competency and commitment of state oil and gas regulators to 
protect our states' drinking water resources in the development of the 
country's shale energy resources.
North Dakota's Bakken Resource
    Let me begin by talking about the Bakken formation. I note that 
because of high crude oil prices in 2007 and 2008 and the discovery of 
new technology that has made it possible to economically produce the 
Bakken formation in North Dakota and Montana, the State of North Dakota 
has recently moved from the country's 9th ranked state in daily oil 
production to number 5.
    The Bakken Formation is a large unconventional oil and gas resource 
that underlies most of western North Dakota, eastern Montana, southeast 
Saskatchewan, and southwest Manitoba. The U.S. Geological Survey (USGS) 
stated in an April 2008 report that it is the largest continuous 
resource they have assessed in the lower 48 states.
    The upper and lower members of the Bakken formation are world class 
petroleum source rocks. Published estimates of Bakken oil generation 
potential range from 10 billion barrels (Dow 1974) to 300 billion 
barrels (Flannery and Krause 2006). The unpublished work of Price 
estimated the Bakken oil generation potential at up to 503 billion 
barrels. An extensive oil sampling program conducted by the North 
Dakota Geological Survey has shown that the Bakken is ``truly 
dysfunctional'' with no evidence that Bakken-generated oil has migrated 
away from the Bakken pool as previously thought. The geological models 
presented by Price (unpublished) and by Flannery and Kraus (2006) were 
based on input from North Dakota Geological Survey geologists, samples 
from the North Dakota Core and Sample Library, and the well files from 
the North Dakota Oil and Gas Division establish the most likely range 
of oil and gas in-place estimates of 300-500 billion barrels of oil and 
300-500 trillion cubic feet of associated natural gas.
    This incredible resource was identified by geologists within months 
of the first commercial oil production in North Dakota in a well 
drilled on a farm north of Tioga, ND in 1951. Yet, economic production 
was rare until the remarkable technologies of the 21st century were 
brought to bear, including deep, long horizontal wells with multiple 
hydraulic fracture treatments. I might note that research funded by the 
U.S. Department of Energy (DOE) Office of Fossil Energy has helped 
advance these shale technologies, and I encourage strong Congressional 
support of the program.
    Significantly, even after applying the latest tools available, the 
Bakken Formation is expected to yield only 1.4% of its original oil in 
place, which is still a remarkable 4-7 billion barrels of oil and 4-7 
trillion cubic feet of natural gas. The Bakken play in North Dakota is 
still in the learning curve. North Dakota wells are still undergoing 
adjustments and modifications to the drilling and completion practices 
used for this formation. It is apparent that technology and the price 
of oil will dictate what is potentially recoverable from this 
formation. The current Bakken shale recovery estimate equals all U.S. 
crude oil imports from the Persian Gulf since 2000 and a full year of 
residential natural gas consumption for our nation. The proven portion 
of the middle Bakken member occupies over 8.4 million acres in western 
North Dakota. The current North Dakota drilling rig fleet is capable of 
developing 300,000 to 650,000 acres per year meaning full development 
could require 13 to 26 years and over 13,000 new wells each 
hydraulically fractured from 2 to 20 times. This is lot of energy for 
our country and jobs for the American economy.
State Regulation of Oil and Natural Gas Development
    I'd like to now address the issue of how development of this shale 
resource in North Dakota, and throughout the country, is regulated so 
as to also protect and preserve our country's precious water resources. 
It is useful to understand the critical role that states play in the 
regulation of oil and natural gas resources in the United States. A 
history of oil and natural gas in North Dakota can serve as an 
illustrative example.
North Dakota Oil and Gas Regulatory History
    In response to shallow natural gas discoveries used for domestic 
lighting and heating the North Dakota Legislature passed an oil and gas 
conservation law that prohibited production of gas unless it was tied 
to a distribution system in 1911. The 1941 Legislature later passed the 
first meaningful regulatory bill under the urging of then State 
Geologist Wilson M. Laird. As a result, North Dakota had an oil-
conservation law in place when oil was discovered in the State ten 
years later, but following that first commercial oil production in 
April 1951 North Dakota saw the need to be part of the organization 
chartered by congress to assist states with oil and gas regulation. 
North Dakota joined the Interstate Oil Compact Commission in 1953 and 
the North Dakota Legislature revised the Oil and Gas Conservation Law 
to conform to the IOCC Model Act that same year. A Chief Petroleum 
Engineer was hired who immediately updated the rules to reflect the new 
law. Most states that produce oil and gas share a similar history and 
are also members of the IOGCC.
    Every North Dakota Governor since 1987, around the time when North 
Dakota became one of the top 10 U.S. states in daily oil production, 
has chaired the organization.
    The highlight of IOGCC meetings since 1988 has been the Council of 
State Regulatory Officials. At meetings of this group, the top oil and 
gas regulatory official of every member state and every oil and gas 
producing Canadian province, or their designee, shares with the group 
the top issues in their state or province. Recommendations from other 
states that have or are working with similar issues are frequently 
solicited. This forum allows state regulators to respond to new issues 
very quickly, consistently, and collaboratively. For example, within 
weeks of a recent home explosion in Ohio state regulatory officials 
were discussing the investigation by the Ohio Department of Natural 
Resources and the primary cementing failure that caused it. Another 
example of the efficacy of such a program is the frequent updates on 
the LEAF lawsuit and group discussions of the issues surrounding 
hydraulic fracturing in the United States that ensued.
    When I began this job almost eleven years ago the relationship 
between the North Dakota Oil and Gas Division and other state and 
federal agencies whose jurisdiction overlapped in many areas was very 
mixed. Realizing that relationships change as do agency directors we 
moved aggressively to develop Memoranda of Agreement with those 
agencies that provide structure for both the regulators and regulated 
community and provide for period review and change. A national example 
of this is a Memorandum between the IOGCC and the U.S. Environmental 
Protection Agency (EPA) which provides for a process under which states 
and EPA regularly meet as environmental co-regulators.
Regulation to Protect Water Resources
    As the head regulator of oil and natural gas development in the 
State of North Dakota and an officer of the IOGCC representing all oil 
and natural gas producing state regulators, I can assure you that we 
have no higher priority than the protection of our states' water 
resources--let me repeat no higher priority. Much of our entire 
regulatory framework, from drilling to completion, production, and 
finally plugging and abandonment, is centered around measures to 
prevent any contamination of the water resource. As a component of the 
completion of a well, hydraulic fracturing operations are thus 
thoroughly regulated and supervised by the states.
    A major component of production operations is the proper storage 
and disposal of all production wastes, including hydraulic fracturing 
flow back water. These operations are carefully monitored, audited, and 
regulated in our state programs.
    As I noted in my testimony above, hydraulic fracturing is a 
critical component of developing the Bakken formation, indeed every 
shale play throughout the U.S. and Canada. Without hydraulic 
fracturing, under regulation of the states, this resource could not be 
produced.
    I have included both a picture of a hydraulic fracture treatment 
near Lake Sakakawea in North Dakota (page 5) and a diagram of a typical 
Bakken formation well (page 6) that shows how it is that water 
resources are protected during the oil and natural gas production 
operations, including hydraulic fracturing.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


Hydraulic Fracturing Is Environmentally Safe
    In a 1998 survey of state oil and gas regulatory agencies, 
conducted by the GWPC, twenty four state programs said they had not 
recorded any complaints of contamination to a USDW that the agency 
could attribute to hydraulic fracturing of coalbed methane zones.
    In 2004 the Environmental Protection Agency published a final 
report summarizing a study to evaluate the potential threat to 
underground sources of drinking water from hydraulic fracturing of coal 
bed methane production wells and the Environmental Protection Agency 
concluded that ``additional or further study is not warranted at this 
time...'' and that ``the injection of hydraulic fracturing fluids into 
coal bed methane wells poses minimal threat to the underground sources 
of drinking water''.
    Subsequently, the IOGCC conducted a survey of North Dakota and 
other oil and gas-producing states that found that there were no known 
cases of ground water contamination associated with hydraulic 
fracturing. Hydraulic fracturing is a common operation used in 
exploration and production by the oil and gas industry in North Dakota 
and all the member states of the IOGCC. Approximately 35,000 wells are 
hydraulically fractured annually in the United States, and close to one 
million wells have been hydraulically fractured in the United States 
since the technique's inception, with no known harm to ground water.
    It is my firmly held view and that of the IOGCC that the subject of 
hydraulic fracturing is adequately regulated by the states and needs no 
further study. In my opinion too frequent nationwide or federal study 
and review of critical operations like hydraulic fracturing, 
underground injection, and RCRA class II waste exemptions create an 
environment of uncertainty and litigation that inhibits real progress 
in sustainable resources development.
    Complaints of ground water contamination attributed to hydraulic 
fracturing or any other oil and gas operation should continue to be 
investigated by the appropriate state agency or agencies to determine 
whether or not ground water has been affected and whether a cause and 
effect relationship can be established between any impacts to ground 
water and petroleum exploration and production activities.
Summary
    The State of North Dakota and the IOGCC are firmly committed to the 
premise that regulation of oil and gas field activities is managed best 
at the state level where regional and local conditions are understood 
and where regulations can be tailored to fit the needs of the local 
environment. Federal regulatory programs have been most effective when 
they have been delegated to state regulatory agencies and funded 
through primacy programs. The primary example of this success has been 
the 1974 Safe Drinking Water Act (SDWA) section called the Underground 
Injection Control (UIC) Program. Between 1982 and 1990, twenty oil 
producing states applied for and received primary enforcement authority 
(primacy) from EPA to administer the program under Section 1425 of 
SDWA. Delegation of authority for this program to the states has 
required those with oil and gas regulatory programs to demonstrate that 
their programs were equally effective in protecting ground water as 
those promulgated and administered by EPA under Section 1422 of SDWA. 
Federal regulatory programs that cannot be delegated to state 
regulatory agencies and funded through primacy programs have been a 
constant source of friction between regulators and it has been much 
more difficult to achieve compliance. The primary example of this 
success has been the 1990 Oil Pollution Act (OPA) and Spill Prevention 
Control and Countermeasure (SPCC) regulations.
    Regulations alone don't begin to provide the full measure of a 
regulatory program. The North Dakota Oil and Gas Division of the 
Department of Mineral Resources utilizes 8 performance measures to 
monitor our activity in the areas of drilling permitting, UIC 
permitting, wellbore construction, well bore mechanical integrity 
testing, spill containment and clean up, fluid measurement, oil and gas 
conservation, and customer satisfaction. At least five of these 
measures are directly related to protection of water resources. These 
performance measures are backed up by a staff of field inspectors who 
visit the wells every day from when the drilling rig moves in until the 
permanent wellhead is installed and at least quarterly after that.
    North Dakota has participated in numerous work groups whose purpose 
was the development of Best Management Practices (BMPs) and regulatory 
review processes. While these efforts have done a great job of 
documenting the evolution of technology used to address and mitigate 
problems real or imagined they result in snap shot views of BMP or 
regulatory practices at a point in time and they do not result in 
living documents that keep up with the industry. For example, North 
Dakota participated in a deep unconventional natural gas BMP work 
group, which finished its work just as industry focus shifted to coal 
bed methane, sparking another BMP work group which again finished its 
work just as industry focus shifted to unconventional oil and gas shale 
utilizing horizontal drilling and hydraulic fracturing.
    Regular meetings of regulatory officials such as the IOGCC's 
Council of Regulatory Officials and EPA Task Force are the most 
effective way for regulators to keep pace with the rapid shifts in 
energy industry focus in real time.
                                 ______
                                 
    Mr. Costa. Thank you very much. Our last witness rounding 
up this panel is Mr. Albert Appleton, an Infrastructure and 
Environmental Consultant, and as I noted earlier, the former 
Director of the New York City Water and Sewer System, which 
would open up a whole other possibility of questions, but that 
is not the subject of this morning's hearing.

      STATEMENT OF ALBERT F. APPLETON, INFRASTRUCTURE AND 
ENVIRONMENTAL CONSULTANT, FORMER DIRECTOR OF THE NEW YORK CITY 
                     WATER AND SEWER SYSTEM

    Mr. Appleton. I have been before this Committee for those 
questions before. Thank you, Mr. Chairman. I am partially here 
not only because of that connection, but because of the work we 
did in the early 1990s in creating the New York City Watershed 
Program, which is a global poster child for the use of non-
regulatory measures to deal with broad landscape and water 
programs.
    I would like to acknowledge before I go on being before 
again Congressman Hinchey, whose advice and support during that 
time played a critical role at a time when most of the 
political structure was against this kind of environmental 
innovation.
    There are two sets of questions here. Nobody is disputing 
that natural gas is a good fuel, and nobody is disputing that 
if you can back out more polluting fuels, that is a good idea. 
The question is whether or not the cost of extracting this gas 
economically and environmentally is worth the particular 
benefits, and that is an issue particularly raised by 
hydrofracking as it goes to replace more traditional methods of 
natural gas extraction. Now, the industry says that essentially 
it is putting more regulation on that. Regulation that actually 
already exists for every other industry is something they can't 
afford.
    Yet, at the same time as the industry touts the enormous 
benefits of this, in New York it is projected an increase in 
governmental revenues of $1 billion annually, it is talking 
about huge kinds of cash flows, so the idea that the industry 
could not afford to comply with this housekeeping does not even 
pass the most rudimentary tests of due diligence. Now, why is 
hydrofracking raising such concerns? The concerns are raised by 
a particular characteristic of that, which is the materials 
used for hydrofracking, the purpose of which is laid out in my 
testimony, don't biodegrade.
