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The Marcellus Shale is about to become the most productive natural gas field in the United States, according to new data from energy industry analysts and the federal government.

Though serious drilling only began five years ago, the sheer volume of Marcellus production suggests that in some ways there’s no going back, even as New York debates whether to allow drilling in its portion of the shale, which also lies under large parts of Pennsylvania, West Virginia and Ohio.

The top spot for the Marcellus “doesn’t surprise me,” said Jay Apt, a professor of technology at Carnegie Mellon University. “But will it lead to industries that spring up to use that gas?” he asked, adding that much of the bounty could also end up being shipped to Canada, the Gulf Coast or overseas.

In 2008, Marcellus production barely registered on national energy reports. In July, the combined output from Pennsylvania and West Virginia wells was about 7.4 billion cubic feet per day, according to Kyle Martinez, an analyst at Bentek Energy. That’s more than double the 3.6 billion cubic feet from last April, and represents over 25 percent of national shale gas production.

That’s neck-and-neck with production from the Haynesville region in Arkansas and Texas, but new drilling permits there have declined sharply.

The Powell Shale Digest, an industry newsletter based in Fort Worth, Texas, concluded that a recent report from the U.S. Energy Information Agency means “it is reasonable to assume” that the Marcellus has or will soon pass Haynesville as the top producer.

The Marcellus Shale is a gas-rich formation of rock thousands of feet below ground. Advances in drilling technology made the shale accessible, which led to a boom in production, jobs and profits, and a drop in natural gas prices for consumers. But there are also concerns about pollution and impacts to roads and other public services.

Apt said having a natural resource bounty is one thing, and using it wisely is another. The current wholesale price of natural gas is about $3 here, but $12 or more in Europe and Japan.

“It’s clear people will want to export” the Marcellus gas, Apt said, adding that such an outcome could lead to what economists call “the resource curse,” which is when the general population hardly benefits, while a few get very rich.

But Apt said there are some hopeful signs, such as the Shell Oil Co. plan to build a petrochemical plant to turn Marcellus gas into other consumer and industrial products including plastics. It’s widely believed that if Shell moves ahead with plans to build that $2 billion plant north of Pittsburgh, other small industries will follow.

For now, it looks like the Marcellus region will be in the top production spot for several years, analysts say. While drilling has slowed, there were still 288 new well permits issued in May, and more than 1,200 for the first five months of the year, according to data from LCI Energy Insight, an El Paso firm that tracks national energy trends.

Martinez noted that several major Marcellus region pipeline expansions are scheduled for completion this fall, which should allow production to grow even more, and make it easier to ship gas to other parts of the northeast. That could boost wholesale prices, he said, and keep energy companies focused on the region.

“Long-term, being able to move the gas out of the region will give some support to those prices,” Martinez said.

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DEEP IN THE rolling tree-clad hills of Pennsylvania, on a hilltop close to a group of barns and farmhouses, Chevron’s Kikta well pad can be found at the end of a narrow country lane. This is part of the Marcellus shale, 250,000 sq km (96,500 square miles) of gasfields stretching across Pennsylvania, West Virginia and New York state. The drilling rig is 30 metres high, so large that it is hard to imagine how it could have got to the site, but it comes apart and the components fit onto lorries. It sits on an acre of flattened hilltop, along with a million-gallon reservoir to provide the huge quantities of water needed for extracting shale gas. Vehicles and machines are poised for action. Four wells will be drilled from this one pad. The drill will first bore 2,300-2,600 metres (7,500- 8,500 feet) downwards; then the drill bit is coaxed to the horizontal and the drilling continues outwards. Gas will start rising to the wellheads, just a few metres apart, after the next task is performed: hydraulic fracturing, or fracking.

Shale is a hard rock made up of sediments deposited on sea and lake beds hundreds of millions of years ago. To make it give up the gas held within, it needs to be broken up. Along up to 2km of horizontal pipes 14cm wide, holes open out onto the shale. Along small sections, water, fine sand (the “proppant”) and fracking fluid are injected under high pressure.

