On Friday, the U.S. government released its first regulations for hydraulic fracturing, the controversial drilling method that involves injecting a mix of water and chemicals into the earth in order to release hydrocarbons from rock formations. The new guidelines apply only to exploration on federal and Native American land.
Wyoming was home to the most oil- and gas-producing acreage on federal lands in fiscal year 2014. More than 4 million acres were producing oil and gas in the state last year. New Mexico came in second, with 3.7 million million acres, followed by Colorado's 1.5 million acres.
Acres Producing Oil and Gas on Federal Land (source: Bureau of Land Management, FY 2014)
Since 1985, Wyoming has issued the most permits to drill on U.S. government-owned turf by far. It approved 40,360 permits over the last two decades, compared with New Mexico's 28,066 approvals and Utah's 10,957.
In New Mexico, 51 percent of oil and 62 percent of gas was produced on federal land in 2014, according to the state's Energy, Minerals, and Natural Resources Department. Just 11 percent of oil and 15 percent of gas came from private land. The rest was drilled on state-owned land, with a very small percentage coming from Native American territory.
The new rules, issued by the Department of the Interior, govern certain aspects of fracking, including the quality of wells and cement barriers that protect groundwater, disclosure of chemicals and storage of waste fluids.
To be sure, a number of state agencies have already established similar rules, which is likely reduce any new burden on producers in those states, since they are already essentially in compliance with the new federal regulations.
John Robitaille, vice president of the Petroleum Association of Wyoming, said his state is in a good position to implement the new rules because Wyoming already has the personnel and budget to enforce similar state regulations.
Still, the association believes the issues covered by the federal rule should remain under the purview of the state oil and gas commission.
"The thing that we are most concerned about is the rule that has come out is essentially redundant and duplicative of the rules that are already being implemented by the the Wyoming Oil and Gas Conservation Commission," he said.
Wally Drangmeister, vice president and director of communications for the New Mexico Oil and Gas Association, echoed that sentiment. The industry group expresses worries that layering federal rules over state regulations will add unnecessary costs.
"In an environment where the price of oil is in the mid $40s and is below $3, every dollar counts relative to what you're producing," he said.
According to the Department of the Interior, states and tribes may obtain a variance "in situations in which specific state or tribal regulations are demonstrated to be equal or more protective than [the Bureau of Land Management's] rule."