    Once they are in the environment, they are in the 
environment to stay. We have learned through long and bitter 
experience that the only way to protect the environment from 
these kinds of materials is to keep them out of it. Now, as my 
testimony lays out, there are three paths to these materials:
    There is the deep injection of them. There are surface 
spills, and there is the disposal of waste material. These all 
present very serious and pernicious threats to the environment. 
They can be controlled. This is not the question. The question 
is will they be controlled? There has been a great deal of talk 
here about regulatory structures. There has been far too little 
talk about the problem of enforcing an industry that is 
building hundreds of thousands of wells or at least hopes to 
and projects that it will do so.
    When we did the New York City Watershed Protection Program 
that covered an area of the size of Delaware to do it right 
took 400 new people. With all due deference to my colleagues, 
particularly from North Dakota, which is in the Appleton home 
state, regulatory staffs in the United States do not begin to 
cover the need to do this. Again, this is a topic we could 
spend a lot of time on, but I am trying to be good. I know how 
important Chairman are shall we say.
    There are a couple of other issues that have been raised. 
Water withdrawal has raised an issue. Water withdrawal can be 
overstated in issue as it is managed right, but water 
withdrawal in areas that have small streams or seasonal streams 
or streams that are being used for disposal is an altogether 
different question. Then, there are the questions of air 
pollution. There is the question of social impact on these.
    These include 24-hour drilling operations, notice odor, 
light pollution, road congestion, the degradation of property 
values for people who have not leased their areas adjacent 
stream, disruption of local rural economies and disruption of 
traditional agricultural opportunities. There is a way to deal 
with these questions. It is called zoning. Zoning is designed 
to keep industrial activities away from incompatible uses. We 
don't have that kind of zoning in most rural areas.
    Now, many will argue that these problems are overstated, 
but if just two percent of these hundreds of thousands of wells 
go south in some way or another, that is thousands upon 
thousands of incidents, and I invite questions about that. In 
my remaining time, I want to focus quickly on two things about 
long-term energy policy. The first is we are spending as a 
society, state and nationally, billions of dollars in hopes of 
building a green energy economy, but who does that green energy 
economy compete with?
    It competes with traditional fuels, including natural gas, 
that generates half of the electricity in the country already. 
If we subsidize natural gas production by allowing the 
externalization of environmental cost, we are essentially 
undercutting our own green investment policy. The other 
question, which I would say in closing, is global warming seems 
to be left completely out of this picture.
    I am fascinated when I read the Economist each week. Here 
we have a very detailed, three-page analysis of global warming, 
and then six pages later they will talk about the new play and 
offshore Brazilian oil as if global warming is going to have no 
impact on future hydrocarbon demand. It will. That is, future 
hydrocarbon demand has got to go down if we are going to 
address this problem, and that means in the future we must 
focus on those sources that are most sustainable.
    My time has expired. I appreciate your patience for the 
extra 30 seconds. I would be delighted to answer questions.
    [The prepared statement of Mr. Appleton follows:]

          Statement of Albert F. Appleton, Infrastructure and 
                        Environmental Consultant

    Good Morning, Mr. Chairman, Committee Member
    I am honored to appear before this Subcommittee to testify on this 
issue. At one level, the issue the Committee is addressing appears 
simple, what is the appropriate level of environmental regulation But 
to address the potential of shale gas and, indeed, the other 
unconventional fuels the Subcommittee will be reviewing requires a 
rigorous approach to the underlying economics of this issue. I hope 
this testimony will assist the subcommittee in doing so.
    Should shale gas drilling be subject to the normal requirements of 
good environmental housekeeping? The industry argues that this would be 
``overregulation'' and that it would economically undermine the future 
of shale gas extraction. Yet at the same time, when touting shale gas, 
the industry promises annual revenues of many billions of dollars to 
state governments and local landowners, and describes shale gas as an 
asset ultimately worth trillions. With projected cash flows of these 
levels, the claim that the natural gas industry cannot afford the costs 
of meeting basic environmental housekeeping standards, costs every 
other American industry, most of whom are far less profitable than 
shale based natural gas, routinely pay, is not a claim that survives 
even the most rudimentary due diligence.
    The industry also argues that shale gas extraction is 
environmentally safe. This is also a claim that challenges basic common 
sense. Shale gas extraction is dependent on hydraulic fracturing; also 
know as fracking, a process of using high pressure injection of sand in 
water to fracture the shale formations and release the natural gas 
trapped in the shale. But sand added to water merely sinks to the 
bottom. What must also be added is some liquid with the same specific 
gravity as sand to hold the sand in solution so that it can exert its 
fracturing force. As has been widely documented, these fracking fluids 
use a witches brew of toxic chemicals, nearly all of which are 
intrinsically hazardous to the environmental.
    Why are they so intrinsically hazardous to the environment? The 
answer is simple: these compounds do not biodegrade. Once in the 
environment, they stay in the environment. Most of them bioaccumulate. 
The remainder volatize, removing them from water and land, but adding 
them to the atmosphere where they become contributors to global 
warming. The only way to protect the environment, and particularly 
water resources, is to prevent their introduction into the environment. 
Streams have no capacity to absorb these compounds; dilution is the 
only solution for their pollution. And because these compounds are 
toxic in such minute amounts, streams very quickly reached their 
capacity to safely dilute such compounds.
    So how does fracking introduce these compounds into the 
environment? There are three ways.
    First, fracking leaves a significant portion of the fracking fluid 
underground, where it is free to migrate into groundwater. The industry 
argues that fracking, particularly in the East, takes place at depths 
so far below aquifer layers that fracking presents no threat to 
underground water resources. Unfortunately, there are three 
qualifications to that reassuring conclusion. The first is that 
currently there is no standard based assessment of the underground 
hydrology required before a site is chosen for fracking. So what one 
has, in effect, is underground injection of wastes without any the 
safeguards of permitted underground injection.
    The second qualification is that the industry position assumes 
that, as the concrete casing is drilled through the water bearing 
strata, it is properly drilled and maintained so its integrity is not 
breached, allowing fracking materials to pollute the water. To insure 
this, far more oversight of the drilling process is needed than takes 
place now.
    And the third qualification is time. Fracking material may not 
invade aquifers immediately; it is a process that could take decades. 
But because those materials do not biodegrade, if they can move towards 
water sooner or later they will get there. And then what? The issue of 
delayed damages is one that has drawn almost no attention, but it is 
one that thirty years from now those dependent on aquifer water could 
passionately and bitterly care about. Time is also the enemy of 
concrete, yet the requirements for maintaining concrete drilling 
casings, particularly once a well has ceased to produce, have yet to 
adequately address the question of long-term casing integrity.
    The second way fracking materials can enter the environment, 
particularly the water environment, is through surface spills. There 
are three sources of such spills, unplanned irruption of underground 
liquids, including fracking materials, to the surface; poor 
housekeeping; and surface floods. Fracking liquids, and the materials 
for them, are typically stored in open lagoons, a practice that should 
end in favor of off the ground, corrosion proof tanks. It should be 
remembered that so far shale gas extraction has operated largely on the 
flat, arid, sparsely populated, often publicly owned lands in the West. 
As shale gas extraction moves into the hilly, rainfall abundant, 
densely populated and privately owned East, only proper regulation and 
a far different standard of care can avoid an inevitable disaster.
    One of the key elements of those regulations must be stormwater 
management, an issue that in many jurisdictions is avoided by keeping 
the size of the actual drilling pad to less than five acres and is 
exacerbated by the Clean Water Act exemptions from stormwater 
permitting for oil and gas production.
    The third way fracking materials can enter into the environment is 
through the disposal of used fracking liquids. Though a significant 
portion of fracking material will remain underground, an even larger 
portion returns to the surface presenting critical problems of waste 
disposal. The industry has done everything from spreading these liquids 
on the road as deicers, to depositing them in streams, to putting them 
through normal sewage treatment plants. None of these are acceptable 
practices. The enormous loophole for oil and gas waste in the Resource 
Conservation and Recovery Act (RCRA) needs to be replaced by a positive 
program that insures fracking materials will receive proper disposal.
    The path that needs to be taken is to put waste fracking materials 
through an industrial strength hazardous materials treatment facility 
and then to properly dispose of them through a properly and strictly 
enforced program of planned and hydrologically safe underground 
injection. Though many advocate allowing discharge of hazardous 
material treated effluent into streams under carefully controlled 
limits, any disposal of treated fracking liquids in streams needs the 
most careful study. It must be banned in any areas that are used for 
water supply purposes because of the threat of bioaccumulation. Even in 
other areas, conclusions that treated fracking fluid can be disposed of 
in surface waters run the peril of misleading the industry as to how 
much dilution capacity a surface stream has and inducing it to depend 
on a resource whose limits they will soon exceed.
    Though the pollution problems of fracking materials have attracted 
the bulk of attention with respect to shale gas extraction, they are by 
no means the only environmental issues that fracking raises. There is 
air pollution, from a combination of using diesel powered equipment, an 
enormous volume of drilling related truck traffic and the venting to 
the atmosphere of a number of gases, including methane.
    Then there is the question of where will the shale gas industry get 
the water for the fracking process? Even if one uses the industry 
numbers for the amount of wells that will be drilled, in absolute terms 
the amount of water fracking will need is not outlandish. But that 
conclusion scants some critical complexities in terms of local impacts. 
First, the volume of water needed for a single fracking event, two to 
ten million gallons, can have a huge impact on local tributary streams. 
Second, the timing of such withdrawals can be critical in terms of 
issues should as fish spawning and maintaining the natural annual 
pulsing of stream flows to which the stream ecology is adapted. Third, 
water withdrawals that could be acceptable in wet years may not be 
acceptable in dry ones. Fourth, if the industry shifts to groundwater 
use, those withdrawals could have significant effects on groundwater 
aquifers that are providing base flows for surface streams. And 
finally, water withdrawals from any stream that is receiving discharges 
of treated fracking fluids must be coordinated with discharge planning 
so that the reduction in the dilution capacity of the stream is 
reflected in the amount of discharge allowed.
    If water withdrawal for fracking purposes by natural gas drillers 
is to proceed in an orderly and ecologically responsible manner, a 
proper regulatory and planning framework needs to be created.
    Here a pause to take note of industry claims that state regulation 
will be sufficient is particularly appropriate. Both the issues of 
discharge of treated fracking fluid waste, and the issue of water 
withdrawals are not just local ones. Many streams traverse more than 
one state making common rules for interstate situations essential if 
development is to proceed in an orderly manner and if a race to the 
bottom to avoid the requirements of good environmental housekeeping is 
not to be created.
    Two other issues of environmental impact and cost externalization 
will complete the immediate inventory of concerns for this subcommittee 
should be most aware of. The first is the impact of fracking on the 
rural landscape, particularly in areas that support water resources. 
These impacts are both ecological and social. Ecologically, five acre 
drilling pads, surrounded by a larger leased area degraded by drilling 
support and combined with new pipeline corridors and new or expanded 
roads mean a landscape transformed from rural to industrial.
    Then there are the social impacts of such drilling. These include 
24 hour drilling operations, problems of noise, odor, light pollution, 
greatly increased volumes of truck traffic and road congestion, 
potential health impacts from the toxic chemicals that fracking 
operations put into the environment, and the disruption of well based 
rural water supplies. The landscape transformations from the new shale 
gas economy undermine rural businesses in tourism, depress the property 
values of those adjacent to well sites whose property was not leased 
for oil and gas drilling, and are often incompatible with traditional 
agricultural business activity.
    Many will argue about the level of these problems, dismissing them 
as few isolated instances, but consider the numbers. Even if only 2% of 
proposed drilling sites generate some significant adverse impact, on 
the basis of industry projections of 120,000 drill sites for 
Pennsylvania and New York alone that would create 2,400 instances of 
significant impacts. Given shortages of an experienced labor force and 
a historical culture that has emphasized production over environmental 
housekeeping, if the industry expands at the rate the industry 
projects, one could reasonably expect to see a glitch percentage closer 
to 5%, or 6,000 adverse impacts in New York and Pennsylvania alone.
    All of which points to three conclusions. First, shale gas drilling 
is completely inappropriate in any area that is a major drinking water 
source, such as the New York City watershed, the Delaware River Basin, 
and recharge areas for sole source aquifers.
    Second, the above panoply of landscape and social problems can only 
be addressed by one tool, zoning, which most rural areas currently 
lack. Such zoning, designed as all zoning is, to minimize the impacts 
of incompatible uses being placed adjacent to each other, is essential 
not only to minimize harm to existing countryside residents from 
fracking, but to maintaining over the long term, public support for the 
use of fracking technology.
    Finally, it seems clear that a system of impact payments to local 
rural governments will be needed, to deal with issues like congested 
road systems, facilities for workforces, adverse impacts on traditional 
outdoor recreational resources, improvements in utility systems and 
schools and so forth.
    In closing this section of my presentation, a word must be said 
about enforcement, which must be the companion of any restoration of 
the environmental standards of the Clean Water Act, Safe Drinking Water 
Act, and of the other new environmental regulations needed to address 
the above issues.
    The Department of Energy's report on Comparative Gas regulation 
identifies eight separate tasks involved with shale gas regulation. 
Moreover, because prevention is the only viable strategy for many of 
these issues, and because of the intrinsic difficulty in monitoring 
underground activity, it is clear that frequent site visits, a number 
of which should be unannounced, will be required, not to mention that 
there are a number of tasks such as supervising concrete work on 
drilling casings that should be independently supervised and reviewed 
by regulators at the time they are carried out.
