A congressional bill introduced Tuesday threatens the technique that helped spur the domestic natural gas boom in the past few years, according to Chesapeake Energy Corp. and Southwestern Energy Co.

Hydraulic fracturing would no longer be exempt from the Safe Drinking Water Act under a bill introduced by Reps. Diana DeGette and Jared Polis, both D-Colo., and Maurice Hinchey, D-N.Y. Companion legislation in the Senate was introduced by Sens. Robert Casey, D- Pa., and Charles Schumer, D-N.Y.

The drilling method, which pumps 1 million gallons of water, 50,000 pounds of sand and chemicals into the ground at high pressure to fracture rock, would be in the U.S. Environmental Protection Agency's jurisdiction should the bill pass.

Production using hydraulic fracturing would almost come to a stop as the industry waits for the EPA to develop a system to handle millions of well permits, said Chris Tucker, a spokesman for Energy In Depth, a Washington, D.C.-based energy coalition.

"It's over until the EPA puts the process in place to even accept a permit, let alone issue one," Tucker said.

The U.S. is expected to produce 21.2 trillion cubic feet of natural gas this year, according to the Energy Information Administration. That will rise by another 4 trillion cubic feet by 2030, from the development of gas from shale-rock formations thousands of feet below the surface.

Passage of the bill would mean drilling for so-called unconventional gas may plummet as much as 50 percent, according to a January study by the Department of Energy's Office of Fossil Energy. The bill would also be partly responsible for an annual 245 billion- cubic-foot drop in production, according to Energy In Depth.

Legislative efforts to make permitting for hydraulic fracturing or "fraccing" more stringent would have "an adverse effect" on operations, Oklahoma City-based Chesapeake said in a public filing.

"We use a lot of water in whatever we do," Southwestern CEO Steve Mueller said June 1 at a conference hosted by RBC Capital Markets. "From our perspective at our company, that's one of the biggest issues out there, to make sure somebody in Washington doesn't decide how you frac a well."

But a contrasting view of the bill's potential effects was offered by Jen Snyder, an at energy researcher.

Hydraulic fracturing is "relatively far below the drinking-water level," Snyder said in a telephone interview. "Even if we do move toward federal regulation of fraccing, it's not going to really kill shale-gas development and hydraulic fraccing.

"Our expectation is that if we did move to get rid of the exemption, it would probably in the short term slow things down a little bit and add some costs." SUBHEAD: Hydraulic fracturing would be regulated by EPA.

Originally published by DAVID WETHE Bloomberg News.

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