The Bureau of Land Management has released a new proposal for rules governing the use of hydraulic fracturing on federal land. This proposal contains revisions from last year’s proposal that better balance environmental and business interests over the controversial drilling technique.

Hydraulic fracturing, or ‘fracking,’ has been used in conventional, vertical wells since at least the 1950s.  New developments in directional drilling technology recently allowed the technique to be used in wells that are drilled horizontally. As a result, American companies now have access to the oil and gas trapped in dense, non-permeable shale deposits at an economically acceptable cost.

Widespread use of the technique since 2005 has caused domestic production to skyrocket and the price of natural gas to fall from $12MBTU to $4MBTU. According to a recent paper published by the American Action Forum, there is even more potential for growth, including the possibility that the US becomes a natural gas exporter in the foreseeable future.  Shale deposits of oil and natural gas in the United States are some of the largest in the world.  By some estimates, there is enough gas in US shale to supply a century worth of energy at current consumption levels. The BLM rules will affect 90% of all drilling on federal lands so their impact is potentially tremendous.

Environmentalists are concerned that fracking is dangerous and that the regulations don’t do enough to address their concerns. The Sierra Club even went so far as to release a statement that “no amount of regulation will make fracking acceptable.” The technique, which uses high-pressure water, sand and toxic chemicals to shatter underground rock and release the fossil fuels trapped inside, certainly sounds dangerous.  Chief among the concerns is the possibility that chemicals or even the fossil fuels themselves will contaminate local drinking water. One television commercial opposing fracking in New York  shows a woman lighting the water from her kitchen faucet on fire with a match.

The industry has pointed out that there has yet to be a single case of water contamination where fracking is the culprit. Water is sometimes contaminated but it is usually the result of a leak or crack in the shaft of the well. That can happen whether fracking is used or not and is already regulated by the federal and state laws on well construction.

While the industry isn’t concerned that fracking will contaminate underground aquifers (which are separated from shale deposits by thousands of feet of rock), they are concerned that the federal regulations are duplicative.  The new rules are more deferential to existing state regulation than last year’s.  They also struck a compromise about the controversial requirement to disclose proprietary chemical mixtures used in the fracking process. But additional permits will make development more expensive.

With so much potential for economic growth and cheaper energy, the administration can’t afford to burden the industry with unnecessary regulation. The new rules are a step in the right direction to balance reasonable environmental risks with regulation costs.