    Taking New York as an example, the industry currently projects 
40,000 wells will be drilled in the State. If half that number, 20,000 
wells are active at any one time, then New York State regulators need a 
staff adequate to oversee 20,000 wells. Though to offer any precise 
number of additional regulators that New York will need would depend on 
too many assumptions to be done casually, it is clear that an adequate 
regulatory oversight staff for fracking will number in the many 
hundreds if not larger. When the New York City watershed program was 
created, it required 400 new staff to cover an areas a tenth of the 
size of area of the Marcellus and to manage what was ultimately a less 
complicated environmental oversight task.
    Addressing these issues must be the foundation of any successful 
long-term policy towards extraction of shale natural gas. Yet ideally, 
this would only be the beginning.
    The current debate over shale gas extraction is based on an 
industry approach that assumes the environment is, in economic terms, a 
cost center, and that the policy issue is to find a balance point where 
economic activity can be maximized and the costs of environmental 
compliance minimized. But this is essentially what should be called, 
for lack of a better term, the old accounting, in which industry tries, 
by minimizing its environmental obligations, to externalize as many 
costs as possible and, by externalizing them, to maximize its profits.
    But as a society, what we have increasingly come to recognize is 
that we want is a new accounting, the accounting of sustainability, 
where the environment is not seen as a cost center to be avoided to the 
greatest extent possible, but as a profit center, where environmental 
stewardship becomes the key to a smooth functioning, profitable 
industry that maximizes overall public wealth.
    The problem with the old accounting is that, while it makes money 
for some, it costs money for many more. Externalizing costs is, in any 
free market economy, intrinsically inefficient. It is a form of 
corporate welfare performed at the expense of all those who must pay 
the externalized costs, costs that in any full cost accounting system 
generally wind up being far greater than the sum of the benefits that 
come from doing so. For example, the natural gas industry projects New 
York State will receive a billion dollars in additional revenue from 
shale gas development. However, if such development were to undermine 
water quality in the New York City watershed, as it undoubtedly would, 
the cost of building and operating filtration works would be at least 
1.2 billion dollars a year. Extend these impacts throughout the state 
and we have an industry whose profits would depend on an inaction 
subsidy from New York State's government and the costs paid by state 
residents would be far in excess of what it would produce for them.
    There is an even more fundamental flaw, one that applies 
nationally, with allowing the shale gas industry to externalize its 
costs through a lack of environmental regulation or effective 
enforcement of applicable environmental regulations. The country has 
made a historical commitment to a green energy economy at all levels of 
government. Again using New York as an example, electrical power 
customers in New York State are paying enormous sums as surcharges on 
their electrical bills to support green energy.
    But whom does green energy compete with as a source of electricity? 
It competes with natural gas powered electrical generation. If the 
price of natural gas is kept artificially low by government's failure 
to prevent the externalization of the costs of fracking produced 
natural gas, then government is undercutting its own green energy 
policy. The great economist Milton Friedman once did a famed interview 
where he stood on the D.C. Mall and pointed first to the Department of 
Agriculture saying, over there well meaning people spend billions of 
dollars encouraging the growth of tobacco. Then, pointing to the 
Department of Health and Human Services, he said, and over there 
equally well meaning people spend billions to fight the health 
consequences of using tobacco. One of these sets of people, he 
concluded, is wrong.
    If Dr. Friedman were alive today, he would undoubtedly look at our 
policy of sponsoring green energy while allowing the subsidization of 
lower prices for its natural gas competitor by externalizing its 
environmental costs of production, and conclude the same thing. Until 
we make coal, natural gas and oil production sustainable, we will 
continue to face that dilemma.
    Sustainable is the key word. The basic premise of sustainability is 
that the environment is a profit center, not a cost center, and that 
the integration of economic development with environmental stewardship 
is the way to maximize individual and social profit. This is the 
challenge that the natural gas industry, with its resistance to the 
ordinary standards of environmental housekeeping that every other major 
American industry complies with, is notably failing to address. In 
clinging to the old accounting of the past, instead of the new 
sustainable accounting of the future, it is the shale gas industry that 
is generating the opposition to its use of fracking and is feeding 
rapidly escalating political controversy. In orienting the shale gas 
energy industry towards the past, instead of the future, the Cheney 
Energy Amendments of 2005 did the industry no favor. The industry 
should be seeking to make shale gas extraction as sustainable and as 
green that its advertising and public pronouncements, as its slogan of 
clean burning natural gas, implies.
    What, briefly, would that sustainable policy look like? It would 
end the externalization of environmental costs by raising the standards 
of industry practice. It would develop non-toxic and biodegradable 
fracking additives. It would recognize that there are critical areas, 
watersheds, special scenic resources, critical resources for the local 
economy and densely populated areas that need to be off limits for any 
drilling. And it would work closely with local stakeholders to develop 
local zoning and regional planning schemes to avoid disastrous social 
impacts.
    So, in the context of this hearing, how important is shale gas 
extraction going to be for America's energy future. Unless the industry 
embraces sustainability, the answer is going to be not very. For the 
last chapter is the drama of green energy versus traditional energy is 
going to belong to global warming.
    We are at an interesting point in political and economic time. The 
country and much of the world has embraced the idea of a green energy 
future. But we have not yet faced the full implications of what that 
means for the existing energy industry.
    The basic reality is that over whatever time period we choose to 
target, total carbon combustion is going to have to drop dramatically, 
if we are going to avoid the multi-trillion dollars costs of global 
warming that we are already beginning to experience. Transitions 
produce these kinds of gaps in understanding. Few things can produce 
more of a sense of economic unreality than to read in a business 
publication like the Economist a rigorous assessment of the prospects 
for global warming and then find five pages later an article on the new 
oil play in the Arctic Ocean or in deepwater off Brazil that totally 
ignores the impact of global warming policy on hydrocarbon demand and 
the on the stunted economic return likely on the tens of billions that 
will have to be invested to recover these resources.
    With respect to global warming, once the emissions implications of 
current economic growth in just the four CRIB countries, the numbers 
are inexorable. A vast reduction in carbon combustion and a massive 
increase in green energy production is the only future that has any 
choice of being sustainable.
    Over the next ten years, it will become ever more apparent that the 
existing hydrocarbon based energy industry will be playing a game of 
last man standing in which the prize will go to the industry or the 
components of particular industries that are more efficient and more 
sustainable. The billions and billions of dollars involved in 
extracting and using the unconventional resources this committee is 
reviewing, these additional billions in externalized environmental 
costs that have so far accompanied such developments, will not be paid 
by a public that is struggling with both the costs of transitioning to 
a green economy and with the steadily accelerating costs of 
unprecedented climate change.
    So far, the only industry that seems to recognize this fact, even 
if the recognition has been somewhat begrudging and incomplete, has 
been the coal industry. Perhaps because it has not been sheltered, as 
shale gas extraction has been, from the upsurge of public opposition to 
unsustainable energy generation, the industry is now developing a 
serious commitment to clean coal and trying to make deep subsurface C02 
injection work. It is far too early to assess whether they will be 
successful in these efforts, but the fact they are starting to face 
their future in this manner is a welcome development. The shale gas 
industry needs a similar epiphany if it is not to energy a brief burst 
of publicly subsidized splendor followed by a decline that leaves much 
of the American countryside an industrialized sacrifice zone.
    Hopefully, the work of this Committee will represent a starting 
point in that effort.
    Thank You.
                                 ______
                                 
    Mr. Costa. Thank you very much. We are now at the part that 
I always like best, which gives Members an opportunity to ask 
questions of the witnesses, and I will begin. All of you have 
spoken in some degree about the sense of the potential for 
shale gas as a major part of the energy portfolio that I spoke 
of earlier. Beginning with Mr. John, would you please describe 
to me what you think are the chief obstacles in capitalizing on 
shale gas as a significant portion of this energy portfolio in 
the country?
    Mr. John. Gladly, sir. I would first characterize just the 
size of the resource plays, the big four shale plays.
    Mr. Costa. Speak closer into the mic. We do want to hear 
you.
    Mr. John. I appreciate that. Hopefully, that is better. I 
would first want to just emphasize the size of the four shale 
plays that we have been talking about are enormous, and I think 
the science that has gone into the stimulation and the 
horizontal drilling technique so far, it has advanced to the 
point that we as an industry are confident that we are poised 
to develop these large plays.
    My basic answer to your question would be our biggest 
concern would be that there wouldn't be any negative changes in 
the environment ahead of us, the regulatory environment that 
would preclude us or hinder us from going forward with the 
development of the plays. We believe that we have the 
technology now to develop these plays. We believe we have the 
resources in place to make it happen, and we would be concerned 
that there would not be any regulatory changes that might 
impede the development of that resource.
    Mr. Costa. Well, that is a very broad description of 
obstacles, regulatory change. It seems to me, and I want to get 
to Mr. Kell when we talk about best management practices, there 
ought to be a discussion going into it as to whether or not we 
want to establish some level of uniformity among states. I am 
originally from a state legislature, so I tend to favor state 
regulatory framework, but I think there needs to be some 
uniformity, and especially given the fact that a lot of these 
plays are intra-state in terms of the areas that they cover.
    In other words, they cover multiple states, and it seems to 
me that providing a level playing field in that instance is 
important. Mr. Kell, what do you see as the major obstacles, 
and you noted best practices. Is there a gold standard as it 
relates to best management practices? If there is, where does 
that gold standard lie? Where would you point to that would 
create uniformity maybe around the country?
    Mr. Kell. Yes. Mr. Chairman, in my testimony, I commented 
on two different processes that help address regulatory 
practices within the states with the recognition that geologic 
conditions, industry practices vary from state to state. But 
with regard to that lowest common denominator--those elements 
that ought to be embodied, incorporated in all state programs--
I advocate the stronger review process as a process that was 
established to help bring about more uniformity and consistency 
in the way states regulate and manage oil field waste and 
ensure protection of the environment and public health and 
safety in that process. The STRONGER process has been a proven 
success. There have been 21 states that have voluntarily 
undergone the STRONGER review. Ten of those states have gone 
followup reviews, including Ohio.
    We take very seriously the recommendations of the STRONGER 
review and value their assessment of our program relative to 
the guidelines.
    Mr. Costa. Yes. I don't know if you have it in your other 
information, but submitting that information as to best 
management practices among the states, I'd like to look at it. 
There is also noted, and maybe you are the person who asked the 
question about the impacts on water quality, and certainly I 
think we should all be concerned about that. The gentleman from 
New York noted that in his testimony. I would like to get back 
to him on that, but I am also concerned about water quantity.
    I mean, if you are east of the Mississippi River, as 
witnessed yesterday, last night and today water is everywhere, 
but if you live where I do, and you are in the middle of a 
drought, the quantity of the water becomes another issue. Is 
the impact on the availability of the extraction of that water 
and the potential depletion of aquifers an issue?
    Mr. Kell. It can be an issue, and I would recognize that as 
an excellent topic to be addressed through stakeholder driven 
preparation of best management practices. Being from Ohio, 
which is a state that borders the Marcellus play but has yet 
had very limited development, I look with interest across our 
border to Pennsylvania and West Virginia as state regulatory 
offices among several agencies wrestle with how do we 
effectively manage the larger volume withdrawals in a way that 
does not diminish water quantity or quality, and we are hearing 
stories from a variety of states.
    Some of those are referenced and documented in the Primer 
about some of the innovative methods that are being developed 
and used in order to minimize impacts that can be caused by 
those withdrawals, so I look forward to seeing and learning 
from the experience of other states so if and when Ohio begins 
to see some of the larger hydraulic fracturing operations that 
we will have the wisdom imparted from those other states that 
are pioneers in wrestling with those issues.
    Mr. Costa. Yes. My time has expired, but I would like to 
pursue that further. Maybe there is something that we can do to 
bring together the states that have significant natural gas 
shale potential and hold some sort of workshop that would bring 
together best management practices and have that discussion as 
we move forward in this. The gentleman from Colorado is next.
    Mr. Lamborn. Thank you, Mr. Chairman, and, Mr. Kell, thank 
you for what you and the other state regulators around the 
country are doing. My first question is this: Former EPA 
administrator, Carol Browner, reported to Congress in 1997 that 
the states were adequately regulating hydraulic fracturing and 
that no overriding Federal rule was necessary because of the 
lack of risk or exposure. Do we need Federal regulation if 
there is no risk or exposure as in her words?
    Mr. Kell. As a member of the Ground Water Protection 
Council and a representative of Ohio and as indicated in my 
testimony, we believe that the states are doing an effective 
job in the management of this and do not support or believe 
there is a necessity for a Federal oversight program for 
drilling and completing and treatment of oil and gas wells.
    Mr. Lamborn. Since her statement in 1997, 12 years ago, has 
anything changed since then that would change that position?
    Mr. Kell. No.
    Mr. Lamborn. Second, can you amplify on the letters that 
five of the six states that you mentioned earlier submitted for 
the record, and why were those six states chosen to submit 
letters for the record?
    Mr. Kell. The six states were chosen because they were 
specifically referenced in the article that attributed 
thousands of cases of groundwater contamination specifically to 
the practice of hydraulic fracturing. The state directors from 
all six states were contacted. The State of Colorado has a new 
director and was unable to respond in the short timeframe 
provided, so I can't speak on behalf of the State of Colorado, 
but the other states that were referenced, the directors have a 
long-standing history.
    When citizen complaints arrive with regards to alleged 
contamination of groundwater by industry practices, we evaluate 
all those. We investigate those, and we look for causation, and 
most states have had long-standing investigative programs, and 
we identify sources of contamination when in fact the oil and 
gas industry has caused impact. Those five directors, who are 
very familiar with their specific programs have all stated that 
in the history of their investigative programs they have not 
diagnosed a single water quality problem as resulting from 
hydraulic fracturing.
