Last summer, I asked whether investors should fear the FRAC Act. That's the piece of legislation seeking to subject the oil industry practice of hydraulic fracturing to federal oversight. This duty currently falls to the states.
Investors in companies like Range Resources
There are two frac-related news items that I want to bring to your attention. The first is that the EPA has launched a comprehensive, peer-reviewed study "to investigate the potential adverse impact that hydraulic fracturing may have on water quality and public health." I am hopeful that this study will put some of the more alarmist concerns to bed, while perhaps cracking the whip on some chemical compounds that should be banned from frac fluids.
Speaking of which, the race by oil services companies to develop "green" -- i.e. nontoxic -- frac chemicals is well under way. A Bloomberg piece today highlights some efforts by Halliburton
I remain confident that these companies can figure out ways around using the most offensive chemicals. The faster they implement these alternatives, the more likely they are to defuse opposition in frac battlegrounds like New York and Pennsylvania, and avoid unnecessary regulations. That should be a win-win for all stakeholders.