*UPDATE* EIP Diesel Fuel Report Lacks Data Integrity

UPDATE II(8/15/2014; 10:12am ET):The criticism for EIP’s report just keeps piling on. Today, the Ground Water Protection Council (GWPC) – which consists of state ground water regulatory agencies and runs FracFocus.com – debunked EIP’s claim that producers are using diesel and merely changing codes on FracFocus to avoid legal scrutiny. As EnergyWire reported:

“Officials at the Ground Water Protection Council (GWPC) say that their system now gives state governments all the data they need to prevent such changes — and punish companies that break the rules.

‘The big picture is that it would be illegal to do that maliciously,’ said GWPC Executive Director Mike Paque. ‘The implication is that FracFocus is the Wild West. That reflects a lack of awareness.’” (emphasis added)

EnergyWire also quoted Mike Nickolaus, of FracFocus:

“But Mike Nickolaus, who oversees FracFocus for GWPC, said that although oil and gas companies can make changes, the FracFocus system gives state officials the tools to track changes. If companies break the disclosure rules in their state, regulators can take action.

‘We do know when these records are amended,’ Nickolaus said.”

Furthermore, EnergyWire reports that FracFocus “has maintained records of every change made to disclosure reports since June 2013, when the system was revised. GWPC officials call that revision FracFocus 2.0.”  That date is important because it is well before EPA issued its February 2014 final guidance, which expanded the definition of diesel, and which EIP used to implicate companies retroactively.

UPDATE (8/14/2014; 10:35am ET): Regulators across the country are responding to Environmental Integrity Project’s (EIP) deeply flawed report on diesel fuel and setting the record straight.

As the Arkansas Oil and Gas Commission explained, operators in Arkansas are not using diesel during hydraulic fracturing operations, and there’s no cause for concern about the environment or public health.  As an Arkansas news channel reports:

“But Lawrence Bengal, director of the Arkansas Oil and Gas Commission, said these companies were doing nothing illegal. He points out that the companies were using kerosene, which the EPA didn’t list as a diesel fuel until February 2014. Since then, Bengal mentioned the state has made sure companies aren’t using diesel for drilling purposes anymore.

‘We constantly review [the list of chemicals] especially since 2014, February of this year, to ensure that the particular CAS number of kerosene or the other four that were listed in the US-EPA report aren’t being used in Arkansas,’ said Bengal.

And Bengal said there’s no need for concern – harping on how fracking wells are constructed in Arkansas.

‘There’s four layers of protections keeping the well fluids or whatever is in the well from the freshwater,’ said Bengal. ‘So I have no concern at all that there’s any reason to believe that contamination could have occurred.’” (emphasis added)

North Dakota regulators also weighed in, explaining that producers in the state are not using diesel for fracking.  From KXNews:

“Spokesperson for the North Dakota Department of Mineral Resources Allison Ritter says she has faith that companies are not using diesel in their fracking.

She says the Department has a system to make sure operators are compliant. They are required to disclose what chemicals they plan on using before they begin drilling. They also submit a similar report to FracFocus within 60 days after completion. Ritter says companies must apply for a specific permit if they plan on using diesel in the fracking process. She says since February, no company has applied.

‘I absolutely have faith in our system. This has come up actually a number of times and we’ve checked and double checked. People have inquired wanting to know are people using one of these 5 chemical abstract numbers during hydraulic fracking and every time we have run a double check on top of what we already do every month we have come up with nothing so I have complete faith in our system,’ says Alison Ritter.

Ritter says the purpose of the FracFocus was to be able to look up a well and see what chemicals were used during fracking. She the program is constantly being updated.” (emphasis added)

Of course, the most important question is whether people should be concerned about public health or the environment.  That question was answered pretty well by none other than EIP itself. As the Austin American-Statesman reported:

“None of the wells known to use diesel are in Central Texas. The Texas Railroad Commission, which regulates energy production in Texas, says it has found no evidence of groundwater contamination in the state due to fracking. Had she [EIP report author Mary Greene]?

‘We found no direct indication of impacted groundwater from diesel in Texas,’ Greene said.” (emphasis added)

—Original post, August 13, 2014—

This afternoon, the Environmental Integrity Project (EIP) released yet another report attempting to undermine hydraulic fracturing (“fracking”), this time claiming that the oil and gas industry is bucking the law by using diesel fuel in epic proportions.  According to EIP, there are “351 unpermitted wells fracked with diesel fuels between 2010 and July 2014,” presumably based upon data collected from FracFocus.org, an online disclosure registry for additives used during hydraulic fracturing.

