ABOUT HALLIBURTON

September 7, 2003 (Houston Chronicle) -- Tucked inside an 800-page energy bill making its way through Congress is a short section that would exempt from federal regulation a lucrative gas-drilling process perfected by Houston-based Halliburton, the energy company Vice President Dick Cheney once ran.

The exemption, while it likely wouldn't benefit Cheney financially, is testament to the support that the oil and gas industry enjoys in the White House and the Republican-controlled Congress.

The process, widely used by Halliburton and other energy companies across the West, injects diesel fuel, hydrochloric acid or other additives into the ground to help boost production.

Environmentalists say that could put drinking water at risk, and they want federal officials to have regulatory power to prevent problems and step in if water is contaminated. Alabama residents claim the technique, called hydraulic fracturing, fouled drinking-water wells and unleashed a stench in homes.

"Waiting for damage to occur was not the intent of the Safe Drinking Water Act," said David Ludder of the Legal Environmental Assistance Foundation. "(State) agencies have an interest in not finding contamination. They're interested in production, not protecting drinking water."

Ludder in 1997 persuaded a federal appeals court to require the fluids used for hydraulic fracturing in Alabama to meet federal drinking-water standards.

Industry officials want to prevent the spread of federal regulation to places such as the Rocky Mountain West, a key region in President Bush's energy plan because 85 percent of the growth in coal-bed methane gas production is expected to take place there in the next 10 years.

The officials say there's no proof that hydraulic fracturing endangers drinking water, and that regulation would drive up the price of gas for no good reason.

Officials at Halliburton say regulation is a threat to profits. The company fought regulation of hydraulic fracturing when Cheney was chief executive.

After Cheney took office and chaired the White House energy task force, his final report touted hydraulic fracturing as a way to deliver more clean-burning natural gas to the nation, although he did not ask Congress for an exemption. It left out any potential environmental hazards.

"To the best of our knowledge, there have been no documented cases of environmental damage caused by hydraulic fracturing - nada, zip, zero. That's a pretty good track record," said Ken Johnson, spokesman for Rep. Billy Tauzin, a Louisiana Republican who chairs the House Energy and Commerce Committee and who wants to eliminate federal regulation of hydraulic fracturing.

But Steve Weiss of the Center for Responsive Politics, a nonpartisan watchdog group, said Halliburton and the oil and gas industry are enjoying the benefits of a Republican White House and Congress, to which they gave significant financial contributions.

"Campaign contributions are given with the intent of getting favors large and small," Weiss said. "The industry has had many of its issues addressed."

Cheney has sold his holdings in Halliburton, the world's biggest practitioner of hydraulic fracturing, but still receives some fixed financial payments from the company. Analysts say the process represents about 5 percent of the company's $ 12 billion total business.

Industry advocates point to an Environmental Protection Agency study that concluded hydraulic fracturing is unlikely to pollute drinking water.

"Those findings could not be more clear," said William Whitsit, president of the Domestic Petroleum Council. "EPA strongly stated that after looking at all incidents, there wasn't a single one that could be attributed to hydraulic fracturing."

That study, a two-year, peer-reviewed inquiry, was opposed at first by the oil and gas industry. Now the industry uses the study, still in draft stage and being refined, to argue for total exemption.

But the study also recommends that the industry stop pumping diesel fuel into the ground during the process, and it notes that some companies drilled new water wells or provided drinking water to homeowners who said their water was contaminated.

Those red flags, environmentalists say, indicate hydraulic fracturing might be dangerous.

Industry officials say the fracturing fluids are no more dangerous than ice cream, because the same thickening agent - guar gum - is used in both.

In the fracturing process, guar gum often is mixed with diesel fuel because it costs less than mixing it with water.

The fluid also can contain hazardous bacteria killers and the chemical thiourea, which can cause goiter and liver, blood and respiratory damage.