The fracking fluid, which makes up about 1% of the brew, is a combination of gelling polymers of the sort found in food and cosmetics, to keep the sand suspended in the fluid as it is pumped into the well; chelants (like kettle descaler) to break down the polymer and release the sand when it arrives in the fractured shale; friction reducer (as found in nappies) to keep the flow smooth; and biocide, a disinfectant that stops bacteria gumming up the well.

On reaching the shale, the mixture of water and fracking fluid bursts open the rock and the sand keeps the fractures open, allowing the gas to flow to the surface. The power for the operation is supplied by the engines of a fleet of trucks, so this stage of the process can be noisy. But it takes only five days to complete, and then the shale gas begins to flow and the trucks, portable offices and hoppers are taken to another site to start all over again.

After a little over a year of activity, at least half of which is taken up with planning and obtaining permits, most of the land is reclaimed, apart from a little pipework and a water tank on a small section of the original site. At Elias, a completed Chevron operation, the only sound to disturb the replanted clover meadow is a faint whooshing as gas passes to an underground pipe network. It is the sound of dollars clocking up, and it could go on for 30-50 years. The gas rushes out rapidly in the first year or so before tailing off quite fast to a third of the original flow and gradually declining thereafter.

The remarkable thing about extracting shale gas, says Bruce Niemeyer, Chevron’s regional boss, is “the absence of anything remarkable going on” above the ground. The Marcellus is not what you might expect a gasfield to look like: the views can be spectacularly beautiful. And not only is it good to look at, its gas is also cheap to develop and cheap to produce. The average cost per well is $6m-7m, against $7m-11m in the Haynesville shale, spread across parts of Arkansas, Louisiana and Texas. Moreover, the Marcellus is close to the big markets of the Atlantic coast, so the gas is cheap to transport too. If only every gasfield were like that.

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There continues to be a great deal of national debate about how best to strengthen America’s energy security and provide consumers with more access to affordable energy while also identifying ways to protect our environment.

Across the Appalachia, the Marcellus Shale continues to provide real solutions to all of these pressing challenges. Using more clean-burning American natural gas – which is safely and responsibly developed to ensure our air and water resources are safeguarded – is a reality. The winners? Consumers, our environment and America’s ability to competitively compete in the global marketplace.

Today, in fact, EQT Corporation – a Marcellus Shale Coalition (MSC) member – announced the launch of a “pilot program to convert Marcellus drilling rigs to” liquefied natural gas, or LNG. This from their release:

EQT Corporation today announced the launch of a pilot program to begin converting drilling rigs to liquefied natural gas (LNG), displacing the diesel used to power equipment at the well site. This program marks the first LNG rig conversion in the Marcellus Shale and will provide a cleaner burning alternative fuel for the region’s drilling operations.

“We want to be a leader in reducing the environmental impacts related to drilling and we are proud to be the first operator in the Marcellus to launch such a program,” states Steve Schlotterbeck, President Exploration and Production for EQT. “Along with safety, protection of the environment is top-of-mind for our employees, contractors, and of course communities. We continually look for opportunities to improve our operations and displacing diesel, by introducing the use of alternatives such as LNG and field gas, is one way of doing so,” Schlotterbeck continued.

In EQT’s release, the company underscores the important fact that “the use of LNG also provides another means of reducing our dependence on foreign oil imports – with sourcing coming from various U.S. shale plays.” Further, “The LNG being used for EQT’s pilot program is produced locally from Marcellus natural gas reserves,” according the release.

And thanks to commonsense efforts by EQT, as well as a host of other MSC members, the region continues to realize the clear benefits of using American natural gas to fuel our growing transportation needs. Under the headline “Searching For Savings, Drivers Turn To Natural Gas,” StateImpactPA reports that “right now the gallon-equivalent of compressed natural gas costs less than  half as much as a gallon of gasoline.”

In the July 4 story, Scott Detrow highlights Governor Corbett’s leadership on this critical issue and the fact that  “nat­ural gas-run vehi­cles release far fewer emis­sions into the air than gaso­line or diesel cars and trucks” and that “they’re also a step, he argues, in the direc­tion of Amer­i­can energy independence.”

This from the story about MSC member company Waste Management’s compressed natural gas (CNG) efforts:

The con­ver­sion is hap­pen­ing in Wash­ing­ton County, where Waste Man­age­ment parks a fleet of more than thirty CNG-fueled garbage trucks. The com­pany is in the midst of a national effort to con­vert all its vehi­cles to nat­ural gas.

