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Drilling companies claim fluid components are trade secrets

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Sunday, Aug. 28, 2011

The oil and gas drilling industry has been reluctant to disclose all the contents of the hydraulic fracturing fluid, saying some information is a trade secret that would give competitors an advantage.

"By and large, that argument is specious," said energy expert Kent Moors, a Duquesne University professor and scholar in residence at Duquesne's Institute for Energy and the Environment. Revealing the additives and chemicals in the fluid does not reveal the formula used to make the fracking fluid, he said.

The industry says hydraulic fracturing is a proven technique used for more than 50 years. The fluid used is pumped thousands of feet below water supplies. About 98 percent of the fluid is water and sand used to prop open fissures. The remaining 2 percent, with various additives to spur production, is the focus of attention and controversy.

The American Petroleum Institute favors full disclosure of the fracking fluid, said Erik Molito, the trade group's upstream director.

Some components are common household items and are generally harmless, such as salt and citric acid. Others are extremely toxic, such as benzene and lead, according to a House of Representatives Energy Committee report issued in April. From 2005 to 2009, the oil and gas service companies used 780 million gallons of fracturing fluid containing 29 products, some of which were potentially cancer-causing, are regulated as a risk to human health or listed as a hazardous air pollutant, the House report said.

Pennsylvania, Arkansas and Wyoming have regulations requiring companies to disclose the additives and the chemicals used in each well, and permit drillers to designate some chemicals as trade secrets that should not be disclosed.

When a company lists an additive or chemical component as a "trade secret," Arkansas and Wyoming conduct an initial review to determine whether it agrees with that assessment.

In Pennsylvania, a company can designate a fracking fluid component a "trade secret," without review by the state.

Interested residents have alternatives. When someone wants to review a file on a well that was fractured with some fluid a company considers proprietary, the drilling company will be notified by the state, said Jamie Legenos, a spokeswoman for the Department of Environmental Protection. If the company maintains an ingredient is a trade secret, a resident can file a Right to Know request and the state will make a "discretionary decision" on whether that trade secret should be disclosed, Legenos said.

The review process could extend 30 days if the department needs additional information to make a decision, Legenos said, and the decision can be appealed.

Whether any companies have been required to disclose information it designated as a "trade secret" was not available, Legenos said.

In Wyoming, Tom Doll, supervisor of the state's Oil and Gas Conservation Commission, said the agency has been pleased with regulations that took effect in September 2010, "but we still are struggling with the trade secrets."

Wyoming requires reports on fracking fluid a company plans to use, and then what it did use when the drilling was completed, Doll said.

"We are seeing good compliance from companies," Doll said.

The Arkansas Oil and Gas Commission, which regulates the industry in that state, also requires reports to be filed before drilling and afterwards, said Shane Khoury, deputy director and general counsel for the commission.

"The most difficult part is working with the regulated companies as to what they have to disclose. A lot of them want to keep an entire additive as a trade secret," but the state may agree that only individual chemical constituents of the additives are trade secrets. Competitors may get the formula of additives, "but you don't know the quantities," Khoury said.

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