Industry says it already discloses voluntarily

By Timothy Gardner and Ayesha Rascoe

WASHINGTON, Feb 3 (Reuters) - The U.S. government will require natural gas drillers to disclose which chemicals they use in hydraulic fracturing on public lands, according to draft rules crafted by the Interior Department.

President Barack Obama pledged in the State of the Union address last week that the government would develop a road map for responsible natural gas production and roll out new rules to ensure drillers protect the environment.

Companies would be required to disclose the "complete chemical makeup of all materials used" in fracking fluids under the Interior Department's draft rules, a copy of which was obtained by Reuters.

The industry objected to any rule that would force drillers to reveal the chemicals used in fracking, during which chemical-laced water and sand are blasted deep below ground to release oil and natural gas trapped within rock formations. Fracking has allowed companies to tap a wealth of new natural gas reserves but critics say the procedure has polluted water and air.

The Bureau of Land Management estimates that companies use the fracking technique on about 90 percent of wells drilled on federal lands.

The proposed rules would also require drillers to ensure the stability of underground casing in wells and that waste water from fracking does not leak into the environment.

The Interior Department has said it is moving ahead with the rules but has not offered a specific timeline for when they will be released.

Fracking has helped companies tap vast reserves of natural gas that could turn the United States into an exporter of the fuel. But environmental groups and some residents near fracking operations say the process pollutes the water and air.

The Environmental Protection Agency late last year issued a draft study that said fracking fluids likely polluted an aquifer that supplies public drinking water in Wyoming. The agency is also trucking drinking water to four homes in Dimock, Pennsylvania after receiving data from residents suggesting the water has been polluted by drilling.

The EPA is also formulating rules on emissions from natural gas operations.

The energy industry complained that the draft rules were overkill as companies were voluntarily revealing the fluids. U.S. law does not require disclosure of fluids used in fracking on federal lands.

"The federal government should not add bureaucratic layers where disclosure is already occurring," said Reid Porter, a spokesman at the American Petroleum Institute. He said states are effectively requiring disclosure and the industry has helped them create such programs.

TRACE PROBLEMS TO THEIR SOURCE

One of the largest natural gas drillers, Chesapeake Energy Corp, said it has been voluntarily disclosing its information on chemicals for nearly a year on all its wells on public or private lands on a web site called www.fracfocus.com .

Jared Polis, a Democratic U.S. Representative from Colorado praised the move to toughen regulations.

"It's essential to disclose fracking chemicals anywhere they're used in order to protect the public's health in populated areas where those chemicals are most likely to affect the our air, water and health," he said.

Provisions that better monitor wells before during and after drilling, will allow "doctors and regulators alike to trace problems back to their source," he said.