By the end of 2012, it will be halfway done with the goal — at least within its Wash­ing­ton County fleet. “In 2011 we got 23 CNG trucks. In 2012 we should get another 18,” dis­trict man­ager Rich Mogan told StateIm­pact Penn­syl­va­nia. “By the end of the year we’ll have 45 to 50.”

In the simplest and truest of terms, safe, responsible natural gas development is Building a Stronger, More Secure America.

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The U.S. public favors greater regulation of hydraulic fracturing, a natural gas drilling technique that has reduced prices for consumers while raising environmental concerns.

More than three times as many Americans say there should be more regulation of fracturing, known as fracking, than less, according to a Bloomberg News National Poll conducted March 8-11. The findings coincide with recent surveys in Ohio and New York where people who believe fracking will cause environmental damage outnumber those who say the process is safe.

The U.S. Environmental Protection Agency has proposed new standards on wastewater and emissions from fracking operations, and is investigating claims the extraction process tainted drinking water in Wyoming and Pennsylvania. Photo: Spencer Platt/Getty Images

“That actually doesn’t surprise me,” Mark Boling, executive vice president for Houston-based Southwestern Energy Co. (SWN), said of the poll results in an interview. “We have been so focused as an industry on figuring out how to crack the code and get these huge volumes of gas trapped in shale formations. We haven’t focused on the things we have to do differently above ground.”

Because of fracking, the U.S. is producing so much gas that the government may approve an export terminal after warning four years ago of a need to boost imports. Gas from shale, fine- grained sedimentary rocks that trap the fuel, made up 23 percent of U.S. production in 2010, and is forecast to rise to 49 percent by 2035, according to the Energy Department.

Fracking Jobs

In 2010, the industry supported more than 600,000 U.S. jobs, according to a report that consultants IHS Global Insight prepared for America’s Natural Gas Alliance, a group that represents drillers. Gas prices fell 36 percent last year, helping to put U.S. household expenditures for gas this winter on a track to be the lowest in nine years.

When asked by Bloomberg if there needs to be more or less regulation of fracking, 65 percent said more, 18 percent said less and 17 percent said they weren’t sure. The poll of 1,002 adults 18 and older was conducted by Selzer & Co., a Des Moines, Iowa-based firm. It has a margin of error of plus or minus 3.1 percentage points.

In fracking, millions of gallons of chemically treated water and sand are forced underground to break up rock and allow gas or oil to flow. Environmental groups have raised concerns over harmful emissions and the handling of wastewater from gas wells.

State Regulation

Fracking has been used in places such as Texas and Oklahoma since 1949 and is largely regulated by the states. Its use has expanded with the adoption of horizontal wells that branch off to tap into more gas from a single well.

In Pennsylvania, Ohio and West Virginia, drillers are tapping a formation known as the Marcellus Shale that may hold enough gas to supply the U.S. for six years.

The drilling boom has also produced some high-profile failures that have prompted state regulators to review standards. In Pennsylvania, rules were beefed up after the state found that gas from wells operated by Chesapeake Energy Corp. (CHK) had seeped into drinking water supplies in 2010. In his Jan. 24 State of the Union address, President Barack Obama said his administration would “take every possible action” to see that gas fracking is done without putting the public’s health or safety at risk. The U.S. Environmental Protection Agency is investigating claims that the extraction process tainted drinking water in Wyoming and Pennsylvania.

New York Moratorium

Former New York Governor David Paterson put a moratorium on drilling while regulators draft rules to protect water sources such as the unfiltered watershed that provides 1.3 billion gallons (4.9 billion liters) a day to New York City.

Proposed regulations threaten to slow shale-gas development and the growth of new jobs, according to the American Petroleum Institute, which represents oil and gas companies. Kyle Isakower, vice president for regulatory and economic policy for the Washington-based industry group, warned of a wave of new federal regulations.

“We’re concerned that there are now 10 separate federal government agencies looking to study and potentially add new and unnecessary layers of regulations on hydraulic fracturing,” Isakower said in a March 1 statement. “More regulation could increase costs and delays for operators.”

