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Schlumberger sees new gas drilling regulation

San Francisco, October 24, 2009

Schlumberger, the world's largest oilfield services company, expects new US regulations for a key natural gas drilling process because of public fears about water pollution, its CEO said.

Asked by an analyst why Schlumberger supported disclosure of "hydrofacturing" fluid ingredients, Chief Executive Andrew Gould said he recognized the concerns of regulators and the public and wanted to be involved in the discussions early on.

"I'm pretty sure that there will be some form of new regulation in order to satisfy the authorities and the public's desire to know that what is being done is safe," Gould said on a conference call on Friday to discuss third-quarter earnings.

"And that seems to me a perfectly natural thing to want."

People in gas-drilling areas say their well water has become discolored or foul-smelling, killing pets and farm animals who drink it and causing illness among children.

Last month, two top US natural gas producers called on the industry to release data about the chemicals they use in the fast-growing Marcellus shale development to counter fears it was polluting water supplies.

Another leader in hydrofracturing, Halliburton, has said that 99 per cent of the fluid is made up of sand and water, while the remaining chemicals complied with state and federal regulations.

The technology enables drillers to tap into rock deposits and release natural gas by injecting water and chemicals. The Marcellus is only one of the large US shale formations that the industry expects will supply huge amounts of natural gas.

Gould said it was no accident that shale gas was first exploited in Texas and Louisiana because of extensive oilfield service infrastructure in the region, as well as the regulatory regime compared with other parts of the world.

"Pakistan has a huge amount of shale gas," Gould said by way of example. "But, you know, there is not the infrastructure in Pakistan to exploit it today."

He also pointed out that the number of wells dotted around the greater Dallas area, which includes part of the Barnett shale, would simply never be allowed in a place like Germany.

Gould said he expected to see more shale gas drilling in other parts of the world, but it would take longer than many people expected and would be more expensive than in the US. – Reuters




Tags: Water | pollution | Schlumberger | Regulations | San Francisco | oil drilling |

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