BP Fights to Limit Controls on Shale Gas Drilling

BP is lobbying on Capitol Hill against a federal US environmental agency being given jurisdiction over the use of a controversial method of extracting gas from shale deposits, ahead of an important meeting this week.

The London-based oil company wants decisions on drilling techniques such as hydraulic fracturing - which uses high-pressure liquids to force fissures - to be taken at state level, rather than being left to the Environmental Protection Agency (EPA), whose specialist committee meets on Wednesday to discuss its concerns.

BP is also opposed to the public disclosure of the chemicals used in fracturing, on the basis that the information is commercially sensitive - something that will anger environmentalists, who are highly suspicious of the process.

Although BP was unable to comment, the New York Times published a "discussion draft" said to have been produced by BP which says: "States with existing oil and gas regulatory programmes have the authority to and are best situated to continue regulating hydraulic fracturing processes and procedures."

Tony Hayward, the chief executive of BP, said in a recent speech that abundant shale gas had the potential to transform the US's dependence on foreign gas imports.

The shale gas deposits have been known about for decades but recent technological developments have opened the way for supplies to be exploited in North America - and potentially in Europe and Asia.

Environmental groups fear that the chemicals used in fracturing are highly toxic and are worried about them filtering into reservoirs.

Oil companies have found significant shale deposits in New York state and Pennsylvania, close to densely populated areas. Requests to drill have met opposition from green groups, as well as from local politicians.

But the EPA is seen as an even tougher potential opponent. The environmental engineering committee of the agency's science advisory board is scheduled to meet on 7 and 8 April to evaluate "fracking", as it is known.

The EPA is well known to BP, having recently challenged a permit given by the state of Indiana allowing the company to expand its Whiting refinery for use as a centre for treating crude from the controversial Canadian tar sands.

BP was once seen as one of the most environmentally conscious oil companies but that reputation is now under strain as it becomes a vocal supporter of and active participant in the carbon-intensive tar sands extraction in Canada.

The green rhetoric of its former chief executive Lord Browne has been toned down since Hayward took the reins three years ago, although the company retains the use of the slogan "Beyond petroleum" - adopted under Browne's leadership - for some of its activities.

Hayward has promised to boost annual profits at BP by $3bn (PS2bn) over the next two or three years and committed the company to increasing production by 1%-2% a year until 2015.

BP will face further questions about its attitude to the environment when directors appear before shareholders at the annual meeting next week.