Proposed EPA Rules

The EPA has proposed rules that would reduce emissions from gas wells and set standards for how to treat wastewater. The agency is also conducting a broad study on the potential impacts of gas fracking on drinking water. Preliminary results are scheduled to be released later this year.

“I don’t see it as something where the federal government is moving into an area where they haven’t traditionally had jurisdiction,” Boling said. “I don’t see a problem with that.”

Boling is part of an industry group working on a project with the New York-based Environmental Defense Fund to help states improve oversight of gas fracking.

In December, the EPA linked fracking to groundwater contamination in Pavillion, Wyoming. The agency is also testing water from wells in Dimock, Pennsylvania, after residents in the community complained of methane and chemical contamination from wells operated by Cabot Oil & Gas Corp. (COG)

Cabot on EPA

That inquiry prompted Cabot Chief Executive Officer Dan Dinges to say the “EPA’s actions in Dimock appear to undercut the president’s stated commitment to this important resource,” according to a Jan. 26 letter to EPA Administrator Lisa Jackson. “EPA’s approach has caused confusion that undermines important policy goals of the United States to ensure safe, reliable, secure and clean energy sources from domestic natural gas.”

Still, Pennsylvania residents strongly support shale gas production. When asked if drilling should go forward in light of its economic benefits or stop because of potential environmental impacts, 62 percent chose drilling compared with 30 percent who said there should be no drilling, according to a survey by Quinnipiac University (78104MF) in Hamden, Connecticut. The poll of 1,370 registered voters was conducted Sept. 21-26.

People in New York and Ohio expressed greater concern over environmental damage, according to Quinnipiac. In a January survey of 1,610 registered voters in Ohio, 43 percent said fracking would cause environmental damage and 16 percent said it would not. When asked the same question in December, 55 percent of people surveyed in New York said drilling would damage the environment while 13 percent said it would not.

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The country’s largest fracking site, a 350 million-year-old formation called the Marcellus Shale, spans the states of New York, Pennsylvania, Ohio, West Virginia and Maryland.

So what is fracking?  And why should you care?

Hydraulic fracturing has been around for decades. Oklahoma-based Natural Gas  producer Chesapeake Energy explains that “Hydraulic fracturing is a proven technological advancement which allows producers to safely recover natural gas and oil from deep shale formations.”

On the other hand, The Environmental Working Group (EWG) explains that now, natural gas producers are deploying a new gas drilling method called high-volume horizontal hydraulic fracturing to release gas locked in previously untapped shale formations.

Current fracking techniques use an accelerated process different from that of the past.

The New York Times reports that this “carries significant environmental risks. It involves injecting huge amounts of water, mixed with sand and chemicals, at high pressures to break up rock formations and release the gas…With hydrofracking, a well can produce over a million gallons of waste water that is often laced with highly corrosive salts, carcinogens like benzene and radioactive elements like radium, all of which can occur naturally thousands of feet underground.”  The most commonly used chemicals include carcinogens such as benzene, toluene, ethylbenzene, xylene and other toxins.

In 2011, according to a report by the Department of Energy’s outside advisory panel on natural gas, shale gas reached 29 percent of total dry gas production in the lower 48 states, which is up from 6 percent in 2006.

Drillers claim fracking does not pollute ground water and underground water supplies.  However, according to EWG, “growing numbers of Americans, many in rural communities, report that wells and other water sources have become unusable since fracking operations started up nearby.”

In addition to the threat to water through contamination and the use of toxic chemicals, and the risk of air pollution, fracking is dangerous in other ways as well.

There have been explosions – such as the one in Ohio in 2007.  There has been water contamination – in 2008 in Pennsylvania it was found that drilling waste water contaminated the Monongahela River.

There have been chemical spills – In 2009 Pennsylvania authorities fined Cabot Oil & Gas $56,650 for three spills of hydraulic fracturing fluid near the town of Dimock.

Truck traffic is increased – EWG notes that “drilling can require 1,300 truck trips per well, often in areas where roads do not exist or are not built to handle heavy trucks. Trucks cause significant air and noise pollution and can spill their loads, endangering water supplies.”