But a closer look reveals that EIP is distorting the data and deliberately misleading the public about the use of diesel, as well as the rules and regulations that apply.

Let’s take a closer look at the report’s claims.

FACT #1: EIP egregiously inflates the numbers

EIP claims to have found “351 unpermitted wells fracked with diesel fuels between 2010 and July 2014 by 33 different companies across 12 states.”  However, when you actually dig into the data, a very different picture emerges.

More than 280 of the 351 wells EIP identified did not use diesel, but rather kerosene – which was not considered a diesel fuel until EPA’s final guidance in February 2014. It’s worth noting, however, that there is nothing in the Safe Drinking Water Act that actually defines what “diesel fuel” is; EPA’s guidance was essentially a list of recommendations for permitting authorities, including an arbitrary expansion of what qualifies as diesel fuel. Nonetheless, any well using kerosene – be it before February 2014 or after – is included in EIP’s report as a fracturing activity using “diesel fuel.” In other words, EIP is retroactively changing the definition of diesel fuel in order to malign more operations for engaging in an activity (a “diesel frack”) that did not occur.

This would be like if officials reduced the speed limit, and then accused drivers of speeding because of how fast they drove before the change.

Importantly, only seven of the instances of kerosene to which EIP refers occurred after February 2014, when EPA expanded the definition of diesel fuel to include kerosene. That means out of 280 supposed “diesel fracks” in EIP’s report, 273 of them simply cannot be accurately described as such. As for the seven fracturing activities that occurred after February 2014, all were in Oklahoma and Texas, which have primacy over their Underground Injection Control programs, meaning the U.S. EPA has granted permitting authority to the state. States typically regulate hydraulic fracturing under drilling regulations, not their UIC programs, which means the permitting would not occur under UIC anyway. Moreover, the delegation of primacy is based upon equivalent environmental protection (as compared to federal UIC requirements), which – it could be argued – would include covering hydraulic fracturing under separate permitting structures than the UIC, so as long groundwater is protected. Given the safety record of hydraulic fracturing, it would be hard to argue against this – that is, if the real goal is protecting water and public health.

As for the use of actual diesel fuels, EIP identified 59 instances of producers allegedly using diesel fuel in their operations, and all but two instances (in West Virginia) occurred in states with primacy.  In other words, while EIP tries to argue that producers are defying the law and not obtaining permits under SDWA, in reality these wells were permitted by states under their effective state drilling regulatory programs.

For what it’s worth, the Texas Railroad Commission has actually described the confusion and uncertainty over how, exactly, SDWA applies to the use of diesel fuel during fracturing operations, at least from a permitting perspective.

It’s also important to put the volumes listed by EIP in context. Most of the reports show very minor volumes of kerosene (or diesel or other hydrocarbons identified by EIP), which are often used in certain corrosion inhibitors.  EPA’s original concern with diesel fuel dealt with the use of the fuel as a carrier fluid (i.e. to dissolve the additives associated with fracturing), rather than its use as a de minimis component within the additives. Some of the additional complexity regarding EPA’s oversight of fracturing activities that employ diesel fuel includes the lack of clarity on what volume of diesel fuel actually constitutes a credible risk if it were released into groundwater. The average concentration in all of the wells identified by EIP – which, again, grossly inflate the number of times diesel fuel was actually used – is a fraction of a percent, often only a few hundredths of a percent.

There are over 77,500 wells registered with FracFocus.  Even if EIP were accurate to say that 351 of these use diesel fuel , that’s less than 0.5 percent of the wells listed.  If you look at the instances of actual diesel fuel, and not the instances where EIP retroactively broadened the definition of diesel fuel to inflate its numbers, that incredibly low figure declines even further.

FACT #2: No cases of water contamination from diesel

“The potential impact on human health and the environment related to the 351 wells identified in this report is significant.” (EIP report, p. 12)

There is absolutely no basis for this claim, because there has never been a single case of water contamination from hydraulic fracturing, whether diesel fuel was used or not. Perhaps this is why EIP used the term “potential impact,” instead of “evidence shows.”

