EPA regulators announced the first set of rules for the quickly spreading drilling technique called fracking, or hydraulic fracturing, which uses a combination of water, sand, and chemicals to fracture rock layers. The process is used to release petroleum, natural gas, and other emissions. The extra emissions are what the EPA regulations address, according to The Wall Street Journal.
The rules would require drillers to capture the emissions that are released, and also allow them to sell it, though they won't be enforced until 2015. The EPA estimated that the industry might be able to save between $11 and $19 million per year, according to MarketWatch.
Administrator Lisa Jackson said, "By ensuring the capture of gases that were previously released to pollute our air and threaten our climate, these updated standards will not only protect our health, but also lead to more product for fuel suppliers to bring to market."
The oil and gas industry responded to the EPA, claiming that controls on wells with low amounts of volatile organic compounds from drilling emissions would not be cost effective. American Petroleum Institute president and CEO Jack Gerard said that those controls should only be placed on wells that have a gas stream that is 10% or more of volatile organic compounds.
Meanwhile, some smaller private companies have been developing more environmentally friendly ways of fracking that do a better job of maintaining emissions.
Business section: Investing ideas
The new rules might make the fracking process more difficult for drillers, but the possibility of selling the emissions could help reduce the costs. Below is a list of oil and gas drilling and exploration companies that are more profitable than their peers. Do you think they can take advantage of the delay to overcome the rules?
List sorted by market cap. (Click here to access free, interactive tools to analyze these ideas.)
2. Patterson-UTI Energy
3. Unit Corp.
4. Rex Energy
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Danny Guttridge does not own any of the shares mentioned above. Profitability data sourced from Fidelity. The Motley Fool owns shares of Ensco. Motley Fool newsletter services have recommended buying shares of Unit. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.