In January 2012, Christopher Portier, director of the Centers for Disease Control and Prevention‘s National Center for Environmental Health and the Agency for Toxic Substances and Disease Registry, argued that additional studies needed to be carried out to determine whether waste water from the fracking wells can harm people or animals and vegetables they eat.  That same month a group of U.S. doctors “called for a moratorium on fracking in populated areas until such studies had been done” according to a Bloomberg article.

Marylanders should take note: This is happening in our state and there are no plans to let up. It’s dangerous and bad for all of our health.

Fracking is not a partisan issue.  President Obama voiced his support for the practice of fracking during his State of the Union address in January 2012.  He, and all of the Republican nominees for President, take campaign contributions from the gas and oil industry. According to the Center for Responsive Politics, however, Republican candidates receive approximately four times as much money.

All candidates support hydraulic fracturing. However, a report by the Associated Press earlier this month notes that the majority of US citizens do not support hydraulic fracturing, regardless of party.

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North American natural gas producers face one big problem as they pledge to cut production to bolster prices: skeptical traders.

Led by No. 2 U.S. producer Chesapeake Energy (CHK.N), companies including Canadian producer Encana Corp (ECA.TO) and ConocoPhillips (COP.N) have pledged to knock a total of about 2 percent off domestic output.

But with scant evidence of where or how long cuts are being implemented, traders are wary. Natural gas prices are languishing within pennies of a 10-year low hit in January. Traders say prices will likely remain depressed until reductions can be confirmed in company earnings or government data, months from now.

One of the mildest winters on record and an unyielding boom in shale gas production has pummeled natgas futures this winter — welcome news for U.S. households and industrial users like Dow Chemical (DOW.N) but a bane for producers now struggling to break even on thousands of new wells. Substantial cuts could turn that around.

Stockpiles are at record highs for this time of year and without supply reductions they may exceed capacity by the end of the summer. Such an unprecedented event would cause havoc by forcing producers to sell gas at extremely discounted levels, perhaps even to pay for someone to take it off their hands.

So producers have announced swift cuts in supply, reprising a strategy that helped temporarily stem the previous price crash in 2009. But looking back, traders say, those curbs appear to have lacked the impact that they had initially expected.

Chesapeake’s production actually rose in the second quarter of 2009 after cuts were announced, as increasing output from new wells more than offset the cuts it made at existing facilities, company data show.

The supply restrictions may have also been relatively short-lived. Chesapeake announced on April 16, 2009 that it would double the size of planned reductions to 400 million cubic feet per day — about 13 percent of the company’s output at the time. Reuters calculations, based on company data, suggest that the closures would have lasted less than a month at that rate.

Now that cuts have been announced again, traders say they want to see the evidence. So far, it’s been hard to find.

“The market doesn’t think there is a lot of production cutting going on,” said Keith Barnett, executive vice-president at Springrock Production which forecasts U.S. natural gas supply.

While natural gas inventories are now declining more quickly than at the beginning of the winter and pipeline flows have fallen in some places, some analysts say the figures do not prove that cuts have hit the market yet. Colder weather has helped drain inventories, and many utilities are now burning more cheap gas instead of costlier coal. Less gas flowing through some pipes can be made up by higher flows elsewhere.

A Chesapeake spokesman said that more than 1 billion cubic feet per day (bcfd) of production had been cut this year by tightening the taps at producing wells, moving rigs to more lucrative oil plays and delaying the connection of freshly drilled wells to pipelines.

FLOODED MARKET

In aggregate, Chesapeake, Encana and Conoco, announced plans in the past few weeks to take about 1.35 billion cubic feet per day (bcfd) of output off the 67-bcfd U.S. market.

Chesapeake, which trades natural gas and is shouldering the lion’s share of production curbs, first announced cuts of 0.5 bcfd on January 23, 2012, sending prices up nearly 8 percent. But the market barely reacted on February 21 when Chesapeake said it had lowered output by a total of about 1 bcfd, 16 percent of its daily production and about 1.5 percent of total U.S. supply.

After a brief rally in late January, prices at the New York Mercantile Exchange have fallen back to within a few cents of the low of $2.23 per million British thermal units (mmBtu) hit on Jan 23. Gas traded above $4 last summer.

