Hydraulic fracturing, also known as "fracking," has gained widespread use to unlock huge natural gas reserves, but the technique also has raised concerns about environmental damage.
EPA said the $1.9 million study, expected to be completed by 2012, will look at the effect on groundwater, surface water, human health and the environment in general.
Hydraulic fracturing injects millions of gallons of fluids under high pressure into a well drilled into rock formations to enlarge cracks and release oil or gas. Sand is pumped into the fractures to keep them from closing.
Recently fracking has been used to tap natural gas stored in shale formations; most notably the Barnett Shale in west Texas, the Haynesville Shale in north Louisiana, the Fayetteville Shale in northern Arkansas, Woodford Shale in southern Oklahoma and the Marcellus Shale beneath New York, Pennsylvania, West Virginia and Ohio.
According to the Energy Information Administration, there are 1,744 trillion cubic feet of technically recoverable natural gas in the U.S., or enough to supply the country for 90 years at current rates of production. Much of it can only be recovered with fracking wells, according to the industry.
Concern is mounting that unregulated fracking will taint drinking water, siphon off too much surface material, deplete aquifers and produce briny wastewater that can kill fish.
A 2004 EPA study found no evidence that fracking threatens drinking water, but critics argued that the report was flawed and last year Congress asked EPA for a new study.
U.S. Rep. Maurice Hinchey, D-N.Y., has pushed Congress to regulate the practice. He said the 2004 EPA study was "marred by biased data influenced by senior officials" in the Bush administration. A spokesman said he was referring to former Vice President Dick Cheney.
A provision in the 2005 energy bill prevented EPA from regulating fracking. Houston-based oilfield giant Halliburton Co. pioneered the technique. The 2005 provision was called the "Halliburton loophole" by foes.
"You take 7 million gallons of water (per well) out of an aquifer in a little area, you're not going to get recovery for who knows how long," said Jimmy Couvillion, a landowner in Keithville, La. He wants more oversight of drillers scrambling to tap the Haynesville field.
Wilma Subra, a Louisiana chemist and environmentalist who's investigated shale field exploration nationwide, said leaks and spills were a threat and drillers should divulge what chemicals they're using. They're not required to do that now.
Arthur E. Berman, a Houston-based petroleum geologist who's questioned the headlong rush to open up shale fields on economic grounds, said the environmental risks have been overblown.
"We have been doing hydraulic fracturing for 50, 60 years and there is no evidence whatsoever that there has been ground or surface water contamination," he said.
He said only "point-5 percent" of what goes into a well were chemicals, and those were mostly "common chemicals that you would put in your swimming pool or hot tub, something like chlorine."
"Having said that, the companies should come clean and reveal the content (of the chemicals they use)," he said. "We're dealing with people's fears, and that's justified."
He said water conservation was a bigger issue because wells require as much as 10 million gallons of water.
Drillers said leaks are rare because a well is covered in a steel casing capped at both ends with cement.
"Fracturing has a long and clear record of safely leveraging otherwise unreachable homegrown, clean-burning, job-creating energy reserves," said Lee Fuller, the head of Energy In Depth, a Washington-based coalition of natural gas and oil producers.
In response to environmental concerns, Fuller said the industry has been drawing up standards for well casings and how to best handle the fluids in wells. He said efforts in Congress to regulate fracking should be halted until the EPA study was completed.
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