story by Benjamin Haas, Jim Polson, Phil Kuntz and Ben Elgin
Seeking to quell environmental concerns about the chemicals it shoots underground to extract oil and natural gas, Apache Corp. told shareholders in April that it disclosed information about “all the company’s U.S. hydraulic fracturing jobs” on a website last year.
Actually, Apache’s transparency was shot through with cracks. In Texas and Oklahoma, the company reported chemicals it used on only about half its fracked wells via FracFocus.org, a voluntary website that oil and gas companies helped design amid calls for mandatory disclosure.
Energy companies failed to list more than two out of every five fracked wells in eight U.S. states from April 11, 2011, when FracFocus began operating, through the end of last year, according to data compiled by Bloomberg. The gaps reveal shortcomings in the voluntary approach to transparency on the site, which has received funding from oil and gas trade groups and $1.5 million from the U.S. Department of Energy.
“FracFocus is just a fig leaf for the industry to be able to say they’re doing something in terms of disclosure,” said U.S. Rep. Diana DeGette, D-Colo.
DeGette, along with U.S. Sen. Robert Casey, D-Pa., introduced legislation in March 2011 that would require companies to disclose fracking chemicals. The bills haven’t advanced in either the House or Senate.
With FracFocus, “companies that want to disclose can do it but the other ones don’t have to,” DeGette said.
Bloomberg compared oil and gas well records from eight states – Arkansas, Colorado, Louisiana, Montana, Oklahoma, Texas, Utah and Wyoming – against disclosures that companies made for those states on FracFocus. While the state data didn’t reveal whether wells were fractured, regulators in each state said that at least 85% of their wells were fracked. The Congressional Research Service puts the national estimate at more than 90%.
In the eight states, companies told regulators that 18,158 wells were readied for production or were newly producing from April 11, 2011 through Dec. 31, 2011. They disclosed 8,555 of them on FracFocus. If 85% of the total wells were fracked, that means 45% of the fracks weren’t disclosed on the website.
Bloomberg’s analysis, covering states that accounted for 64% of U.S. gas production in 2010, shows the difficulty of getting a full picture of the industry’s transparency. Because there’s no official national database of fracked wells, Bloomberg chose states that had reliable records on when gas and oil wells started producing or were completed – that is, made ready to flow – and thus were candidates for posting on FracFocus.
Oil and gas companies have gotten better at listing their fractured wells on the website over time, said Dan Whitten, a spokesman for America’s Natural Gas Alliance, one of two industry groups that help pay operational costs for the website. Some states now require companies to make disclosures on FracFocus, he said.
“ANGA operators are committed to transparency, and support public disclosure of the additives used in the hydraulic fracturing process,” Whitten said in an e-mail. “If you were to look at a complete timeframe of FracFocus, you would see a progressively higher rate of participation.”
Companies participating in the voluntary system agree to disclose information about wells on the website once they have been fractured, which is the start of the completion process. Data from three other leading states – New Mexico, North Dakota and Pennsylvania – are incomplete or don’t list well-completion dates. For Texas, Bloomberg used the date companies submitted completion reports, which are supposed to be filed within 30 days.
More than half of new wells went unreported on FracFocus in each of three states: Texas, Oklahoma and Montana. In all, 1,126 companies had at least one well in the analysis period. While it’s possible that some companies didn’t use hydraulic fracturing, the data show that 1,038 of them, or 92%, didn’t report any wells on the website.
In hydraulic fracturing, companies blast millions of gallons of water, sand and chemicals deep underground to break up rock formations and free oil and gas. The technique has unlocked vast new sources of energy. At the same time, concerns center on the hundreds of chemicals – including known carcinogens – used in the process.
Homeowners in Pennsylvania, Texas and Wyoming have complained that their well water was contaminated with chemicals or methane gas from nearby frack jobs. The U.S. Environmental Protection Agency last year linked the method to contaminated drinking water in Pavillion, Wyoming; the agency is now retesting some of those findings. The EPA has little authority to regulate fracking; Congress in 2005 stripped it of most such power.
States have responded in various ways. Pennsylvania officials require that companies disclose chemicals within 60 days after fracking. New York has a moratorium on the practice until its environmental impact can be determined. Vermont has banned it outright. Texas began mandating disclosure of fracking chemicals this year, after officials determined that operators were voluntarily reporting about half their fracked wells to FracFocus, according to the Texas Railroad Commission, which regulates oil and gas wells.
Oil and gas executives say the FracFocus website helps eliminate the need for any new federal oversight that might unify the regulatory approach.
“Rome wasn’t built in a day,” said Cal Cooper, manager of special projects for Apache. “This is a positive thing. It shows industry can get its act together and make things happen in a short amount of time.”
Apache hadn’t reported some wells in Texas that received only minor frack treatments, Cooper said – though he said they should have been disclosed on the site. The company also struggled to get some of its contractors to disclose their chemicals, he said. Both issues have been addressed, he said.
“We certainly expect to post all of our 2012 frack jobs in the U.S. on FracFocus,” he said.
The company is updating its 2011 disclosures on the site as well, “and we fully expect to reach our goal of 100 percent disclosure from Jan. 1, 2011,” Cooper said.
