BHP Billiton’s $20 billion push into the US shale-gas industry, touted as a ”tier-one” entry into a new business by its petroleum division, continues to be dogged by regulators as they crack down on the industry’s controversial ”fracking” extraction methods.
The crackdown comes as Queensland’s booming coal seam gas (CSG) industry fights off criticism that fracking techniques underpinning a planned $50 billion investment in several gas export projects pose unacceptable safety and environmental risks.
The local industry’s fight was not helped yesterday by news from BG-owned QGC that one of its CSG wells in Berwyndale South Gasfield, about 280 kilometres north-west of Brisbane, was leaking after the well head was damaged on Monday by equipment being moved.
The well is on a farmer’s property that contains a ”field” of CSG wells draining gas from underground coal seams. A pipe leading from the well head sustained a five-centimetre crack and, according to QGC, the leaking gas was not considered dangerous beyond three metres.
A ”safety zone” was placed around the damaged well pending repairs, and the well has been shut in.
Issues raised about the fracking of shale beds in the US have generally raised more serious issues.
Staff of the Arkansas regulator charged with supervising the US state’s shale gas extraction activities recently argued that reinjecting waste fluids deep underground as part of the controversial ”fracking” process may have triggered or exacerbated earthquakes in at least part of the gas-rich Fayetteville shale structure.
BHP Billiton has valuable gas interests in the Fayetteville structure. Now two of its waste-fluids disposal wells are among four that have been permanently shut under a ban imposed by the Arkansas Oil and Gas Commission.
After four months investigating a cluster of tremors and quakes in central Arkansas, the AOGC in late July ordered the permanent closure of waste-fluids disposal wells in an area stretching from about 40 kilometres north of Little Rock, 30 kilometres north-east to Cleburne County.
The AOGC’s staff applied for the ban after information from the Arkansas Geological Survey and the Centre for Earthquake Research and Information pointed to a previously unknown geological fault in the area.
The AOGC’s directorate told the AOGC’s commissioners there was enough evidence to suggest that ”seismic events in the proposed moratorium area are being enhanced, induced or triggered by the operation of the disposal wells”.
But after a public hearing, the commissioners adopted a less forbidding view: they found only that seismic activity elsewhere in the US had been enhanced or induced in the past, and they did not make any connection between the quakes and fracking.
The AOGC commissioners nevertheless voted unanimously to ban disposal wells in the area. The ban affects two wells BHP Billiton acquired as part of its $US4.75 billion ($A4.6 billion) purchase of Chesapeake Energy Corp’s Fayetteville shale assets in March.
BHP said both had been plugged and abandoned ”out of an abundance of caution” ahead of the AOGC’s action. In fact, one of the wells was suspended under emergency orders on March 4, when Chesapeake still operated it.
BHP contends the science is not settled on the relationship between fracking and seismic activity.
”The causes of the seismic activity are still not well understood,” BHP said in a statement. ”The science has not definitively concluded that the disposal wells were either causing the tremors or contributing to their strength or severity in Arkansas.”
But the regulator has warned that the ban area, which includes parts of five counties, could be widened.
The AOGC’s ban has become a key defence point for BHP Billiton as it and other shale gas producers seek to fend off class actions filed by Arkansas residents.
The residents claim injecting water and chemicals underground to force out gas has polluted soil, air and water systems with toxic substances, and that fracking has triggered hundreds of earthquakes.
BHP wants the cases dismissed, saying it has never ”operated” one of the cited wells because it was suspended before BHP took possession of Chesapeake’s assets.
The Arkansas ban comes as regulators press companies to publish the substances they use in fracking and how they monitor the impact of toxic waste fluids.