As more fracking looms, Kentucky lawmakers consider bill reworking regulations on drilling

With the potential looming for a jump in high-volume hydraulic fracturing, or fracking, to drill for oil and gas in Kentucky, state lawmakers will consider a bill that includes stronger reclamation standards and more protection for water sources near wells.

House Bill 386, introduced this week, would upgrade rules to cover a type of drilling in which operators can inject millions of gallons of chemical-laced water under high pressure into deep, horizontal bore holes to break up rocks, unlocking oil and gas.

That type of energy exploration has become common in recent years in Pennsylvania, Ohio, North Dakota and elsewhere, resulting in a boom in production, but it hasn't taken off in Kentucky.

However, research showing there could be a lot of oil and gas in a shale layer deep under parts of Kentucky has sparked interest among oil companies, which signed hundreds of new leases with mineral owners the past two years.

That interest has focused on Lawrence, Johnson and Magoffin counties, where there appears to be the greatest potential to tap the Rogersville shale layer, but leasing agents reportedly also have approached residents in Madison, Rockcastle and other counties.

Fracking has caused concerns about air and water pollution from emissions of methane or spills and leaks of oil or drilling chemicals, though the industry says the technology is safe.

Studies have not documented significant problems with fracking chemicals contaminating groundwater through leaks from bore holes, which are cased with concrete, but there have been cases of water contamination from surface spills of oil and fracking water.

Len Peters, secretary of the state Energy and Environment Cabinet, named a working group last summer to look at the state's drilling rules, in part because of the potential for increased high-volume fracking.

The group included regulators and representatives of the industry and environmental groups. HB 386 represents the items on which the group's members reached agreement, according to participants.

The key components of the bill include:

■ A system to clean up abandoned oil-storage tanks. There are about 4,200 abandoned tank facilities in the state, according to the cabinet. Under the bill, regulators would first look for a company to pay for the work. The bill would set up a state fund to cover the work if there were no operator to hold responsible.

■ A requirement for drillers to test any water impoundment or groundwater source near the surface site of a deep horizontal well that would be affected by drainage from the wellhead. Companies would have to test the water again after completing the well to see if the operation had affected water quality.

■ A provision for companies to notify landowners within 1,000 feet before starting a high-volume horizontal frack.

■ A requirement for companies to include a plan for reclaiming drilling sites using best practices.

■ Bonds to cover the cost of plugging and reclaiming deep vertical and horizontal wells.

Drilling companies also would have to disclose the names of chemicals used in a high-volume fracking operation but could withhold information on the volume and relative concentration of the chemicals if they claimed it as a trade secret.

The bill would allow health care workers to get access to that information if needed, and the cabinet could make companies give the information to firefighters or others responding to an emergency spill.

Tom FitzGerald, who heads the Kentucky Resources Council and took part in the working group, said the bill was a "significant step forward" on landowners' rights and other fronts.

"We have a series of protections that we built in," FitzGerald said.

Andrew V. McNeill, executive director of the Kentucky Oil and Gas Association, said the bill included a number of improvements, including firming up rules under which deep horizontal drilling units could be established.

The industry needs that certainty because it can cost millions of dollars to develop a deep horizontal well.

"Modernizing the industry's regulations balances the need to promote investment in the state's oil and gas industry while also ensuring the regulatory framework protecting the commonwealth's environment is strengthened," McNeill said.

The Energy and Environment Cabinet also supports the bill and urges legislators to approve it, said spokesman Dick Brown.

House Majority Leader Rocky Adkins, a Democrat from Sandy Hook, is the primary sponsor of the bill.

Rep. Jim Gooch Jr., a Democrat from Providence who chairs the House Natural Resources & Environment Committee, is listed as a sponsor as well.

The bill has been posted for consideration in Gooch's committee, but a meeting scheduled for Thursday was canceled.

Not everyone was pleased with the bill despite the consensus process behind it.

Jim Scheff, who is involved with a group called Frack Free Foothills that has raised concerns about the potential for fracking in the Berea area, said the provisions for reclamation bonding and water testing were good.

However, the bill falls short on notice to communities and does not address issues such as increased traffic dangers and damage to roads from heavy trucks serving wells, Scheff said.

"This is heavy industry coming to rural areas," Scheff said.

Participants in the work group said HB 386 was not likely to be the last word on oil and gas drilling in Kentucky. There were a number of issues on which members of the group could not reach consensus.

For instance, the industry wanted to reduce the percentage of mineral owners who had to sign leases with companies in order to have a deep-well drilling unit approved.

The group deferred action on that because members could not come to an agreement, FitzGerald said.

The work group plans to keep meeting on unresolved issues.

This story was originally published February 11, 2015 at 6:18 PM with the headline "As more fracking looms, Kentucky lawmakers consider bill reworking regulations on drilling."