Halliburton Company (HAL), Baker Hughes Incorporated (BHI): Another Fishing Expedition on Fracking

If the EPA won’t stop fracking, then maybe the Justice Department will step in and do the job for them.

CIDs require recipients to produce documents, respond to interrogatories, or provide sworn deposition testimony and are used by the government before litigation has actually commenced. The area Justice is investigating, pressure pumping, is the main step in the fracking process and involves injecting water, chemicals, and other fluids under high pressure into a well to fracture the rock formations trapping the oil and gas deposits.

Once the rock is fractured, proppants, typically sand or ceramic beads, are then used to prop open the fissures (hence their name) to allow the gas and oil to flow freely.

It has been the development of the hydraulic fracturing process that has created the natural gas boom we’re in the midst of. The U.S. is awash in natural gas and will soon become a major exporter through Cheniere Energy, Inc. (NYSEMKT:LNG)‘s Sabine Pass facility in Louisiana.

Environmentalists have opposed fracking, however, accusing the procedure of causing everything from groundwater contamination to flaming faucets and earthquakes. Spurred on by these activists, the EPA began conducting tests to prove it was fracking behind drinking water contamination, as the theory was that fracking fluids were seeping into the aquifers. Yet as Nuverra Environmental Solutions Inc (NYSE:NES) explained, these fluids are pumped into wells thousands of feet below the ground, far below the aquifers, and the fluids seep down, not up. Nuverra Environmental Solutions Inc (NYSE:NES) is one of the leading suppliers of water and fluids-management services used in fracking for the oil and gas industry.

The EPA injected tracer chemicals into the fluids that were pumped into the wells at around 10,000 feet below the surface and monitored them at the 5,000-foot level. To the chagrin of the agency and the environmentalists, they found nothing. The regulatory agency ultimately punted on its study, which was originally supposed to be peer-reviewed, turning responsibility for its completion over to state authorities and high-tailing it out of town.

The Energy Department, meanwhile, conducted its own tests and just concluded a landmark study determining that fracking isn’t responsible for contaminating groundwater supplies at all. As for the flaming faucets, it was a condition known in the area for years before drilling ever occurred there. Whether fracking causes earthquakes is still a matter of conjecture.