“Recently, observed pipeline flows have declined on a sustained basis, suggesting that the announced production curtailments are underway,” Goldman Sachs analysts David Greely and Johan Spetz said in a note.

Even assuming the shut-ins have been imposed, some analysts say the oversupply caused by the prolific development of shale deposits is still growing. The U.S. government on Tuesday increased its 2012 production forecast for the second time since the production constraints were announced; it now expects output to climb 2.6 percent versus last year to a record high.

THIN DATA

Other analysts who have poured over available pipeline flow data say it’s impossible to be certain either way. While extensive analysis of pipelines shows a decline in flows in Texas and Louisiana since late January, lines elsewhere have shown increases.

For instance, declining production from Chesapeake wells in the Barnett and Haynesville shales in Louisiana and Texas has been partly offset by increased output in the Pennsylvanian portion of the Marcellus shale, according to Thomson Reuters Trading Analytics in New York, which compiled the data.

From the small sampling of the giant actual flows involved, it is hard to draw firm conclusions.

A court in Texas — a state which produces about 10 percent of U.S. supply — ruled in October that from the end of 2011 pipeline operators no longer had to report volumes on intrastate pipelines, meaning only flows between Texas and other states were made public.

Production cuts are currently “impossible to prove,” said Jon Ecker, a natural gas expert at Genscape, which monitors natural gas pipeline flows.

A TELLING HISTORY

Based on experience, the question may not be whether cuts are being made, but how long they will last.

In 2009, after Chesapeake announced cuts on March 2 and April 16, second-quarter output actually rose by 4 percent over the previous quarter as new drilling successes outweighed curbs elsewhere, according to company regulatory filings.

Moreover, a Reuters analysis of the data suggests that, after cutting more that it pledged in the first quarter, Chesapeake ramped production back up just a few weeks after announcing the second reductions.

A company spokesman who reviewed the Reuters calculations in this story said: “Our decisions regarding the duration of curtailments are dependent on market conditions and we retain the right to adjust our production as we deem appropriate.”

Chesapeake typically owns about 50 percent of a well’s production while the other half goes to partners and royalty owners, the Chesapeake spokesman said. So reductions announced in company results represent about half of the total cuts.

Chesapeake said its average reduction was 74 mmcf per day, a total of 6.7 billion cubic feet for the entire second quarter of 2009. About 1.5 bcf of that should have occurred between April 1 and April 16, based on Chesapeake’s one-half share of the initial 200 mmcfd curbs in place since March 2.

Therefore, the doubling of cuts announced on April 16, as prices continued to decline, could only have lasted 26 days at that rate, to May 12, given that the total cuts for the quarter amounted to just 6.7 bcf.

By mid-May 2009, natural gas prices had risen more than 40 percent from what was then a seven-year low but the decline resumed throughout the summer, as Chesapeake resumed pumping at full throttle. Third quarter production rose three percent over the second quarter and fourth quarter production jumped another 7 percent. The company confirmed in July 2009 that it was no longer cutting production.

“In the past, those that shut in typically talked up a storm … but when the data finally came in, little had actually been shut in,” said Martin King, analyst at FirstEnergy, in a report last week.

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Tugging on rubber gloves, a laboratory worker kneels before a gushing water spigot behind Kim Grosso’s house and positions an empty bottle under the clear, cold stream. The process is repeated dozens of times as bottles are filled, marked and packed into coolers.

After extensive testing, Grosso and dozens of her neighbors will know this week what may be lurking in their well water as federal regulators investigate claims of contamination

in the midst of one of the nation’s most productive natural gas fields.

More than three years into the gas-drilling boom that’s produced thousands of new wells, the U.S. Environmental Protection Agency and the state of Pennsylvania are tussling over regulation of the Marcellus Shale, the vast underground rock formation that holds trillions of cubic feet of gas.

The state says EPA is meddling. EPA says it is doing its job.

Grosso, who lives near a pair of gas wells drilled in 2008, told federal officials her water became discolored a few months ago, with an intermittent foul odor and taste. Her dog and cats refused to drink it. While there’s no indication the problems are related to drilling, she hopes the testing will provide answers.

