Insurance requirement for fracking wells proposed

Drillers would be required to have liability insurance for injection and disposal wells under a bill heard by the Natural Resources Committee Feb. 17.

Under LB1070, introduced by Sen. Ken Haar of Malcolm, the Nebraska Oil and Gas Conservation Commission would require proof of liability insurance of at least $1 million before issuing a permit for the drilling of an injection or recovery well. A commercial disposal facility that disposes of more than 500 barrels of injection well wastewater a day would be required to have at least $5 million in liability insurance.

The bill also would prohibit injection wells in areas where the drinking water aquifer begins less than 50 feet below ground or if the saturated depth of the aquifer extends more than 100 feet below ground.

Haar said the bill is intended to ensure that Nebraska taxpayers and landowners do not have to pay for potential damage caused by spills of wastewater generated by hydraulic fracturing, commonly called fracking. He said several states, including Colorado, Ohio and Texas, require operators to have at least $1 million in liability insurance. Between 2009 and 2014 more than 180 million gallons of wastewater spilled when pipes ruptured or storage tanks overflowed, Haar said.

“The bottom line is that the people who are in business to make a profit from wastewater disposal should have sufficient insurance coverage so that landowners or taxpayers are not left holding the bag,” he said.

Janece Mollhoff, speaking on behalf of the League of Women Voters of Nebraska, testified in support of the bill. She said wastewater from fracking could leak into the Ogallala aquifer, threatening public health and the state’s agricultural industry.

“Leaking fracking wastewater could be catastrophic and the liability should be fully on the industry and not the state or federal disaster plan,” she said. “Setting standards for a minimum level of liability insurance for both the drilling and disposal of wastewater is prudent for the protection of our most valuable natural resource.”

Phil Kriz, a petroleum engineer for Kimball-based Evertson Companies, spoke against the bill. He said that injection wells are mechanically safe and more than 600 injection wells in the state’s panhandle have operated without problems for years. He said the proposed restrictions on injection wells in locations where the aquifer is near the surface are too broad.

“The way this is written I would be out of business,” he said. “This precludes almost the entire panhandle of Nebraska.”

Bill Sydow, director of the Nebraska Oil and Gas Conservation Commission, testified in a neutral capacity. He said the proposed restrictions would limit oil and gas production in much of the state. Sydow added that most of the 150 well operators in Nebraska already have liability insurance and that it should be left to businesses to determine the amount of insurance they carry.

The committee took no immediate action on the bill.