Some of the largest oil and gas companies posted more complete data to the site. For example, Royal Dutch Shell Plc, Europe’s top oil producer, disclosed fracking chemicals for 107 wells in the eight states during the analysis period. The company reported 115 wells to state regulators, records show. Shell reported all its fracked wells to the website, said Kelly Op De Weegh, a Shell spokeswoman, indicating that eight of the wells weren’t fractured.
For the same period in 2011, Chesapeake Energy Corp., the second-biggest U.S. gas producer, disclosed information on 85% of the 1,148 wells listed for it in the eight states. Most of the missing wells were fractured before Feb. 15, 2011, when the company started reporting to FracFocus, said Michael Kehs, a company spokesman.
Chesapeake’s own records show it has withheld FracFocus reports on 10 wells fracked since it began disclosing on the website, Kehs said. In each case, there are unresolved discrepancies in information provided by contractors that did the fracking, he said.
“Chesapeake has reported 99 percent of our wells to FracFocus since the initiative was launched,” Kehs said.
While FracFocus was designed to display all wells fracked in 2011, its voluntary approach allows companies to choose when they want to begin reporting.
ConocoPhillips, the largest independent oil and gas producer by market value, decided to report only wells fracked after April 30, 2011, said Davy Kong, a company spokeswoman. That decision left 86 wells from the period Bloomberg examined that were fracked prior to May 2011 unreported, according to data the company provided.
Exxon Mobil Corp., the biggest oil company by market value, didn’t publish 28% of the 856 wells listed in records for the eight states. Rex Tillerson, the CEO of the Irving, Texas-based company, has praised the website and called for extending its voluntary approach to disclosure overseas.
Exxon focused on training staff to file the necessary data during the first half of last year, said Jeff Neu, an Exxon spokesman. In the year’s second half, the company reported more than 80% of its fracked wells, and it expects to report all of them going forward, he said.
Among the largest operators, the companies with the lowest rates of disclosure in the eight states were Midland, Texas-based Concho Resources Inc., which reported none of its 160 wells to the website, and SandRidge Energy Inc., which didn’t disclose 84% of its 779 wells. QEP Resources Inc. reported 74 of 153 wells listed in state records. Apache was fourth lowest.
Concho executives wanted to wait until various state regulators finalized their own reporting requirements before it began disclosing its chemicals, said Steven H. Pruett, the company’s senior vice president of corporate development.
SandRidge, based in Oklahoma City, began reporting all its frack jobs in Texas to FracFocus on Jan. 1, 2012, and those in Oklahoma and Kansas on March 1, 2012, Kevin White, a spokesman, said in a telephone interview. The company made only a few earlier reports, he said. SandRidge doesn’t drill in other states.
QEP began submitting reports to FracFocus in the third quarter of last year, said Noel Ryan, a spokesman for the Denver-based company. Continental Resources Inc. didn’t report 54 of its 64 wells in the eight-state group. The company didn’t immediately require staffers to list wells on FracFocus, said Mike Cantrell, the Oklahoma City-based company’s vice president for government and regulatory affairs.
Of 22 companies with at least 150 wells in the eight states from April 2011 through December 2011, 11 didn’t disclose a third or more of them on FracFocus, the data show.
“The data is so incomplete, it doesn’t help,” said Shane Davis, research manager for the Rocky Mountain chapter of the Sierra Club, which supports stronger state and federal regulation of fracking. Davis said he has studied more than 1,000 drilling-related spills in Colorado.
For members of the public, the website can be frustrating. Wendy Leonard wanted to know about wells in her area after she saw one being drilled near her children’s school in Erie, Colo. She asked state regulators, who referred her to FracFocus, she said.
“And then I’d go home and wouldn’t find anything,” she said.
Leonard and her family ended up moving to a town an hour away because of health concerns related to fracking, she said.
FracFocus is operated by two groups: the Groundwater Protection Council, a group of state water officials; and the Interstate Oil and Gas Compact Commission, an association of states that produce the fuels. The council’s own analysis shows that about half the wells that have been fracked in the U.S. have been reported through the site, said Mike Nickolaus, special projects director for the GWPC.
“Companies can take it or leave it where it’s voluntary, but we see more and more companies using FracFocus to say, ‘This is a good mechanism for us to get our information out there and be transparent,’” Nickolaus said.
The website’s operational costs, which total “a few hundred thousand dollars” a year for server space and site maintenance, according to Mike Paque, executive director of the GWPC, are paid for partly by America’s Natural Gas Alliance and the American Petroleum Institute, two Washington-based industry groups.
“We’re unapologetic about the industry cost-sharing on FracFocus because they get a big benefit from the website,” Paque said. There’s no penalty for failing to participate, he said.
Public money helped create FracFocus. From 2009 to 2011, the U.S. Department of Energy gave grants totaling $3.84 million to the GWPC, records show. About $1.5 million of that sum was used to develop the website, according to Paque. The government plans additional grants for the GWPC totaling $2.12 million through 2014, Energy Department documents show.
Since the website’s inception, seven states, including Texas, Pennsylvania and Colorado, have either allowed or required companies to use FracFocus to fulfill disclosure mandates. The federal Bureau of Land Management, which oversees oil and gas rights on 700 million acres – more than four times the size of Texas – is considering adopting FracFocus as the basis for chemical disclosures by companies operating on its land.
Gaps remain on the website even when wells are disclosed. Companies skip naming certain chemicals when they decide that revealing them would give away what they consider trade secrets. Many of the wells listed on FracFocus have at least one or two chemicals marked confidential. Others have far more.