“If there is something wrong with the water, who is responsible?” she asked. “Who’s going to fix it, and what does it do to the value of the property?”

Federal regulators are ramping up their oversight of the Marcellus with dual investigations in the northeastern and southwestern corners of Pennsylvania. The EPA is also sampling water around Pennsylvania for its national study of the potential environmental and public health impacts of hydraulic fracturing, or “fracking,” the technique that blasts sand, water and chemicals deep underground to stimulate oil and gas production in shale formations. Fracking allows drillers to reach previously inaccessible gas reserves, but it produces huge volumes of polluted wastewater, and environmentalists say it can taint groundwater. Energy companies deny it.

The heightened federal scrutiny rankles the industry and politicians in the state capital, where the administration of pro-drilling Gov. Tom Corbett insists that Pennsylvania regulators are best-suited to oversee the gas industry. The complaints echo those in Texas and in Wyoming, where the EPA’s preliminary finding that fracking chemicals contaminated water supplies is disputed by state officials and energy executives.

In New York, which also has vast amounts of gas in shale formations beneath much of the Southern Tier, drilling is on hold while state regulators work on controversial new regulations for energy producers attempting to tap into those deposits.

Caught in the middle of the state-federal regulatory dispute are residents who don’t know if their water is safe to drink.

The EPA is charged by law with protecting and ensuring the safety of the nation’s drinking water, but it has largely allowed the states to take the lead on rules and enforcement as energy companies drilled and fracked tens of thousands of new wells in recent years. The American Petroleum Institute urged the Obama administration last week to rein in the 10 agencies it says are either reviewing, studying or proposing regulation of fracking.

The EPA says public health is its key focus and insists it is guided by sound science and the law. “We have been clear that if we see an immediate threat to public health, we will not hesitate to take steps under the law to protect Americans whose health may be at risk,” said Terri White, an EPA spokeswoman in Philadelphia.

Dimock, a village about 20 miles south of the New York state line, holds the distinction of being Pennsylvania’s top gas-producing town, yielding enough gas in six months to supply 400,000 U.S. homes for a year. Some residents contend their water wells were irreversibly contaminated after Houston- based Cabot Oil & Gas Corp. drilled faulty gas wells that leaked methane into the aquifer — and spilled thousands of gallons of fracking fluids that residents suspect leached into the groundwater.

Cabot first acknowledged, then denied responsibility for the methane it now contends is naturally occurring. It also asserts that years of sampling data show the water is safe to drink.

The EPA looked at the same test results and arrived at a different conclusion.

The well water samples “led us to conclude that there were health concerns that required action,” White said.

Cabot says its drilling operations had nothing to do with any chemicals that have turned up in the water. It points to a Duke University study last year that found no evidence of contamination from fracking.

Meanwhile, twice a day, six days a week, Dimock resident Ray Kemble drives about eight miles to a hydrant in Montrose, fills a 550-gallon tank strapped to the back of a donated truck and delivers water to as many as five homes, including his own. Anti-drilling groups are footing the bill, estimated at $500 per week.

Kemble said his well water turned brown and became unusable in 2008, shortly after the gas well across the street was drilled and fracked.

At his home, he filled a large plastic container dubbed a water buffalo from the tank on the truck.

“Never had a problem before until Cabot came in,” Kemble said.

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A university study asserts that the problems caused by the gas extraction process known as hydraulic fracturing, or “fracking,” arise because drilling operations aren’t doing it right. The process itself isn’t to blame, according to the study, released today by the Energy Institute at the University of Texas at Austin.

The report is likely to add new fuel to a blazing controversy over fracking. Researchers reviewed the evidence contained in the reports of groundwater contamination from three prominent shale-rock formations where the process is employed: the Barnett Shale in North Texas, the Marcellus Shale in Pennsylvania, New York and other areas of Appalachia; and the Haynesville Shale in western Louisiana and northeast Texas.

The groundwater contamination is graphically portrayed in the documentary “Gasland,” which showed residents near shale-gas operations setting their drinking water on fire as it came out of the tap. Worries about such contamination have sparked political resistance to fracking, leading some states and countries to hold up new drilling operations.