    It is not to say there weren't problems related to oil and 
gas operations, but the hydraulic fracturing practice was not 
identified as one of those causation factors.
    Mr. Lamborn. Now, the factors that they cited that 
contributed to contamination, like operator error or improper 
techniques for upper well casings, et cetera, et cetera, are 
those being addressed by current regulations?
    Mr. Kell. State regulations either currently address those 
or in response to trends and problems that are recognized. As 
Mr. Helms testified, the states are very competent and 
committed, and when we recognize there are issues that are 
identified as causing issues, we work diligently toward 
upgrading our permit conditions, our regulations and statutes.
    Many of the problems referenced by those articles were, in 
fact, legacy issues that many states have already addressed 
through the legislative process, including old earthen storage 
pits, line leaks and other things that have since been 
corrected through the regulatory process.
    Mr. Lamborn. OK. Thank you. Lastly, a question for Mr. 
Duncan of the U.S. Geological Survey. In the event natural gas 
production were to be reduced because of regulatory restraints 
imposed on the use of hydraulic fracturing, would there be 
alternative environmental risks arising from the other sources 
of energy to which this country would have to turn?
    Mr. Duncan. That is a tough question to answer. Generally, 
the U.S. Geological Survey does not try to predict what future 
energy resources might be used. We try to make sure that our 
research and assessments are relevant to the priorities of the 
Nation, and if additional geologically based energy resources 
were to become important in our economy, we would certainly 
look at those with our research agenda.
    Mr. Lamborn. OK. Thank you, and, Mr. Chairman, I would 
yield back my last nine seconds.
    [Laughter.]
    Mr. Costa. Your last five seconds. Thank you. I have been 
informed that we are going to have votes at about 11:15, so 
obviously with all the Members of the Subcommittee here, we are 
going to try to get through that, but we will have to come back 
if we want to make sure that everybody gets a chance to get 
their questions in and to go a second time. Mr. Hinchey was 
next followed by Mr. Boren, but, Mr. Boren, did you work that 
out?
    Mr. Boren. I have to run out something if the Chairman 
would indulge me quickly?
    Mr. Costa. Well, if Mr. Hinchey wants to defer.
    Mr. Hinchey. How quickly are you going to be?
    Mr. Boren. Go ahead. Go ahead.
    Mr. Costa. Mr. Hinchey, please proceed.
    Mr. Hinchey. Thank you very much, Mr. Chairman.
    Mr. Costa. Into your mic there, please. There we go.
    Mr. Hinchey. I very much appreciate the opportunity to 
focus on this issue. This is a very important issue.
    Mr. Costa. Right.
    Mr. Hinchey. It is not an issue that is newly important. It 
has been around for a long time. It is something that this 
Congress focused on back in 1974 in a number of other states. 
We have some very strong regulations in the State of New York. 
I just want to express my appreciation to all of the gentlemen 
who are here and the statements that they have given and the 
responses that they have given to the questions, especially to 
Mr. Appleton, and I want to congratulate him on all the hard 
work that he has done and the effective work that he has done.
    I am very happy to see him here today and have an 
opportunity to listen to the things that he has to say. I don't 
think anyone here, and I don't know of anyone frankly who is 
opposed to the use of natural resources in our country. We know 
that we are heavily dependent upon foreign oil and that we are 
necessarily going to use the resources that we have here, the 
energy resources that we have in our own country, so no one is 
opposed to the drilling of natural gas.
    But, clearly, we are interested in making sure that 
activity is done in a way that is not going to be injurious to 
other people, and that is the main point here. That Safe 
Drinking Water Act, which was passed back in 1974, was largely 
focused on that issue, and it was focused on that issue based 
upon experience. The experience was that some drilling that had 
been used by some corporations in places around the country had 
contaminated water supplies and had other adverse effects on 
the environment, so the Safe Drinking Water Act was put into 
effect in 1974.
    Something very strange happened in 2005 here. As a result 
of initiatives put forth by the Bush Administration, the 
Congress cooperated with them, and they repealed the drilling 
for natural gas from the Safe Drinking Water Act so that the 
drilling of natural gas could go forward without having that 
kind of regulation and oversight engaged in it. That was, in my 
opinion, a big mistake. Some of us voted against that for that 
reason and other reasons, but nevertheless it is in play now.
    As a result of that, we have seen a number of issues where 
states have been adversely effected: Arkansas, Alabama, 
Colorado, Texas and other states have been effected by the way 
in which this drilling occurs. One of the ways in which the 
drilling occurs is the use of chemicals in the drilling 
process, and with the use of those chemicals, there is a large 
problem: The contamination of water. That contamination of 
water could effect people's private wells, or it could effect 
larger water supplies, reservoirs, things of that nature.
    We are very interested in how this thing is going forward. 
I wanted to ask a question of Mr. Kell, if I may. I know that 
you have done a lot of work, and I know also that you require 
financing from outside sources. Can you tell us some of the 
finances that you get from outside sources to do your research 
and the effect that might have on the outcome of that research?
    Mr. Kell. Mr. Hinchey, I believe your question pertains to 
the work of the Ground Water Protection Council?
    Mr. Hinchey. Correct.
    Mr. Kell. The Ground Water Protection Council conducts 
research through a variety of financial sources, including 
Federal grants from U.S. EPA, from United States Department of 
Energy, from dues and corporate supporters.
    Mr. Hinchey. And the oil and gas industry makes a 
contribution?
    Mr. Kell. There are members of a variety of industries that 
contribute.
    Mr. Hinchey. Yes, but I know. I am just asking you about 
the oil and gas industry. You receive funding from the oil and 
gas industry to do this research, is that correct?
    Mr. Kell. In some cases, that is correct.
    Mr. Hinchey. OK. Well, I just wanted to make sure that this 
may not be done in a completely objective way, that there may 
be some outside influence. That is something that we all have 
to keep in mind.
    Mr. Kell. I would emphasize that our opinions are not for 
sale and that our emphasis is on the protection of groundwater 
resources.
    Mr. Hinchey. Thank you. I wanted to ask Mr. John about some 
of the ways in which companies that he deals with engage in the 
fracturing. We have information that indicates that the 
fracturing fluids contain some toxic chemicals, such as 
benzine, and benzine is, as we know, not biodegradable. As Mr. 
Appleton was telling us a little earlier, these kinds of 
materials stay out there indefinitely, and they can have long 
periods of adverse effect on the environment, particularly on 
one of the issues that is most important to human life, and 
that is good quality water.
    What are the chemicals that are used for the fracturing for 
this natural gas drilling?
    Mr. Costa. Mr. John, could you be succinct in your answer. 
We have gone beyond the time, and I want to make sure everybody 
gets a chance to ask their questions.
    Mr. John. Very good. I will try to be as brief as I can. I 
would first draw attention to some of the materials that have 
been provided to the Committee. Certainly, there is what we 
call a fact sheet that is provided by Chesapeake Energy that is 
in the package of information that I have provided that lists 
all the chemicals that are used in the fracking process, and I 
know in the DOE primer, there is another list of those 
chemicals that are provided there.
    I would emphasize that in my experience, we have not seen 
any problems associated with hydraulic fracturing in my career 
to the extent that your concerns aimed would acknowledge that 
hydraulic fracturing has been around since the 1940s or 1950s. 
It is a process that has been employed by our industry for that 
long of time on just thousands and thousands of wells, but as 
far as the list of chemicals, rather than my trying to recite 
them, I would draw your attention to the material that has been 
provided to you.
    Mr. Costa. Thank you. The next Member is the gentlewoman 
from Wyoming, Ms. Lummis.
    Ms. Lummis. Mr. Chairman, in deference to Mr. Boren's need 
to be elsewhere, I would defer my time to him for now if I may 
reserve it later.
    Mr. Costa. Well, the gentlewoman may reserve it later, and 
that is very kind of her, and that means that the gentleman 
from Oklahoma will get an opportunity to ask his questions.
    Mr. Boren. Thank you so much. There are 109 FFA students 
from Oklahoma who will thank you for this who are waiting on 
the Capitol steps for a photo with our Oklahoma delegation.
    [Laughter.]
    Mr. Costa. I suspect there will be some other thank you's 
that you will need to make to the State of Wyoming, but please 
go ahead.
    Mr. Boren. Yes, absolutely. Everyone has thrown in their 
North Dakota story. My wife's grandmother lives in Ashley. They 
had the only restaurant in Ashley, North Dakota, so we have to 
throw that in there.
    [Laughter.]
    Mr. Boren. That actually calms me down a little bit because 
of all the rhetoric that is kind of being thrown around today 
about these issues. One from Mr. Appleton about golly, the oil 
and gas is industry is making so much money. They can afford 
basically to have this over-regulation is what I term it. Right 
now in my district in the State of Oklahoma in the Second 
District in places like McAlester and Atoka and Coalgate, one 
of the poorest districts in the country, natural gas companies 
are stacking their rigs.
    There are companies like Frac Tech that are laying people 
off because the price of natural gas is anywhere from $3.00 to 
$4.00 or maybe a little bit above, and these shale wells that 
we are talking about, those economics don't work at $4.00, so 
these folks are laying people off. People are hurting in my 
district, and these are not Republicans or Democrats. These are 
Americans. A lot of them are blue-collar Democrats by the way. 
It is not one party or the other, and some Republicans as well.
    I think really what Mr. Appleton is doing is searching for 
a problem that does not exist because looking at all these 
other examples and all these states where there has not been a 
problem. We just heard from the testimony from Mr. Kell, from 
others that looking into these allegations of these thousands 
of allegations, there has not been a problem with hydraulic 
fracturing. Then, there was a reference that Mr. Hinchey made 
to EPAct 2005. The President of the United States, Barack 
Obama, voted for that bill.
    I stand with the President on this in supporting hydraulic 
fracturing, so I wanted to bring that up, and I think a lot of 
Members on the Democratic side of this aisle voted for that 
same piece of legislation, including the President of the 
United States. I also want to say by throwing anyone's 
credibility to the side of saying well, you are supported by 
the oil and gas industry. Well, what if you are supported by 
the Sierra Club, by campaign contributions?
    We could say that about any one of us, and I am proud that 
I am supported by the oil and gas industry because they employ 
a lot of people in my state, and I am going to stick up for 
them, and I am tired of people trying to shut down an industry 
when they are not educated on the facts. I am sick and tired 
frankly of a lot of folks in my own caucus coming after the 
largest employer in my state, and I am going to keep fighting 
for them, and I want to go to Chesapeake, who employs a lot of 
people in my state.
    How deep, Mr. John, are these shale wells on average? Can 
you talk about that, and how much distance is between the 
actual fracturing and fresh water?
    Mr. John. Yes, sir. I work in the eastern part of the 
United States. I am out of Charleston, West Virginia, so my 
familiarity is more with the Marcellus Shale than the other 
major shale plays that Chesapeake is involved with, but I can 
give you some information. The Marcellus wells that we are 
currently drilling in northern West Virginia and northern 
Pennsylvania are about 8,000 feet deep. That is 8,000 feet 
down, and then we will drill a horizontal lateral that may be 
as long as a mile at that depth.
    We would expect fresh water aquifers in those areas to be 
200 or 300 feet deep, so that is essentially the distance 
between the shale gas that we are extracting and the aquifers 
if that is getting to your questions. In plays like the 
Haynesville, the Haynesville Shale is deeper than the Marcellus 
Shale. It is deeper than 10,000 feet. The Fayetteville and the 
Barnett are somewhere in between.
    Mr. Boren. And if you weren't able to do this hydraulic 
fracturing, how much of the natural gas industry would go away, 
and how much more would we be dependent on foreign oil and 
terrorism?
    Mr. John. Yes, sir. I believe as far as the shale plays are 
concerned, the four shale plays that we have been talking 
about, hydraulic fracturing is absolutely essential to the 
development of those plays. We would not be able to produce 
natural gas without being able to frack those wells.
    Mr. Boren. And last question. We talked about green jobs 
and solar and wind. What backs that up when the wind stops 
blowing, and there is no sun? What backs that up mainly? Is 
that natural gas would you say?
    Mr. John. I would expect it to be natural gas, yes, sir.
    Mr. Boren. OK. Thank you very much.
    Mr. Costa. That is what Boone Pickens says I think.
    [Laughter.]
    Mr. Costa. Anyway, our next Member is again the gentlewoman 
from Wyoming, who was very gracious in deferring her time.
    Ms. Lummis. Thank you, Mr. Chairman, and I would like to 
thank those of us who joined us today. I am from the State of 
Wyoming where I served briefly on our Oil and Gas Conservation 
Commission, so I am aware of the kind of regulatory mechanisms 
that are in place in our states to address the issues we are 
discussing today. Mr. John, you discussed in your testimony the 
huge energy potential that shale basins across the country pose 
to meet America's energy needs. A couple of our people today 
testified that it is a game changer.
    Can you speak to what effects Federal jurisdiction over the 
process of hydraulic fracturing would have on our energy 
industry's ability to extract these resources?
    Mr. John. Yes. I would begin by reiterating what was 
mentioned earlier, that it is clear that hydraulic fracturing 
is required in order to cause these plays to be viable in order 
to extract the gas. We would also emphasize that we are 
confident that the existing regulatory framework is adequate 
for the protection that needs to be in place to allow that 
fracturing to occur.
    I believe that depending upon the level of additional 
regulatory burdens that it could have a very significant impact 
on our ability to develop the shale and to develop the natural 
gas that we believe so confidently we have discovered there.