As the U.S. EPA’s former Administrator, Lisa Jackson, said in 2012, “In no case have we made a definitive determination that the fracking process has caused chemicals to enter groundwater.” Secretary of Energy Ernest Moniz said in August 2013: “To my knowledge, I still have not seen any evidence of fracking per se contaminating groundwater.” Fittingly, at no point in the report does EIP ever provide any evidence that diesel fuel has contaminated water as part of the hydraulic fracturing process.

EIP attempted to bolster its case by citing an incident earlier this year in Ohio, which, according to EIP, “involved at least 16 different fracking products (including 9,000 gallons of diesel).” The only problem? The diesel fuel was being used to power onsite equipment. EPA’s initial report, issued in mid-July, also found no evidence of hydraulic fracturing chemicals in the water.

FACT #3: FracFocus entries fixed, not skirting law

“Through its investigation, EIP learned that some well operators have replaced—and continue to replace—their original FracFocus disclosures (that reported the injection of diesel fuel) with new disclosures that no longer indicate injection of diesel fuel. This is curious given that many of the disclosures EIP first identified were changed after EPA issued its draft guidance on the use of diesel in hydraulic fracturing in May 2012 and then others were replaced after the guidance became final in February 2014. In short, whether through trade secret claims, changing disclosures, or outright failure to reveal the use of products that contain diesel, the industry is under-reporting both the frequency and amount of diesel fuels used.”  (EIP report, p. 2)

EIP suggests that companies are changing their FracFocus entries merely as a means of skirting the law – as if they did in fact use diesel fuel, and are attempting to scrub the public record of it. In reality, many if not all of these changes were made simply due to incorrect data entry in the first place.

As EnergyWire reported in 2012:

Several companies said they were revising their FracFocus data after being contacted by EnergyWire, because diesel or kerosene was incorrectly listed as an ingredient. The FracFocus site that companies use to enter data has a “remove” link next to each entry that allows companies to revise and resubmit entries.

FTS International, formerly Frac Tech Services, and EP Energy, formerly known as El Paso, said a typographical error resulted in the wrong FTS International product being listed for an EP Energy well.

A spokesman for XTO Energy Inc., a subsidiary of Exxon Mobil Corp., said XTO Energy revised one entry for an Oklahoma well that incorrectly listed diesel as an ingredient. FracFocus lists 31 other XTO Energy wells with diesel, as defined by EPA, among the fracking ingredients.

Also, the Independent Petroleum Association of America’s Fuller checked with the maker of one of the products listed as containing diesel, Plexgel 907 LE. He found out that the company’s diesel-based slurry was discontinued in 2009 and replaced with a mineral-oil-based slurry. (emphasis added)

Part of the problem is that the Chemical Abstracts Service (CAS) numbers for some of the additives are quite similar. For example, the CAS number for kerosene has mistakenly been used for mineral oil in the past, in addition to the examples cited above from EnergyWire.

Put simply, EIP is not using facts when it suggests operators have conducted “curious” activities and altered disclosure forms to comply with regulations. The fact that some of the instances identified as “diesel fuel” were not referring to diesel fuel – whether we use a narrow definition or EPA’s broad interpretation of the substances that qualify as diesel  fuel – shows that EIP’s numbers are, once again, grossly inflated.

FACT #4: Rehashes debunked ‘Halliburton Loophole’ talking point

“In 2005, Congress stripped EPA of its authority under the Safe Drinking Water Act to regulate injection of fracking fluids, except diesel fuels, as part as what is known as the ‘Halliburton Loophole.’” (EIP report, p. 1)

Congress never stripped EPA of authority over hydraulic fracturing, because EPA never had the authority in the first place. Hydraulic fracturing has never been an activity subject to the Environmental Protection Agency’s Underground Injection Control (UIC) program under the Safe Drinking Water Act (SWDA), except in the case of producers using diesel fuels.

In fact, EIP’s argument is with the EPA itself.  In 1995, then-EPA administrator Carol Browner said, “EPA does not regulate – and does not believe it is legally required to regulate – the hydraulic fracturing of methane gas production wells under its UIC program.”

Browner added: “EPA’s position is that the fracturing of methane gas production wells is not an injection operation subject to regulation under the Underground Injection Control (UIC) program.” (emphasis added)

Later in its report, EIP recommends that Congress “restore EPA’s authority to require safe practices at oil and gas injection wells,” as if the agency ever had the authority to regulate hydraulic fracturing in the first place. Again, this is a false premise.