At the same time, shale gas is seen as an increasingly important domestic energy source. About a quarter of U.S.-produced natural gas currently comes from shale, and that proportion is projected to rise to nearly half by 2035. Last month, President Barack Obama suggested that the natural gas industry could support 600,000 jobs in America by the end of the decade, in large part due to the rise of hydraulic fracturing. In its latest budget request, the White House proposed new studies by the Environmental Protection Agency to ensure that fracking is done safely.

“It’s a game-changer in terms of the energy balance,” study leader Chip Groat, associate director of the Energy Institute, told journalists today. He and other scientists discussed the report in Vancouver, Canada, at the annual meeting of the American Association for the Advancement of Science.

Where does fracking go wrong?

Hydraulic fracturing involves drilling deep into shale beds, then injecting water, sand and chemicals under high pressure to shatter layers of rock — liberating trapped pockets of natural gas. The gas is captured for energy use, but the water and other byproducts have to be cleaned up. The procedure has been used since the 1950s, but it’s become far more widely applied in recent years due to advances in horizontal-drilling technologies.

The researchers concluded that many of the reports of contamination can be traced to above-ground spills or other mishandling of the wastewater, Groat said. Other causes of the contamination include underground casing failures or poor cement jobs. “These problems are not unique to hydraulic fracturing,” Groat said in a news release.

In the reports reviewed by the researchers, “we found no direct evidence that hydraulic fracturing itself … was a cause for concern,” he told journalists at the AAAS meeting. He acknowledged, however, that shale gas development “can be bungled” due to problems with drilling and extraction techniques used closer to the surface.

Such problems are most likely behind the water-on-fire phenomena documented in “Gasland.” But it’s difficult to identify precisely what the problem was or what the long-term effect will be without before-and-after data, Groat said.

“We really feel hobbled in a lot of these [cases] by the lack of baseline information,” he observed.

Today’s release of the final report follows up on a preliminary version that was issued last fall. In addition to discussing the causes of contamination, the report evaluated the ability of states to enforce existing regulations, and analyzed the public perceptions surrounding fracking.

Among the other findings:

Natural gas found in water wells within some shale gas areas, such as the Marcellus Shale, can be traced to natural sources. The report said the gas was probably present before the onset of shale gas operations.

Some states have actively addressed the regulatory issues surrounding shale gas, but most regulations were written before the process became widespread. In those cases, regulations may need to updated to reflect new situations. However, “there isn’t the need for new regulatory frameworks,” Groat said.

News coverage of the controversy has been “decidedly negative,” and few media reports mention the scientific research related to the process.

Surface spills of the fluids used in the fracking process were judged to pose a greater risk to groundwater sources than the fracking itself.

The Energy Institute said its report was conducted using general university funds, but received assistance from the Environmental Defense Fund in developing the scope of work and the methodology for the study. The EDF said it reviewed drafts of the report during the course of the project but did not contribute to its conclusions.

Not the final word

Scott Anderson, senior policy adviser for the Environmental Defense Fund’s energy program, discussed the report in a blog posting published after the report’s release. “If the problem isn’t hydraulic fracturing, then what is?” the headline asks. Here’s some of what Anderson said:

“As has been the case in other inquiries, the University of Texas study did not find any confirmed cases of drinking water contamination due to pathways created by hydraulic fracturing. But this does not mean such contamination is impossible or that hydraulic fracturing chemicals can’t get loose in the environment in other ways (such as through spills of produced water). In fact, the study shines a light on the fact that there are a number of aspects of natural gas development that can pose significant environmental risk. And it highlights the fact that there are a number of ways in which current regulatory oversight is inadequate.”

Anderson said the report deserved widespread attention, but was “by no means the final word on these topics.”

Groat said the report was based on a review of previously published data rather than fresh field observations. “We did not go out and measure things,” he acknowledged.

He said further studies will be conducted into the atmospheric and seismic impact of hydraulic fracturing — two much-debated environmental issues that were not addressed in detail in the newly issued report. The Energy Institute also plans to conduct a detailed case study on groundwater contamination in Texas’ Barnett Shale, as well as a field investigation into the effects of shale gas drilling on the water above and below fracturing sites in the Barnett Shale.

“Certainly more work needs to be done,” Groat said.

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