Industry Regulation

Oil and natural gas production is subject to federal, state and local regulations.

At the federal level:

• The Clean Water Act regulates surface water discharges and storm-water runoff.
• The Clean Air Act sets rules for air emissions from engines, gas processing equipment, and other sources associated with drilling and production activities.
• The Safe Drinking Water Act regulates the disposal of fluid waste deep underground (far below fresh water supplies and separated by approximately one mile of impermeable rock).
• The National Environmental Policy Act requires permits and environmental impact assessments for drilling on federal lands.
• The Occupational Safety and Health Act (administered by OSHA) sets standards to help keep workers safe. These include requiring Material Safety Data Sheets be maintained and readily available onsite for any chemicals used by workers at that location.
• The Emergency Planning & Community Right-to-Know Act requires storage of regulated chemicals in certain quantities to be reported annually to local and state emergency responders.

Individual states oversee day-to-day natural gas development because they have the on-the-ground personnel and expertise to safeguard local air, land and water. State-level enforcement is considered critical because drilling practices are customized to the unique geological characteristics of different parts of the country.

Well design, location, spacing, operation, water management and disposal, waste management and disposal, wildlife impacts and surface disturbance are all variables that differ and are accounted for by state-led regulation.

The U.S. Environmental Protection Agency is currently conducting a study of the potential environmental impacts of hydraulic fracturing and is expected to release its report in 2014. It is unknown whether this study will result in regulatory changes, and we cannot predict possible impacts of unknown changes. Certainly laws and regulations can and do change in ways that increase costs or limit operations for a company. As with all such changes, we expect to have sufficient time to assess and prepare for any that might impact our hydraulic fracturing and other exploration and production operations.