Chances are you've never heard of Pavillion, Wyo.
Little more than a blip on a map of the Great Plains, the town of 242 residents in Wyoming's Fremont County stands on the front line in the national debate over the gas-drilling method known as hydraulic fracturing, or fracking.
Much is at stake for the U.S. oil and natural gas industries as they await the outcome of a regulatory battle between the federal Environmental Protection Agency and fracking proponents.
In December, the EPA released a draft study that tentatively linked groundwater contamination in Pavillion with fracking, a drilling technique that blasts apart underground rock formations with millions of gallons of water, chemicals and sand to dislodge pockets of natural gas.
The study, which has proven controversial due to disputes between supporters and critics, was the first time a science-backed connection was made. Critics had already been vehement in alleging that the drilling industry tainted underground water in Pennsylvania and elsewhere through well-fracking.
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The controversy started after Canadian energy company EnCana Corp. (NYSE: ECA) started drilling for natural gas several miles outside of town, said John Fenton, chairman of Pavillion Area Concerned Citizens, which is trying to hold the company accountable.
[The water] will put sores on your head, Fenton said in an earlier interview with the International Business Times. I still think it's unsafe.
The EPA found traces of glycols, methane and other unidentified chemicals in two monitoring wells the agency dug for the purpose of investigating pollution claims.
Industry Balks At Study's Methods
The EPA data has been questioned by the industry, which asserts that the agency is confusing contamination with naturally occurring gas.
Erik Milito, director of upstream and industry operations for the American Petroleum Institute, the industry's biggest trade group, said this week that the study represents bad policy. It acts as a deterrent to the gas industry's development, as companies wait to see how the EPA will rule, he said.
The draft study on Pavillion has drawn considerable criticism.
EPA Administrator Lisa Jackson last May testified before Congress that hydraulic fracturing can affect aquifers, but she said she had no evidence that fracking itself causes water pollution.
In a college appearance last month, Jackson said she believes fracking can be carried out safely.
Fracking And Politics
The fracking debate and possible impact on groundwater comes in a period of soaring energy prices and a presidential election year. President Barack Obama has praised natural gas development, but the four Republican presidential candidates claim Obama hasn't done enough to promote domestic energy.
The EPA suspended its peer-review process of its study last week, pending results of further testing, which this time will include Wyoming's own environmental regulator and the U.S. Geological Survey.
It's pretty tough to portray EPA's decision to do another round of tests in Pavillion as anything but a clear concession that it goofed up the first time around, said Chris Tucker, a spokesman for Energy In Depth, a research arm of the Independent Petroleum Association of America.
It was an absolute mess. Hopefully this time around, EPA allows things like science and protocol to guide the process. That'd be nice, for a change, Tucker added.
Local residents and environmentalists are confident the new testing will affirm the EPA's original finding that suggest hydraulic fracturing contaminated groundwater.
If that's the case, the study will blemish fracking's track record, something industry players say has been clean since the method was introduced decades ago.
If the results are upheld, it will bring into very sharp focus the need for regulation of unconventional gas development, said Mark Brownstein, chief counsel of the Environmental Defense Fund's Energy Program.
Brownstein said he believes fracking can be done safely, but that the jury is out on whether companies are as safe as they could be.
States With Standards
The EDF lawyer doesn't think states still on the fence will base their final determinations on the EPA draft report, but they should be conscious of its presence.
Even now, the situation in Pavillion should make states double their efforts, Brownstein said regarding state regulations on fracking.
In New York, where state officials are debating whether to allow high-volume gas drilling, the Department of Environmental Conservation said the Pavillion report's results won't affect their decision.
EPA's draft findings are specific to Pavillion and point to poor well construction and hydraulic fracturing directly into and beneath drinking water supplies as the causes of the problem, DEC spokeswoman Emily DeSantis said.
If high-volume hydraulic fracturing is allowed to move forward in New York, it would be done in deeper formations where the natural gas exists and not within underground sources of drinking water, she said.
DeSantis said New York will enforce rigorous well design standards and at least 1,000 feet of separation between a fracking well site and the deepest source of water.
However, New York will continuously review new information on this form of natural gas extraction as it becomes available, DeSantis said.
The same goes for Texas, where hydraulic fracturing has been conducted for the past 60 years, said Lauren Willis, director of public affairs for Texas Railroad Commissioner David Porter.
The Texas Railroad Commission is the state's oil and natural gas regulator, and has been vocal in its criticism of the EPA report.
Willis said any new findings will have no effect on the state's approach to hydraulic fracturing, because the report deals with geology not seen where natural gas drilling takes place in Texas.
But the national dialogue surrounding hydraulic fracturing and natural gas development is heating up. The American Petroleum Institute blasted Obama for not doing enough to promote domestic energy sources.
This week, the Sierra Club urged the EPA to mandate tougher methane regulations and turned down $30 million in donations from Chesapeake Energy (NYSE: CHK), the No. 2 gas producer and self-proclaimed champion of natural gas, Bloomberg News reported.
Chesapeake Energy declined to comment for this story.
New York is contemplating a health impact study before fracking permits are issued. Maryland is contemplating having gas companies pay a per-acre fee to fund an impact study. Pennsylvania recently put in place a per-well fee, which will be recycled back into the communities affected by drilling.
Greg Ball, a conservative Republican state senator from suburban Brewster, about an hour's drive north of New York City, and a staunch fracking foe, has called on lawmakers to extend New York's de facto moratorium on permits. He says he is convinced fracking contaminated ground water in Bradford County, Pa., which borders New York.
Ball said he hopes the study in Pavillion will prompt legislators to review where they stand.
This is important proof of what we've already seen, Ball said, adding that he would encourage all legislators to take the time to visit a fracking field and see these impacts firsthand.
Another New York Republican, state Sen. Jack Martins of Long Island, expressed his dim view of the industry.
When it comes to hydro-fracking, my philosophy is simple: We can't let economics trump environmental safety, Martins wrote in early March regarding a proposed ban on treatment of fracking water in New York. I hope you'll agree that protecting our water supplies is job one and that this bill merits your support.
New York's environmental conservation commissioner, Joe Martens, hasn't yet issued a final decision.