    Ms. Lummis. Mr. Chairman, would any of the other regulators 
on the panel be interested in commenting on that as well? Yes, 
sir?
    Mr. Helms. Representative Lummis, Lynn Helms from the great 
State of North Dakota. I think perhaps the best example of the 
impact would be to look back to the 1990s when the LEAF lawsuit 
brought about Federal regulations on hydraulic----
    Mr. Costa. Which lawsuit did you say? I am sorry. I didn't 
hear you.
    Mr. Helms. I beg your pardon?
    Mr. Costa. Which lawsuit?
    Mr. Helms. LEAF, L-E-A-F. I can't remember what the L-E-A-F 
stands for now. It was in the State of Alabama, and it dealt 
with coalbed methane hydraulic fracturing. It brought about the 
requirement for the State of Alabama to promulgate new 
regulations with regards to coalbed methane hydraulic 
fracturing and resulted in pretty much a two-year moratorium on 
any kind of drilling or activity in that industry within the 
State of Alabama.
    That is pretty typical of what you would be looking at if 
you implemented Federal regulations. It would be about two 
years before those things could be on the ground and 
implemented, and the industry could restart.
    Mr. Kell. I might comment as well. Aside from impacts to 
the industry, the Board of Directors of the Ground Water 
Protection Council has opposed the reclassification of 
hydraulic fracturing as a permitted activity in the UIC Program 
on two bases: That is there is no evidence that it is 
necessary. Second, it represents a diversion of limited state 
resources from other higher priority activities that they are 
wrestling with toward an issue that has not been identified to 
date as high risk.
    Ms. Lummis. Mr. Kell, that is a great point. I am a 
rancher, and I ranch next to an oil refinery, and we waited 19 
years between the time when the refinery next door signed an 
administrative order on consent under RCRA to clean up our land 
before they ever lifted a shovel. If our regulatory agencies 
cannot move more quickly than that to protect our environment 
now under RCRA, they certainly don't have time to regulate the 
myriad of activities that occur around the country with regard 
to hydraulic fracking.
    In other words, I am not opposed to Federal regulation of 
activities that the Federal government is best at regulating, 
but I am opposed to the Federal government regulating 
activities that it is not best at regulating. Mr. Chairman, I 
have with me today from the State of Wyoming its position on 
this issue. I have a joint resolution passed during the 2009 
general session of the Wyoming State Legislature asking 
Congress not to extend Safe Drinking Water Act jurisdiction 
over the hydraulic fracturing process. I ask unanimous consent 
to submit this document to the Committee record.
    Mr. Costa. Without objection, the will of the State 
Legislature of Wyoming is now heard.
    Ms. Lummis. Thank you, Mr. Chairman, and a followup 
question.
    Mr. Costa. Is this a quick question?
    Ms. Lummis. Thank you. I am just delighted to have had the 
opportunity----
    Mr. Costa. No, no. The time is expired. You have been most 
gracious. If you have a quick question?
    Ms. Lummis. Thank you, Mr. Chairman. To what extent have 
other state governments or regulatory agencies weighed in in 
this regard, Mr. Kell and Mr. Helms?
    Mr. Kell. As President of the Board of Directors of the 
Ground Water Protection Council, our Board of Directors 
consists of directors representing approximately 20 states, and 
the Ground Water Protection Council has passed resolutions with 
regards to this issue.
    Mr. Costa. So 20 states have a regulatory framework?
    Mr. Kell. I would say that the issue through Ground Water 
Protection Council has been examined by those 20 states. With 
the Interstate Oil and Gas Compact Commission, it would have 
been examined by all the member states.
    Mr. Costa. But that doesn't mean they all have a regulatory 
framework.
    Mr. Kell. Any state that permits oil and gas has a 
regulatory framework. Included in the Ground Water Protection's 
Board of Directors are water program administrators as well.
    Mr. Costa. Quickly.
    Mr. Helms. Representative Lummis, in answer to your 
question, the Interstate Oil and Gas Compact Commission 
represents 30 member states and passed a resolution very 
similar to that which you have submitted into the record 
representing all 30 of those states. In addition to that, the 
five individual states, North Dakota, Montana, Wyoming, Alabama 
and Texas have passed similar resolutions and have forwarded 
those to their Congressmen and Senators here in Washington, 
D.C.
    Mr. Costa. All right.
    Ms. Lummis. Thank you, and thank you, Mr. Chairman.
    Mr. Costa. Our next Member from the great region of 
American Samoa, Mr. Faleomavaega.
    Mr. Faleomavaega. Thank you, Mr. Chairman. I do want to 
thank you and our Ranking Member and your leadership for 
calling this hearing. It is very, very important I think to our 
nation's constant search for an answer to these issues that are 
not actually new issues. I do appreciate the testimonies that 
have been given. I would like to ask Mr. Duncan of the USGS--
you mentioned that currently our country consumes about 21 
percent of the world's energy resources. I was under the 
impression it is between 25 and 30 percent.
    Can I get your source as to where you come up with this 
figure of 21 percent?
    Mr. Duncan. That figure comes from the Energy Information 
Administration.
    Mr. Faleomavaega. Are they the most reliable for this kind 
of information?
    Mr. Duncan. While the USGS provides information about 
resources to the EIA, I can't really speak to how they perform 
their evaluations of energy consumption in the world.
    Mr. Faleomavaega. All right. I think, Mr. Chairman, the 
issue is always finding the balance between our nation's needs 
for energy resources, and then the question that follows it--
how do we go about getting it possibly considered 
environmentally safe and also to consider the public safety. I 
would like to ask Mr. John in mentioning that this natural gas 
shale, is it pretty much in the same way that we also go about 
in processing shale oil, or is this entirely different? I am 
pleading ignorance here.
    Mr. John. Sir, it is different. The process for extracting 
natural gas from these shales involves the drilling of a well 
to depths ranging from 4,000 to 11,000 feet vertically, and 
then going horizontally maybe as much as a mile and then 
stimulating that rock as we have talked about to allow the gas 
to flow through the well bore to the surface as opposed to the 
more mining-like activities associated with shales oils.
    Mr. Faleomavaega. There seems to be a debate here whether 
or not hydraulic fracturing is an environmentally feasible way 
of going about obtaining this resource, and I get a sense from 
Mr. Appleton that he takes a different view on this. Is there a 
balance that we can strike here? It seems that it is one way or 
the other. I mean, hydraulic fracturing is a 100 percent safe 
process of obtaining this resource?
    Mr. John. Well, I think it is very important that we 
certainly consider the facts and consider the record that the 
industry has put forth over the decades of stimulating wells by 
hydraulic fracturing. The fracturing technique has been around 
since around 1950, and as information was provided by Mr. Kell 
earlier, I am not aware of any documented cases where hydraulic 
fracturing has fouled groundwater.
    Mr. Faleomavaega. OK. My time is running out. A couple of 
years ago a distinguished Member of our Committee, Mr. 
Peterson, from Pennsylvania, mentioned the fact that Canada is 
currently extracting natural gas offshore, and then they turn 
around and sell it to us.
    [Laughter.]
    Mr. Faleomavaega. And here we are arguing whether or not it 
is feasible that we should go out and get natural gas in the 
same way that Canada is doing it right now, and I am just 
curious are we missing something here? Is Canada implementing a 
lower standard of environmentally safe procedures in obtaining 
natural gas than what we are doing? I am just curious.
    Mr. John. I don't feel qualified to comment on Canada's 
standards, but I would certainly emphasize that the shale plays 
we are talking about are onshore within the United States and 
that they contain ample reserves and enough gas to certainly 
supply natural gas vehicles and even to provide natural gas for 
power generation.
    Mr. Faleomavaega. OK. Mr. Appleton, would you care to 
comment on that?
    Mr. Appleton. I want to correct any impression that this is 
an either/or choice. That is as it is laid out in my testimony, 
there are ways and issues that if we did it, it would make 
hydraulic fracking, particularly if we would develop a 
biodegradable, non-toxic fracking fluid, which quite frankly I 
do not understand why the industry is not trying to do more to 
get to that point, be there.
    All of the improvements of regulation you heard are very 
welcome because basically what we are talking about in this 
first tier before we get to overall energy policy is good 
housekeeping. Good housekeeping is something virtually every 
other industry in the United States is expected to keep. I 
don't do a lot of the community work, and I would encourage 
this Committee if it wants to get more on the impacts on the 
supposed 100 percent performance level that they should have in 
front of them some of the community groups that have been 
dealing with these kinds of local impacts.
    Nor did I say that every time you frack a well that you 
create an environmental problem. Basically, all you have to do 
in these fracking wells is have two percent of them go south, 
as I said in my testimony, and you have a very widespread 
number of environmental incidents.
    The question is, as I tried to pose it, is this industry 
prepared to approach these problems sustainably, or does this 
industry continue to insist upon the right to pose these risks 
to water and to externalize other costs upon the rural 
landscape? Because if that is the situation, then it becomes 
essentially a form of corporate subsidy.
    Mr. Faleomavaega. Thank you. Mr. Chairman.
    Mr. Costa. Thank you. Supposedly votes are going to be 
coming soon, meaning in the next 10 minutes or so. I think we 
will get a chance to at least have two Members ask their 
questions. For those of you who are wondering the order that 
you are in because it is the Chair's intention to come back 
after the votes, there are three votes, so it will take about 
25 minutes, so we will have a break.
    It is Mr. Gohmert and then Mr. Heinrich and then Mr. 
Fleming and then Ms. Degette and Mr. Sarbanes and then Mr. Holt 
in the order that you have come. That is the Chair's intention, 
so with that understood, we will continue to move along until 
votes are called, and we will try to go about five and 10 
minutes left for the vote. Mindful of the Majority Leader's 
admonition two weeks ago, I don't want to put Members at risk 
here of missing a vote, so we will get out of here when there 
is at least more than five minutes to vote.
    Mr. Gohmert, with that understanding, you are next. Tee it 
up. The gentleman from Texas.
    Mr. Gohmert. All right. Thank you, Mr. Chairman, and I do 
appreciate the witnesses being here, your insights, your 
opinions, and I do agree. I mean, we all should agree. Drinking 
water is critical. You can't have life without drinking water.
    Then, as I look, and we have a graph here that is done on a 
map of the United States from the Department of Energy that 
shows the different depths the drilling goes to in order to hit 
different shale formations, and it concerns me when you look at 
the different formations in the different states that once 
again we are being asked to provide a one-size-fits all from 
Washington when some states are doing a better job than other 
states.
    Just as some states do a better job on educating than other 
states, it is not an enumerated power, and yet the man I have 
immense respect for, George W. Bush, nonetheless violated the 
Tenth Amendment and decided to have a one-size-fits all on 
education and did significant damage to schools and especially 
special needs kids in my district.
    Now I am concerned we have people who want to have a one-
size-fits-all from Washington on shale, which is doing immense 
good in a difficult economy, providing jobs, providing money 
that is providing taxes and paying for schools and paying local 
economy, and independent operators have told me that if the 
Federal government takes over hydraulic fracking, I won't be 
drilling anymore. These kids that are coming out of high school 
and trained as welders are getting great jobs and paying taxes 
and having families. That will stop.
    We don't need another one-size-fits-all to do damage. Some 
states are allowed to do better than others. The Tenth 
Amendment says if it is not an enumerated power, it is reserved 
to the states and the people, and we ought to allow some to do 
better. That is what is great about this country, and if one 
state wants to tax their wealthiest so high that they run to 
other states, let them do it. That is their right. We welcome 
them back in Texas if they want to come down there.
    If a state wants to say, ``You know what? We don't want 
drilling in the Great Lakes, off our coast, we will let Canada 
drill the Great Lakes, and being the good neighbors that they 
are, we know they will sell us natural gas that we could 
produce ourselves because they are good neighbors.'' That is 
their right as well. Now, there are some states that are being 
adversely affected, and they need to step up and take care of 
their state, and I appreciate the reference and the concern, 
Mr. Appleton, about global warming and not getting proper 
consideration, but you may not have gotten the memo.
    You are supposed to say climate change because there is 
emerging evidence that the planet may be cooling, and so that 
contributions don't slow up to the groups that have been 
fighting global warming you need to say climate change. I have 
read an article recently that says you know what? We have been 
advocating that CO2 may be trapping additional heat 
in the atmosphere, and that is what is causing warming, but you 
know what? It may be that the CO2 is causing the sun 
rays to bounce off the planet, so it might be the cause of 
cooling if that is what is happening.
    You are going to have it either way, and eventually we will 
get around to looking at the sun and noting that when there is 
more solar activity, more solar flares, it seems to have a 
direct effect on our temperatures here, but anyway, there is a 
huge difference noted in the chart. The Haynesville/Bossier 
shale that is in my district and in Louisiana, there is about 
10,000 feet of difference between the producing scene and the 
ground surface, and they are drilling in downtown Fort Worth, 
and they haven't had problems so far.
    They are drilling. I see the rigs out there at DFW Airport 
every week when I fly in and fly out. That is a huge difference 
from the Antrim in Michigan that maybe has 1,000 feet between 
the producing scene and the ground surface. We don't need a one 
size fits all, and I have read the testimony, and I appreciate 
that.
    I just wanted to be sure and get a perspective in from 
somebody that is very familiar with energy production because 
it is going on in my district, and we are very proud that we 
had an effect in Dan Boren's training, who did some of his 
growing up in my district in Longview, so anyway, thank you, 
Mr. Chairman, and I do yield back.
    Mr. Costa. And thank you, always.
    [Laughter.]
    Mr. Lamborn. You don't know what you just thanked him for.
