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Fracking Gag Rule Part I: Trade Secret?

Fracking Gag Rule Part I: Trade Secret?

I was in the middle of writing a column about the unique benefits and properties of fertilizer made from seaweed when I got distracted by the North Carolina General Assembly. A Republican-led senate committee has proposed to make it a felony for a citizen to disclose the names of the chemicals used by drilling companies in the hydraulic fracturing (“fracking”) process. The purported rationale is that drilling companies claim that the mixtures of chemicals they use are confidential trade secrets. As I will outline below, this claim borders on the absurd.

I have written about fracking several times in the past. For a thorough review of the technology and potential environmental risks please read my previous column, To Frack or not to Frack. For the purposes of this column, here is a very brief summary of fracking. When companies drill for oil or gas, everything is much easier if the deposits are contained in underground rock structures which are relatively porous. The porosity makes it easy for the oil and gas to move from place to place and thus to be extracted to the surface. As time has passed in the United States and around the world, oil and gas deposits contained in porous rock formations have been significantly depleted and drilling companies have started to exploit deposits which are present in low-porosity formations. To extract the oil and gas from these low-porosity rocks, the rocks must first be broken by fracking.

Fracking involves first drilling a hole straight down to the depth where the oil and/or gas deposits reside and then drilling horizontally through the non-porous rocks. Next, millions of gallons of a mixture of water, sand, and chemicals are pumped into the well. Since the temperature below ground is much higher than the surface, the water expands, which creates incredibly high pressures which then fractures the rock. The sand stays within the rock formation to help keep the smaller fissures created in the fracking process open. About 40% of the water and chemicals used in the process are pumped back out to the surface, while the other 60% remain underground.

The chemicals used in the fracking process have several purposes. A partial list includes:
• preventing the sand from clumping together too soon or too tightly,
• reducing the viscosity of the mixture so that it will flow through small cracks,
• preventing corrosion of the metal pipes used in the well, and
• killing bacteria in the water.

Many of the chemicals used in fracking are not soluble in pure water. If these chemicals can’t be dissolved or at least suspended in the water, the fracking process would not work. Therefore, in order to stabilize the chemicals in the water, it is necessary to add some hydrocarbons to the mixture as a co-solvent. Many of the issues and controversies surrounding the environmental risks of fracking are related to the hydrocarbon co-solvent.

The hydrocarbon co-solvent which is typically used is called petroleum distillate. Without going into a lengthy explanation of how an oil refinery works, petroleum distillate consists of a mixture of small to medium size hydrocarbons which were either present in the oil when it was extracted from the ground or created by “cracking” larger hydrocarbons into smaller ones during the oil refining process. Gasoline, kerosene, and diesel are all examples of petroleum distillates. Petroleum distillates generally contain hundreds of different types of hydrocarbon molecules, including known carcinogens such as benzene.

If you are running an oil refinery and want to maximize profits, you operate the equipment so that you manage to sell most of your petroleum distillate as gasoline, kerosene, or diesel. However, because of the nature of petroleum as well as the limitations in the specifications for products like gasoline, the refinery will end up with some distillate left over, for which there is no good commercial outlet. The refinery may be able to sell a portion of these leftovers as paint thinner, but much of it is effectively just waste. It is this waste distillate which is being used across the country as the co-solvent hydrocarbon for the fracking process.

With that background in mind, let’s first examine the claim that the recipes for these mixtures of fracking chemicals used by the drilling companies represent valuable, proprietary trade secrets. Our first hint that this claim is suspect stems from the fact that the technology involved in suspending sand in water and keeping pipes from corroding is neither novel nor complicated. There is certainly some art in calibrating the concentrations of the chemicals to adjust to local geology, but no esoteric or novel science is involved.

Our second hint is that the drilling companies do not invent or own the recipes for the fracking chemicals themselves. Rather, they rely on the one of the four large U.S. oil field services companies – Schlumberger, Halliburton, Flour or Baker-Hughes – who dominate the market. To the extent that a rationale might exist for maintaining trade secrets on fracking chemicals, it would presumably stem from protecting these four companies from one another. Given that all of these companies have been working on the same projects in the same places for decades, they already know exactly what each other are doing. Therefore, the suggestion that a citizen of North Carolina could cause financial harm to Halliburton by disclosing which anti-corrosive chemicals it is using does not pass the smell test.

So if Halliburton and the other companies don’t really need this to be protected by the North Carolina General Assembly, what is the real purpose of this proposed gag rule? I will give you my thoughts on that next week in Part II of this series. The week after in Part III, I will conclude the series by addressing the fate of the 40% of the water and chemicals which are pumped back up to the surface during the fracking process. It seems that the seaweed column will just have to wait.

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