Chesapeake Energy 2013 Annual Report Download - page 36

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Our ability to produce natural gas, oil and NGL economically and in commercial quantities could be
impaired if we are unable to acquire adequate supplies of water for our drilling operations or are unable to
dispose of or recycle the water we use economically and in an environmentally safe manner.
Development activities require the use of water. For example, the hydraulic fracturing process that we employ to
produce commercial quantities of natural gas and oil from many reservoirs requires the use and disposal of significant
quantities of water. In certain areas, there may be insufficient local aquifer capacity to provide a source of water for
drilling activities. Water must be obtained from other sources and transported to the drilling site. Our inability to secure
sufficient amounts of water, or to dispose of or recycle the water used in our operations, could adversely impact our
operations in certain areas. Moreover, the imposition of new environmental initiatives and regulations could include
restrictions on our ability to conduct certain operations such as hydraulic fracturing or disposal of waste, including, but
not limited to, produced water, drilling fluids and other materials associated with the exploration, development or
production of natural gas and oil.
Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in
increased costs and additional operating restrictions or delays.
Several states are considering adopting regulations that could impose more stringent permitting, public disclosure,
and/or well construction requirements on hydraulic fracturing operations. For example, Pennsylvania is currently
considering proposed regulations applicable to surface use at oil and gas well sites, including new secondary
containment requirements and an abandoned and orphaned well identification program that would require operators
to remediate any such wells that are damaged during current hydraulic fracturing operations. In addition to state laws,
some local municipalities have adopted or are considering adopting land use restrictions, such as city ordinances, that
may restrict or prohibit the performance of well drilling in general and/or hydraulic fracturing in particular. There are
also certain governmental reviews either underway or being proposed that focus on deep shale and other formation
completion and production practices, including hydraulic fracturing. Depending on the outcome of these studies, federal
and state legislatures and agencies may seek to further regulate such activities. Certain environmental and other
groups have also suggested that additional federal, state and local laws and regulations may be needed to more closely
regulate the hydraulic fracturing process.
We cannot predict whether additional federal, state or local laws or regulations applicable to hydraulic fracturing
will be enacted in the future and, if so, what actions any such laws or regulations would require or prohibit. If additional
levels of regulation or permitting requirements were imposed on hydraulic fracturing operations, our business and
operations could be subject to delays, increased operating and compliance costs and process prohibitions.
Federal regulatory initiatives relating to air emissions could result in increased costs and additional
operating restrictions or delays.
The EPA has published New Source Performance Standards (NSPS) and National Emissions Standards for
Hazardous Air Pollutants (NESHAP) that amended existing NSPS and NESHAP standards for oil and gas facilities
and created new NSPS standards for oil and gas production, transmission and distribution facilities. The EPA announced
in 2013 that it would reexamine and reissue these rules over the next three years. It has issued updated rules regarding
storage tanks, and additional rules are expected, but the outcome of this process remains uncertain. In addition, the
EPA has issued rules requiring monitoring and reporting of greenhouse gas emissions from petroleum and natural gas
systems. We, along with other industry groups, filed suit challenging certain provisions of these rules, but the outcome
of the challenge is uncertain and may impact our reporting obligations. The EPA is also conducting a review of the
National Ambient Air Quality Standards for ozone, which could result in more stringent air emissions standards
applicable to our operations. An expected completion date for that review is not currently known.
Federal regulatory initiatives relating to the protection of threatened or endangered species could result
in increased costs and additional operating restrictions or delays.
The designation of previously unidentified endangered or threatened species pursuant to the ESA in areas where
we intend to conduct construction activity could materially limit or delay our plans. For example, as a result of a settlement
reached in 2011, the U.S. Fish and Wildlife Service is required to make a determination on the listing of more than 250
species as endangered or threatened over the next several years. Some of these species are included in the list of
over 100 species that are currently proposed for listing as endangered or threatened species. In addition, the imposition
of seasonal restrictions on our construction or operational activities could materially limit or delay our plans.