    [Laughter.]
    Mr. Costa. Yes. I won't retract the thank you. The next 
colleague of ours from the State of New Mexico, Mr. Heinrich.
    Mr. Heinrich. Thank you very much, Mr. Chairman. I want to 
kind of take a little bit of a different tack, and I will try 
to be a little brief and not add too much CO2 to the 
already very dense environment.
    [Laughter.]
    Mr. Heinrich. We are trying to get at this I hope from a 
standpoint of more science and less ideology. I know that is 
difficult for us sometimes. My question really has to do with 
what do we do with these fluids once they are back on the 
surface?
    You mentioned, Mr. Kell, the letter from New Mexico 
regarding the fact that we really don't have a big issue with 
this in terms of contaminating usable water underground, but we 
still are grappling with contamination, basically, of surface 
water--some of it historical and some more recent based on this 
whole idea of good housekeeping and the best way to do that.
    My concern is what do we do with these fluids when they are 
back on the surface? What level of uniformity and consistency 
is there of making sure that we are doing a good job disposing 
of these fluids and other waste products that are inherent to 
the oil and gas business once they are on the surface, and how 
do we continue to improve that process? In addition, I would 
mention that while we had zero cases of usable groundwater 
contamination, we have a number of cases of surface water 
contamination from products at the surface.
    I think that is really one of the areas where I would like 
to see us continue to improve.
    Mr. Kell. You raise good points. I think if you were to 
speak to most state directors, they would recognize two 
critical elements of protecting groundwater resources as well 
as surface water in the process of exploration and development, 
including hydraulic fracturing of oil and gas wells, and those 
include the construction standards by which wells are drilled 
and constructed and, second, the management of return fluids 
and byproducts associated with both the hydraulic fracturing 
and the ongoing production practices.
    I can tell you within the State of Ohio that all fluids 
that are returned to surface from the practice of hydraulic 
fracturing are either returned into lined pits or into steel 
tanks, and they are promptly removed by registered brine 
haulers taking to Class II injection wells permitted pursuant 
to a U.S. EPA approved program in accordance with underground 
injection control regulations promulgated pursuant to the Safe 
Drinking Water Act, and all of them are injected deep below the 
surface.
    I can also tell you that in 25 plus years of managing that 
program, we have not had a single groundwater contamination 
incident resulting from that deep injection. Other states that 
may not have as highly saline produced waters are also 
exploring options of recycling, treatment and engage in other 
waste management practices. I can't speak in detail for the 
State of New Mexico, but I can refer you to their excellent 
director, Mark Fesmire, as one who continues to work toward 
improving environmental protections in New Mexico.
    Mr. Heinrich. Thank you, Mr. Chair.
    Mr. Costa. Thank you. Our next witness is Mr. Fleming I 
believe from the wonderful State of Louisiana.
    Mr. Fleming. Thank you, Mr. Chairman. I would like first of 
all to ask unanimous consent to enter in the record the 2008 
economic impact of the Haynesville Shale into the record, 
please?
    Mr. Costa. The what?
    Mr. Fleming. The economic impact of the Haynesville Shale 
on the Louisiana economy of 2008.
    Mr. Costa. All right. Without objection.
    Mr. Fleming. I would just like to outline, gentlemen, first 
of all before I get to my question what the Haynesville Shale 
has done to my district in north Louisiana. While the rest of 
the country is going through a severe recession, we are doing 
quite well, and it is thanks to the Haynesville Shale and other 
developments, too.
    Certainly, Chesapeake is a major player in this, and just 
to give you an idea, it is estimated there is 234 trillion 
cubic feet of natural gas production potential, and I even 
hesitate to say that because every time word comes out of what 
the potential is, it becomes obsolete, and it becomes much 
larger. We don't know where that is going to end. Impact on 
jobs--it has created nearly $3.9 billion in household earnings 
in 2008. It is creating indirect industry jobs.
    It has been quite frankly a boon, and I am unaware of any 
accidents, any problems, any groundwater difficulties in this 
whatsoever. It is kind of interesting in the discussions that 
we have had here. One of the things I have concluded is that 
when we talk about ordinary use of fossil fuels and even 
nuclear energy that our technology is really ahead of our 
implementation.
    Take, for instance, nuclear power. We haven't built a new 
nuclear plant in decades, don't know when another will be 
actually built, and yet our abilities with nuclear power, which 
has zero CO2 emissions is far beyond what it was 20 
years ago or even 10 years ago. On the other hand, we talk 
about green energy, which makes up approximately 1.6 of energy 
production in the United States, such things as wind, which is 
not reliable, and solar. We are trying to implement these 
technologies when they really have not been advancing very 
quickly at all.
    A gentleman from Spain, who testified to another group of 
us, said that they would not exist in their country if it 
weren't for the subsidies, so that brings me to another point, 
and I want to ask, Mr. Appleton, did I understand you correctly 
that you said that lack of regulations, or I shouldn't say lack 
of regulations, but reduced regulations or non-Federal 
regulations is a subsidy to the natural gas industry?
    I am kind of sensing from your statement that what you are 
suggesting is that we need to artificially raise the cost of 
fossil fuel energy production in order to make so-called green 
energy production more cost effective. Obviously, that is two 
men out on a boat, and both of them shooting a hole in the 
bottom. My constituents want to see energy costs go down. They 
don't want to see them go up and certainly not artificially to 
make green energy comparatively more affordable, so if you 
would please expound upon that, sir?
    Mr. Appleton. Well, there are a couple of key words in that 
characterization: One is artificially, whether or not you are 
externalizing a cost, and a producer is forced to internalize 
that cost whether that is an artificial increase of price or 
more accurate price. I mean, basically I am a free-market 
Libertarian, and I believe in Adam Smith, and I believe in the 
invisible hand and the things that undermine the invisible hand 
are government subsidy, tax preference, perverse incentives, 
collusion, corruption and externalized costs.
    The question would really be whether you and I would agree 
that partaking out of that particular practices are 
externalized costs. The other thing though, and I obviously 
believe that externalized costs are. Part of what I did and 
part of what I continue to do is I am very sympathetic to the 
representatives from Texas, this concern about one-size-fits-
all regulation. I spent most of my career helping people do 
environmental things faster, quicker and cheaper and avoid some 
of the rigidities of regulation.
    There is a basic level of environmental housekeeping that 
has to be taking place here. For example, going back to the 
question on surface water drinking, I am very reluctant to 
allow any discharge of even toxic treatment-level waste into 
surface stream waters. On the other hand, underground 
injection, if done properly, can in fact be a very effective 
way of disposing of this stuff. I would like to draw to the 
Committee's point this anomaly.
    It was just described how in Ohio this material is 
deposited for deep injection in very carefully and closely 
regulated wells, but at the same time, if you are drilling and 
then leave it in the ground, the same material if you bring it 
up you then have to reinject under this regulatory scheme. 
There is no regulation of leaving that original drilling 
material in the ground at all. That is a huge inconsistency.
    Now, when you take time into effect, that is water migrates 
over time, the question is going to be if you make wrong 
mistakes because you don't look at this underground hydrology, 
who 30, 40, 50 years ago is going to pay the cost of these. In 
Pennsylvania, there are hundreds of abandoned wells that are 
still leaking acid into the streams because no one went with 
this program, so I completely concur with the need to avoid 
one-size-fits-all regulation, but in terms of the larger cost 
question, the cheapest price for energy will be the most 
accurately costed price.
    That is a fundamental premise of free-market economics.
    Mr. Costa. Your time has expired.
    Mr. Appleton. I postured a little bit. I am sorry.
    Mr. Costa. It was more than expired, but anyway, I enjoyed 
the response. We will complete this last question with the 
gentlewoman from Colorado, and then at that time it is the 
Chair's intention to recess, and we will have a break for about 
25 minutes, and then we will come back for those Members who 
have not yet had an opportunity to ask questions, and we will 
entertain the possibility of a second round. Congresswoman 
Degette?
    Ms. Degette. Thank you very much, Mr. Chairman. I want to 
thank you for your comity in allowing me to sit in on this 
Subcommittee hearing. As you know, Mr. Hinchey and I have been 
working on the issue of hydraulic fracturing for a number of 
years, and we are getting ready to reintroduce our legislation 
next week that makes hydraulic fracturing reporting 
requirements subject to the Safe Drinking Water Act. Right now, 
it is the only industry that is exempt from that bill, so it 
would simply bring the reporting requirements into compliance.
    I want to be really clear because I know we have a lot of 
members of the oil and gas industry here. I don't object to 
hydraulic fracturing. Mr. Hinchey doesn't object to hydraulic 
fracturing. We just want to make sure that it is done in a safe 
way that protects the drinking water, and out west, we have had 
a lot of experiences with different kinds of mining techniques 
over the last century that have caused human health risks and 
severe environmental damage, so we just want to make sure it 
complies with the law.
    When I hear all of the objections that I have been hearing 
and the scare tactics that I have been hearing from the 
industry, I can't help but be reminded of what Queen Gertrude 
told the young Hamlet when she said, ``Thou dost protest too 
much.'' If there is really nothing wrong with the chemicals 
contained in fracking fluid, why wouldn't we make it subject to 
the reporting requirements of the Safe Drinking Water Act?
    That is the issue I want to explore a little bit, Mr. 
Chairman, in my questions today. The first question I want to 
ask Mr. Appleton for maybe a slightly briefer answer than to 
the last question.
    Mr. Appleton. OK. Fair enough.
    Ms. Degette. Which is in your testimony you of all the 
members of the panel said that the chemicals used in hydraulic 
fracturing are intrinsically dangerous to the environmental and 
public health. When you refer to those chemicals, are you 
referring to carcinogens and endocrine disrupters, benzine, 
toluene, diesel fuel and industrial solvents?
    Mr. Appleton. All of those and more.
    Ms. Degette. OK. Can you just briefly list more?
    Mr. Appleton. No, I can't, but I can submit for your use a 
list.
    Ms. Degette. OK. If you can supplement your testimony, I 
would ask unanimous consent, Mr. Chairman, he be allowed to do 
that. Now, Mr. John, I would like to ask you in your testimony 
you say that hydraulic fracturing absolutely does not pose a 
threat to drinking water, so if that is true, why would you 
object to the disclosure of the chemicals used in the fracking 
process under the Safe Drinking Water Act?
    Mr. John. As I mentioned earlier, the information packets 
that we provided to the Subcommittee----
    Ms. Degette. No. Why would you object? If it is perfectly 
safe, why would you object to disclosure of the chemicals that 
are used?
    Mr. John. What I was saying was that we have disclosed 
today and prior to the hearing----
    Ms. Degette. Which chemicals are used?
    Mr. John. Yes, ma'am.
    Ms. Degette. In each process?
    Mr. John. They are listed in a frack fact sheet that has 
been provided by Chesapeake.
    Ms. Degette. So in that case you would have no objection to 
my bill.
    Mr. John. We have supplied that information as part of 
our----
    Ms. Degette. So would you have an objection to my bill then 
since you have already supplied that information?
    Mr. John. I am not personally familiar with your bill, 
ma'am.
    Ms. Degette. Well, what my bill does is it makes the 
chemicals used in hydraulic fracturing subject to the reporting 
requirements of the Safe Drinking Water Act. It would seem to 
me since you have already disclosed those chemicals you would 
have no objection.
    Mr. John. As stated earlier, we believe that the current 
regulatory framework----
    Ms. Degette. Yes or no.
    Mr. John. We believe the current regulatory framework is 
adequate.
    Ms. Degette. So yes, you would object to my bill because 
you don't think we would need to report it under the Safe 
Drinking Water Act even though you say the chemicals are safe, 
correct?
    Mr. John. Correct.
    Ms. Degette. OK. How about you, Mr. Kell, Now, are you 
saying unequivocally that hydraulic fracturing fluids cannot 
possibly be to blame for water contamination seen in cases 
across the country because in your testimony you say that the 
reports of contamination are not accurate.
    Mr. Kell. In my testimony, I addressed allegations that 
were presented through certain media outlets relative to six 
specific states. We did not survey all states that have oil and 
gas activity, and therefore would not make the statement that 
no one has ever identified----
    Ms. Degette. OK. Thanks. You know, it is kind of a chicken 
and an egg thing to me because since they don't have to report 
what is in the fracking fluid, it is hard to prove that the 
injuries that we are seeing as a result of being exposed to the 
fluid are caused by the fluid.
    Mr. Kell. And I could comment on that.
    Ms. Degette. I wish you would.
    Mr. Kell. Within existing state authorities, there are 
quite a few states that do require and require companies to 
make available the chemical constituents used in hydraulic 
fracturing operations. I can tell you that Ohio currently is 
not----
    Ms. Degette. OK. I really apologize. Can you also 
supplement your answer with that because I only have five 
minutes, and it is just about over.
    Mr. Kell. OK.
    Ms. Degette. In fact, it is over. I just want to ask one 
more question. Would you mind supplementing your testimony 
because I would like to know.
    Mr. Kell. I am sorry. I am not familiar with the process.
    Ms. Degette. OK. We will work with you on that. Mr. Duncan, 
just one last question. You might not know this, but you are my 
government exert, so I am going to ask you, 34 states now 
administer the Safe Drinking Water Act for other types of 
industries, correct?
    Mr. Duncan. I am not familiar with----
    Ms. Degette. We have many situations of Federal laws where 
the states administer them, wouldn't that be an accurate 
statement?
    Mr. Duncan. That is my understanding.
    Ms. Degette. Thank you. Thank you very much, Mr. Chairman.
    Mr. Costa. All right. Thank you. The process is this. 