As for the use of diesel fuel, however, there are no official definitions of diesel fuel in the Safe Drinking Water Act or in the Underground Injection Control (UIC) program regulations.  In February 2014, EPA adopted an expansive definition of “diesel fuel” in its new permitting guidance to include five substances, including kerosene. But again, that’s only guidance for when EPA is the UIC permitting authority.

In most cases, individual states have been granted what’s known as “primacy” for the UIC program, which gives states flexibility in how they protect groundwater during injection activities. The purpose is to protect groundwater, after all, so rules that achieve that end should be the goal, rather than adherence to one specific technique. Because of this effective system, states are not required to match what the federal government sets for its permitting, and thus there is even more uncertainty about how diesel  fuel is to be treated for injection activities.

Don’t just take our word for it, either. None other than the Natural Resources Defense Council, which has consistently pushed for greater EPA authority over hydraulic fracturing (and believes EPA should ban the use of diesel fuel in fracturing), even admitted of EPA’s February 2014 diesel guidance: “states may choose not to adopt these protections.”

State regulations of drilling operations protect ground water during the fracturing process; they did so before 2005, and they continue to do so.

FACT #5: EIP ran to the media first

Interestingly, EIP had planned to release this study in June, and even secured a big write up from the Bismarck Tribune ahead of the release.  The report came as quite a surprise to North Dakota regulators, who criticized EIP for not bringing their findings to North Dakota officials’ attention before running to the press to accuse the industry and regulators of malpractice.  From the Bismarck Tribune:

The project names North Dakota among states that it will target in the report, but a spokeswoman for the state’s Oil and Gas Division doesn’t believe there are any smoking guns.

Spokeswoman Alison Ritter said all but one oil company drilling in North Dakota quit using diesel in fracking starting in 2012. The one that still did, Oasis Petroleum, last used a small amount as a defoaming agent in fall of 2013, she said.*

As of February, when the EPA diesel guidance took effect, companies have been told when they seek a drilling permit that if they plan to frack with diesel they must apply for a special injection permit, and none have, Ritter said. She said the Environmental Integrity Project made an open records request for those diesel injection permit applications.

Ritter said the Oil and Gas Division audits all frack completions within 60 days to verify fluids and chemicals registered on the required FracFocus website.

Ritter said none of those audits revealed any of the five chemical abstract numbers for diesel that would require the special injection permit.

“‘I’ll be really surprised if they (Environmental Integrity Project) have any information that we don’t have,’ Ritter said.

If they do, they should give North Dakota a heads-up “so we could remedy the situation,” she said.

*It should be noted that the “diesel” described was not diesel fuel at all, but rather kerosene.

If this project intended to “alleviate public health concerns,” as the report claims, wouldn’t it make sense first to take the issue up with the regulators whose responsibility is to make sure the law is being followed?  Perhaps, given the clear manipulation of data, EIP figured a media strategy was the best course, lest the regulators themselves discover how badly EIP had fudged its numbers.

Conclusion

“Following the release of the 2014 guidance, the drilling industry continues to suggest that use of diesel fuel in fracking is a non-issue because it has been discontinued. ‘Based on actual industry practices, diesel fuel use has already been effectively phased out of hydraulic fracturing operations,’ said Lee Fuller, Vice President of Government Affairs at the Independent Petroleum Association of America, in a February 2014 statement to the media.” (EIP report, p. 7)

Despite EIP’s best efforts to suggest the oil and natural gas production industry was not telling the truth about diesel fuel, there’s simply nothing in its deeply flawed report to contradict what the industry has been saying all along.

EIP’s own numbers prove that the use of diesel fuel in hydraulic fracturing has indeed been largely phased out – even with the most generous definition of what’s classified as “diesel fuel.” If EIP’s claim were accurate that there are 351 instances of diesel fuel use (again, there weren’t), there are still over 77,500 wells reported on the FracFocus registry, which means the inflated number of 351 is less than 0.5 percent of all the FracFocus wells.

In short, EIP started with the conclusion that there needed to be more regulations imposed on the oil and natural gas production industry (its grant from the anti-fracking Park Foundation was even explicitly earmarked for that purpose). But when the facts did not support EIP’s paid-for conclusion, it had a decision to make: scrap the project because the data just weren’t there, or manipulate the data to try to make it work. As this review shows, it’s clear which path EIP chose.