Members have 10 working days to submit questions to witnesses 
that they would like to have responses to, so if Members of the 
Subcommittee or other Members, the Chair will entertain the 
opportunity to submit those questions, and then you can respond 
to whatever questions are submitted to you. Does the Ranking 
Member have something?
    Mr. Lamborn. Yes. Before we leave, I would like to submit 
for the record with unanimous consent testimony from a 
consortium of trade associations representing oil and gas 
producers and their vendors and suppliers.
    Mr. Costa. All right. Without objection, so ordered. All 
right. We are going to recess at this time. We have three 
votes. It should take about 25 minutes. It is the Chair's 
intention to come back, and whoever shows up here, we will give 
them the opportunity to ask their five minutes-worth of 
questions. We will play it by ear as to whether or not we do a 
second round. Thank all five of the witnesses, please, and we 
look forward to seeing you when we come back.
    [Recess.]
    Mr. Costa. The Subcommittee on Energy and Minerals will now 
reconvene after our recess. We have voted. Next votes are not 
for a couple of hours. It is the Chair's intention to allow 
those who have not had an opportunity to have their five 
minutes to do so, and then those remaining Members that are 
here that have already had a chance, the Chair will entertain 
maybe one more round bearing the patience of everyone. With 
that understood, we will begin with the gentleman from 
Maryland, Mr. Sarbanes.
    Mr. Sarbanes. Thank you very much, Mr. Chairman.
    Mr. Costa. The great State of Maryland.
    Mr. Sarbanes. Great State of Maryland. Thank you.
    Mr. Costa. Not that North Dakota is not great as well.
    Mr. Sarbanes. Right. Well, it is like a newborn. You just 
think your child is the most beautiful one out there, don't 
you?
    Mr. Costa. There you have it.
    Mr. Sarbanes. Thank you to the panelists for being here. I 
am about as far from being an expert on the topic today as one 
can get and still be allowed to serve on this Committee, but a 
couple of things have jumped out at me in the testimony both in 
terms of what you all have been saying and what I was reading 
in the Committee's memo and some of the testimony.
    First of all, is it the case that we sort of know enough? I 
mean, I gather this process has been used for a long time, but 
is it possible that we could discover that sort of the 
interruption that this process represents for sort of natural 
geological formation could have effects and results that we 
don't quite yet understand? Do you all feel comfortable that 
the process has been vetted sufficiently, that we are not going 
to wake up 10, 15 years down the road and say boy, we really 
missed that risk factor, for example, and I invite anybody to 
jump in on that question.
    Mr. Appleton. I don't think we do. I think the landscape of 
Pennsylvania that I was referring to earlier is a classic proof 
of the law of----
    Mr. Costa. Mr. Appleton, could you speak closer into that 
mic. We all want to hear you.
    Mr. Appleton. Yes, sir, Mr. Chairman. I think the landscape 
I was describing in Pennsylvania earlier with 800 coal mine 
fires, 1,000 mines leaching acid are a testimony to the law of 
unintended consequences, and fluids move slowly, but often 
inevitably through ground formations. Now, to the extent we 
have improved that, we have improved that precisely because we 
have had uniform and careful regulation that factors into what 
we don't know as well as what we do.
    Mr. Sarbanes. Right. Did you want to respond to that?
    Mr. Helms. Yes, Congressman Sarbanes, Lynn Helms from the 
great State of North Dakota. In response to that, I do believe 
as a state regulator that we know enough to construct well 
bores in a fashion that protect the groundwater resources and 
to produce those frack fluids back and dispose of them 
properly. One of the Congressmen earlier asked, ``Is this 100 
percent safe, or is it very dangerous?'' This thing is not 100 
percent intrinsically safe.
    Any time that you inject chemical-laden, sand-laden fluid 
into a well bore at 9,000 pounds per square inch and 1,000 
gallons a minute, that is a dangerous operation. We have 
learned though in 60 years how to construct well bores to 
control that and also how to meter the fluids coming back, how 
to put them in tanks and meter them again when they are 
injected underground and to make sure that they are placed in 
saline aquifers where they will be safe for eons.
    Mr. Sarbanes. What are some of the dangers that can occur?
    Mr. Helms. Well, Congressman, one of the dangers that we 
have observed in North Dakota in the last year was mechanical 
failures of pipes or human-caused failures, human error. We had 
what I call three near misses when we initially began 
hydraulically fracturing the Bakken Formation. Through our well 
construction requirements requiring casing to be run through 
all of the drinking water sources and cemented back to the 
surface, we were able to protect the underground sources of 
drinking water from the mechanical failures that happened on 
the pipes inside the pipes. That was the primary failure.
    A secondary failure would be some accidental spill of the 
fluids when they are produced back to the surface, and that is 
why we require placement of those fluids into a steel tank or a 
lined pit. Those pits and tanks are diked and clay put 
underneath of them so that any fluid that accidentally gets 
spilled on the ground gets contained and cleaned up right away.
    Mr. Sarbanes. Are you always going to know if there has 
been an accidental spill, or can it happen in a way that sort 
of goes under the radar screen?
    Mr. Helms. Well, Mr. Congressman, we legally require all 
spills to be reported to the State of North Dakota within 24 
hours. We also inspect those sites on a weekly basis. 
Frequently, my field inspectors will find a spill that went 
unreported, so I believe that we are seeing 100 percent 
detection of those spills, and cleanup of those spills, but 
sometimes it takes legal action.
    Mr. Sarbanes. Let me move to another topic because you said 
you think you know what you need to know at your state level. 
One of the things that is a theme in some of this testimony and 
in the memo that I looked at is that we don't actually know 
oftentimes what chemicals are being used in the process because 
I gather there isn't a requirement now to indicate what 
chemicals are being used, so speak to that, anybody who would 
like to.
    Mr. Helms. Yes, Congressman Sarbanes. I have actually 
traveled out to numerous hydraulic fracturing jobs across North 
Dakota and, on a couple of occasions, I asked the service 
company that was on location, there were two different service 
companies, for the material safety datasheets. They presented 
me with a booklet that showed every single chemical they had on 
location and the quantity that was on location, so with very 
little effort, I was able to determine everything they had.
    Mr. Sarbanes. Could they have declined to give you that 
information if they had chosen to?
    Mr. Helms. I don't believe that they could. Under OSHA 
regulations, they are required to have those MSDS sheets there 
on the location and to present them to any regulatory authority 
that requests them. Now, that is going to vary from one 
hydraulic fracture treatment to another.
    I think that is part of the problem with requiring gobs of 
reporting and recordkeeping of information is that each one is 
slightly different and is going to have different MSDS sheets 
there and different quantities, and so we are going to create 
this humongous record so to speak of all of these frack fluid 
recipes, which really I find would not be particularly useful. 
If I had an incident on one frack job, which I did have one in 
North Dakota that we had to flow to the pit, I want to know 
what was in that frack fluid and what is in that pit and what I 
am dealing with on that particular well site.
    Mr. Sarbanes. I am going to come back to that topic on the 
next round. Thank you.
    Mr. Costa. Gentlemen, time has expired. Sure. Just to 
follow up on that, Mr. Helms, and I am somewhat familiar with 
the regulatory schemes that we have in California, so you are 
able to monitor as you stated everything that goes in there in 
terms of the fluids that are part of the fracturing structure 
and then monitor them when they come out, and then you talk 
about double layer clay pits to hold those materials.
    Are there some that follow or are required into what would 
be considered toxic enough to require Class I sites for 
disposal purposes because you talked about them being taken and 
put in tanks?
    Mr. Helms. Mr. Chairman, there are a few chemicals that 
appear on the MSDS sheets that individually would be considered 
a toxic chemical, for example, benzine, but they are in very, 
very trace amounts in the fracture fluid, so none of the return 
fluid that is coming back to surface reaches the level of 
requiring hazardous waste disposal. All of it qualifies to go 
into what we consider a Class II waste disposal.
    Mr. Costa. Class II? Yes. Now, I am familiar with Class I 
and Class II disposal sites, so what do you do in North Dakota 
with the Class II residual materials?
    Mr. Helms. What we do in North Dakota is we require a 
measurement of every barrel of fluid that flows back out of 
that well bore and an accounting of that goes into our computer 
system, and that is balanced against the reported barrels that 
show up at a Class II injection well site and are then injected 
in that Class II well, so every barrel has to be accounted for. 
It has to have left that location and arrived at a Class II 
facility and been injected in that Class II well.
    If those numbers don't match up, then I have an accounting 
staff and a field staff that begins to research that 
discrepancy.
    Mr. Costa. It gets back to that idea about trying to put 
best management practices with the 20 plus states that are 
involved in this. I really want to pursue that, but I am not in 
the conversation here.
    Mr. Helms. And, Mr. Chairman, North Dakota would be very 
interested in participating in that.
    Mr. Costa. I suspect you would.
    [Laughter.]
    Mr. Costa. Mr. Appleton, I enjoyed your discourse on Adam 
Smith, but distinctions between the ability to deal with both 
water quality and water quantity, I know your experience is New 
York City, but in terms of watersheds, do you have enough 
knowledge to talk about how that is differentiated? I mean, 
these different plays that we are discovering or determining 
that are very expensive I suspect play differently whether they 
are in semi-arid regions or whether they are in very wet 
regions like the northeast.
    Mr. Appleton. Yes, I do have enough experience, and the 
question would be?
    Mr. Costa. Well, the question is does one size fit all, or 
do you have to handle, you believe, the impacts on water 
quality and water quantity differently?
    Mr. Appleton. Well, you obviously would assess those two 
differently. The really critical issue here is water quality in 
that the following premise is a one-size-fits-all premise, 
which because these materials do not biodegrade and 
bioaccumulate, that there is only a limited absorbative 
capacity in streams for any of them to take whether it is 
washed in through an accidental spill or whether it is 
discharged as a product of an----
    Mr. Costa. So in essence, one size doesn't fit all is what 
you are saying?
    Mr. Appleton. Right. I mean, obviously you have to adapt 
your specific application of this premise, but the basic point 
is to keep this stuff out of surface stream water.
    Mr. Costa. No. I understand. I think we all agree on that 
goal. Go ahead.
    Mr. Appleton. The quantity issue is much different. The 
quantity issue with proper planning can be dealt with. The 
pressure is because they pay for hauling the water, and that 
gets very expensive----
    Mr. Costa. Hauling water is not cheap. I know a little bit 
about that.
    Mr. Appleton. Then people want to use local sources. Local 
sources tend to be smaller and take much greater impact from 
the level of water withdrawal that a mainstream river would.
    Mr. Costa. All right. My time is running out. I need to go 
even for the Chairman. Mr. Duncan, you have been very quiet. Do 
we have a better sense of the amount of shale gas resource on 
public lands versus private lands? Have you done any inventory?
    Mr. Duncan. Yes, that is correct. If you look at the Energy 
Policy and Conservation Act that asked the USGS to do 
assessments of resources on priority basins, we focused on 
unconventional sources like shale gas, and that was primarily 
on Federal land, so we are just now transitioning to look at 
say the Appalachian Basin, which is private land.
    Mr. Costa. So you don't really have a good number then or 
approximation, geological survey on the extent of this resource 
on public lands versus private lands?
    Mr. Duncan. That is correct.
    Mr. Costa. All right. And are you working on that?
    Mr. Duncan. Yes. As I was trying to explain, maybe not so 
well, I think we have a good handle on the public land side of 
it, and we are in the process of working on the private land 
aspect, for example, the eastern United States.
    Mr. Costa. OK. Give us just a timeline if you can today. I 
will ask the question later as to when you might be able to 
produce those numbers for us.
    Mr. Duncan. The numbers are probably, and I am going to be 
very vague in a sense, several years out, but within the year, 
we should have the geological framework, in other words the 
petroleum system model published for the Appalachian Basin.
    Mr. Costa. OK. If I could bear with the patience of my 
colleagues here, if I can ask one more question, I won't come 
back for a second round. Well, I might. Mr. John, Chesapeake, 
what are the challenges you face in the development of this 
unconventional gas play versus conventional gas plays?
    Mr. John. Well, I mentioned earlier that I feel like that 
we have been focused enough as a company, as an industry on the 
unconventional major shale plays over the last few years that I 
think we have advanced significantly the technology that is 
needed to make this play work both on the horizontal drilling 
side and on the stimulation side. I think as we go forward, it 
is a question of demand for us at this point.
    Mr. Costa. Well, demand, but also the prices of natural gas 
plays into this, does it not?
    Mr. John. It does, both supply and demand.
    Mr. Costa. I mean, I would like to see us develop more 
natural gas. I have some parochial reasons as I mentioned on 
the outset about air quality. Having said that though, every 
time the natural gas prices drop below, then people want to 
burn other fuels that are more problematic as it relates to the 
air quality issues we have to deal with.
    Mr. John. I think that is a great point, and I think one of 
the reasons----
    Mr. Costa. Where is your break-even point on the 
unconventional?
    Mr. John. It varies by play of course, but I think one of 
the key aspects of these major shale plays that we are talking 
about is that the price threshold is much lower for these types 
of plays than what we have seen from conventional plays up 
until now.
    Mr. Costa. Like slower or like what?
    Mr. John. In the Marcellus, for instance, I would expect 
that a price of $4.00 or just above that could yield adequate 
returns for us to be able to----
    Mr. Costa. Have you had to shut in any of your productions 
as a result of the drop in prices?
    Mr. John. In the Marcellus, we have not. As we look 
forward, I think corporately we would expect prices, and I am 
not very good at forecasting prices, I don't know who is, but 
we would expect I guess a $6.00 to $8.00 price range going 
forward, but the main point I would like to emphasize----
    Mr. Costa. So that is enough to keep you pursuing this 
unconventional----
    Mr. John. Yes, sir, particularly on the unconventional 
side. I think the players in our industry that have access to 
these unconventional plays are going to be greatly advantaged 
due to the low refining costs associated with those plays.
    Mr. Costa. And a final question to you, I saw one of the 
renderings in our material about the footprint and the 
intensity of getting a well in production. I didn't know if 
that was a regular well that they were demonstrating where they 
had all those trailers parked together. I mean, I am a little 
more familiar because we do have oil and gas production in my 
district in Kern County and in Fresno County. Actually, it is 
some of the largest oil and gas production in California. 
People don't think we do that there, but we do, and I know what 
a footprint is like for that.
    Comparing that to a natural gas well on a conventional, is 
the footprint that much larger?
    Mr. John. I don't believe it is, sir. I would offer that 
for the Marcellus wells that we are drilling in the east, the 
average footprint maybe somewhere around five acres for one of 
our drill pads, and we would expect to accommodate six, eight, 
maybe even 10 wells on that----
    Mr. Costa. Wells within that five-acre footprint?
    Mr. John. Yes, sir.
    Mr. Costa. All right. I have gone way beyond my time, and 
my colleagues have been patient. The gentleman from New York, 
from the great City of Poughkeepsie.
    Mr. Hinchey. Well, close.
    Mr. Costa. Close.
    [Laughter.]
    Mr. Costa. Mr. Hinchey.
    Mr. Hinchey. Thanks, Mr. Chairman. Mr. John, I just want to 
follow up on some of the things that were just being talked 
about and be a little more specific. I know that your company 
is engaged in a lot of hydraulic fracturing. I wonder if you 
can tell us what chemicals are used in the context of that 
hydraulic fracturing process?
    Mr. John. Yes, sir. The information that our office 
supplied prior to this hearing listed the chemicals that we use 
when we frack wells. Included in the packet would have been 
what we call a frack fact sheet that lists the chemicals that 
are employed in hydraulic fracturing, and also I believe in the 
DOE primer, there is a separate list of chemicals that are 
employed in hydraulic fracturing.
    Mr. Hinchey. So can you tell us what those chemicals are 
that you use?
    Mr. John. If you would indulge me to pull it from the sheet 
to be sure that I read it correctly? I wouldn't want to offer 
something from memory that was incorrect.
    Mr. Costa. Please speak a little closer into that mic. We 
want everybody to hear you.
    Mr. John. Thank you, sir. Do you want me to go through all 
of them, sir? I will start with hydrochloric or muriatic acid 
as a chemical that would help dissolve some of the muds in the 
well bore. We would use an antibacterial agent, such as 
glutaraldehyde. We would have a need for a breaker that would 
take away some of the viscosity from our fluid that we would 
use an ammonium persulfate. We would need a corrosion inhibitor 
to allow the casing strings and the pipes that we use to be 
preserved.
    Mr. Hinchey. That's the corrosion inhibitor?
    Mr. John. Yes, sir.
    Mr. Hinchey. What is it?
    Mr. John. It is testing my sight here. It is 
dimethylformamide. Then, the cross-linker that we would use 
would be a borate salt. We would then use also a friction 
reducer that would enhance the safety of the operation by 
lowering the pressure that we would need top pump the fluid. 
That would essentially be a petroleum distillate. We would use 
a guar gum as a way to creating viscosity so the fluid can 
convey sand. We would use an iron control agent on some 
applications, a citric acid. Potassium chloride is used as a 
fluid treatment. We would also use a oxygen scavenger.
    Mr. Hinchey. All right. Let me ask you another aspect of 
this question. There are a number of reports that have found 
toxic chemicals in the fracking fluid. Are you aware of these 
reports? Have you seen them?
    Mr. John. I am sure I have not seen all the reports, no, 
sir.
    Mr. Hinchey. But have you seen any of the reports, or are 
you at least aware of some of the reports that have found toxic 
chemicals in the fracking fluid?
    Mr. John. I am aware of the reports, yes, sir.
    Mr. Hinchey. OK. So you are aware of them?
    Mr. John. Yes, sir.
    Mr. Hinchey. So if there are toxic chemicals being injected 
underground, what justification would there be for exempting 
the Safe Drinking Water Act when all other underground 
injection activities are still under the regulation of the Safe 
Drinking Water Act?
    Mr. John. As we have stated earlier, I believe that the 
industry is adequately regulated at the state level, and I 
certainly feel that the information that has been provided from 
the Ground Water Protection Council, letters from various 
states acknowledging that there are no accounts on record, as I 
understood Mr. Kell's testimony earlier, from hydraulic 
fracturing would be the answer for that.
    Mr. Hinchey. OK. Well, that is the issue that we are 
concerned about of course, and we don't like the idea that this 
particular activity is isolated from the Federal Clean Water 
Act when every other activity is still under the restrictions 
and observations of the Federal Clean Water Act. To us, it just 
doesn't make any sense, particularly when we have these reports 
that show toxic fluids are showing up in these injection 
activities, and the consequences of those toxic fluids are 
having adverse circumstances inflicted upon innocent people.
    We have a number of reports ourselves on that, so this is 
just something that we are trying to deal with in the context 
of the legislation that Diane DeGette talked about a little 
while ago. We understand that several of the witnesses claim 
that there is no evidence, some people, a lot of people claim 
that there is no evidence that fracking has caused water 
contamination, but we have seen that there is water 
contamination in a number of places, and I mentioned those 
places before--Alabama, Arkansas, Colorado, Texas.
    I had a call yesterday from a man in Texas that was talking 
about the impact of these toxic chemicals on his family and how 
it had contaminated his water supply. That is why we are trying 
to deal with this issue. I wanted to ask Mr. Appleton if you 
are aware of any of the independent, empirical research that 
has been conducted that in any way suggests that fracking does 
not pose a risk to water supplies? Is there any proof out 
there?
    Mr. Appleton. Well, any time you put chemicals like are 
used in fracking into the environment, it is a risk to water 
supplies if they are not properly regulated. There is also a 
problem in states like New York. They don't require incidents 
to be reported on a systematic basis, so you can't really 
determine this issue either way.
    Mr. Hinchey. OK.
    Mr. Costa. Well, thank the gentleman from New York.
    Mr. Hinchey. Thank you.
    Mr. Costa. Mr. Sarbanes, for your last round, and I think 
we will close the hearing after that.
    Mr. Sarbanes. Thank you, Mr. Chairman. I am going to pick 
up on the same theme, and let me give you the perspective I am 
coming from. Recently, in my state and in my district we 
discovered leaching from the deposits of fly ash, the coal 
combustion waste from scrubbing these plants was getting into 
the drinking water. We had a discussion in this Committee about 
how science advances, and you discover the things and processes 
that you thought might not be a problem at one time now do 
represent a problem, and you can see kind of the cause and 
effect at work.
    Based on that, I continue to be interested in this issue of 
the use of the chemicals. Mr. Helms, I think you said it was 
your understanding that there is sufficient regulation to 
require that the companies disclose which chemicals they are 
using in the process. I mean, Chesapeake has done this I gather 
on its own initiative, but my information just from reading the 
memo is that companies are not required currently, and the EPA 
is actually looking at this question, to disclose what 
chemicals they use.
    We have had reports that ranchers out west, who are quite 
strong advocates of this process of the hydraulic fracturing 
generally and what it produces, nonetheless are concerned that 
they can't seem to get information from the companies that are 
doing it as to which chemicals are being used so that they can 
be on the lookout for possible compromise of the drinking water 
supply and so forth.
    I guess my question to you is if it is the case that a 
company currently is able to avoid disclosing the chemicals 
that are used in the process whether as a result of that not 
being required under state law or Federal law, would you view 
that as a breakdown in the regulatory framework that ought to 
exist with respect to this process?
    Mr. Helms. I will take a shot at that. Well, Congressman, I 
think our discussion is a little bit of speaking toward each 
other but not exactly at the same issue. The difference in 
disclosure I think deals with are they required to make a 
public disclosure to any person who requests that information, 
or are they required to disclose, for example, to the EPA or to 
the local health department everything that they did over a 
period of time, and the answer to that is no.
    Are they required under workplace safety regulations and 
OSHA and various regulations like that, to inform everybody who 
is working on that location what they have on the location and 
how much? Yes, so there are different types and amounts of 
disclosure that are required. I am completely comfortable with 
the current amount of disclosure, which is making sure that 
everybody who is there on that location and exposed to those 
chemical constituents and is going to be working around them be 
fully informed of what is there and how much is there.
    I do not see a great benefit to the public in massive 
volumes of records of what was hauled to a location and 
utilized in trace amounts during a hydraulic fracturing job and 
then later hauled away and disposed of in an underground 
injection-controlled well.
    Mr. Sarbanes. Do you see a benefit to the public of small 
volumes of information as opposed to massive volumes of 
information?
    [Laughter.]
    Mr. Helms. Yes, Congressman. I could see some advantage in 
specific individuals being able to utilize, for example, a 
state oil and gas agency to find out what was utilized on their 
location. I could see that as opposed to----
    Mr. Sarbanes. Mr. Appleton, I think you wanted to comment.
    Mr. Helms. Just one last comment about the reason for the 
exemption here. The intention is to remove these fluids from 
the underground formation and properly dispose of them. They 
are never intended to be in place and left there like they are 
in a hazardous waste site or an underground injection, a Class 
II well.
    Mr. Appleton. I think it is really important this Committee 
focus on the distinction Lynn made between disclosure to 
government agencies and disclosure to the public, and much of 
the complaint about this fracking material is in fact the 
failure of the public to have access even if government 
agencies do so.
    If I may respectfully disagree with Lynn, I don't think we 
are talking about pushing volumes of records around to meet 
what you might call the community-right-to-know need.
    Mr. Sarbanes. Thank you.
    Mr. Costa. Thank you. I want to make two points as I close 
the hearing here, and one, the Chair is seriously considering 
putting together those states that have fracturing taking place 
where it expands to look at developing a matrix to see what are 
these best management practices and whether or not there is, as 
I referenced earlier, a gold standard, what areas there may be 
deficiencies.
    To that end, I would hope that the various interest groups, 
whether they be industry folks or environmental organizations, 
would participate and vet that and have some sort of an effort 
in which we can see how it might complement whatever 
legislative initiatives are being taken, but I would like to 
see if we might develop that collaborative framework and have 
that discussion separate from an actual formal hearing. I would 
urge all those if we can put that together to participate.
    Finally, I want to thank those who have testified here. I 
think you have done a good job. I want to thank the Members who 
have participated. We had a good participation in today's 
hearing. I think it is part of, as I said, a series of hearings 
that we will be holding with regards to unconventional fuels as 
we try to cobble together some consensus on what needs to be, 
in my view, a comprehensive energy policy for this country.
    Again, I thank the Members, those who have testified, and 
now for Mr. Kell, unfamiliar with the process of the procedure, 
Members of the Subcommittee may have additional questions for 
you and your colleagues, your witnesses. They are to respond to 
you through the Committee in writing. Under Committee Rule 
4[h], any materials submitted for inclusion in a hearing record 
must be submitted no later than 10 business days following the 
hearing.
    We will see if there is any followup interest as it relates 
to Members who want to pursue further questioning to the five 
witnesses who testified here today. If there is no further 
business before the Subcommittee, the Chairman again wants to 
thank everyone, and this Subcommittee is now adjourned.
    [Whereupon, at 1:05 p.m., the Subcommittee was adjourned.]

    [NOTE: The documents listed below have been retained in the 
Committee's official files.]

      Fleming, Hon. John, a Representative in Congress from the 
State of Louisiana, ``The Economic Impact of the Haynesville Shale on 
the Louisiana Economy,'' by Loren C. Scott and Associates for the 
Louisiana Department of Natural Resources, April 2009
      John, Mike, Vice President of Corporate Development and 
Government Relations, Eastern Division, Chesapeake Energy Corporation, 
Attachments submitted for the record
        Chesapeake Energy Hydraulic Fracturing Fact Sheet
        Chesapeake Energy Handout on ``America's Abundant Natural 
Gas Shale: A Timely Response to the Need for Clean Energy''
      Kell, Scott, President, Ground Water Protection Council, 
Attachments submitted for the record
        Executive Summary of ``Modern Shale Gas Development in the 
United States: A Primer,'' Prepared by the Ground Water Protection 
Council and ALL Consulting, April 2009
        Ground Water Protection Council Board of Directors
        State Oil and Natural Gas Regulations Designed to Protect 
Water Resources
        Letter from the Ohio Department of Natural Resources to 
the Ground Water Protection Council
        Letter from the Pennsylvania Department of Environmental 
Protection to the Ground Water Protection Council
        Letter from the New Mexico Energy, Minerals and Natural 
Resources Department to the Ground Water Protection Council
        Letter from the State Oil and Gas Board of Alabama to the 
Ground Water Protection Council
        Letter from the Railroad Commission of Texas to the Ground 
Water Protection Council
      Lamborn, Hon. Doug, a Representative in Congress from the 
State of Colorado, Statement submitted for the record by the American 
Exploration & Production Council, American Petroleum Institute, 
Independent Petroleum Association of America, International Association 
of Drilling Contractors,, Petroleum Equipment Suppliers Association, 
and U.S. Oil and Gas Association
      Lummis, Hon. Cynthia M., a Representative in Congress 
from the State of Wyoming, Wyoming State Legislature Hydraulic 
Fracturing Joint Resolution submitted for the record

                                 
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