* EPA: pollution likely from fluids released to aquifer
* Chemicals found in aquifer include benzene
* Wyoming fracking is shallower than in Pennsylvania
* Owner of field Encana denies polluting aquifer
* Republican Inhofe: report is "premature"
(Adds Encana, Inhofe, analysts comments, details on report)
By Timothy Gardner
WASHINGTON, Dec 8 Drilling fluids from a company employing a technique known as "fracking" likely polluted an aquifer in Wyoming, environmental regulators said in a draft report that could blow apart industry claims the process has never led to water contamination.
The U.S. Environmental Protection Agency's investigation into the polluted aquifer could have wide implications on a booming industry that has promoted hydraulic fracturing as way to dramatically wean the United States off gas and oil imports.
The agency said "the best explanation" for the pollution in the wells in Pavillion, Wyoming was that fluids from hydraulic fracturing contaminated the aquifer.
The EPA, however, noted that Wyoming was much more vulnerable to water contamination from fracking chemicals than other areas because drilling there often takes place much closer to the surface than in other states.
In the Marcellus shale in Pennsylvania, which is also experiencing a drilling boom, drilling occurs much farther below water sources, which could make pollution from fluids harder to migrate into aquifers.
The EPA said the pollution in Wyoming, which it detected after drilling monitoring wells, included benzene, which can cause cancer, alcohols and glycols.
"The presence of these compounds is consistent with migration from areas of gas production," it said.
Doug Hock, a spokesman for EnCana Corp (ECA.TO) that owns the field in Wyoming slammed the report. "The synthetic chemicals could just have easily come from contamination when the EPA did their sampling, or from how they constructed their monitoring wells."
Some residents near Pavillion have been receiving bottled water paid for by Encana, a Canadian energy company, since August 2010 after they complained their water tasted and smelled odd.
REPORT "PREMATURE" REPUBLICAN SAYS
In fracking, drillers blast large amounts of water, chemicals and sand deep underground to crack the rock so the hydrocarbons can be released.
Industry groups have said in the decades that fracking has been developed, it has never polluted water supplies, because the drilling occurs far below the water sources such as aquifers.
Environmentalists have long protested that fracking pollutes water with chemicals from the fluids and as methane bubbles up into wells. The process also releases air pollution, they say.
Amy Mall, a fracking expert at the Natural Resources Defense Council, said the report "underscores the urgent need to get federal rules and safeguards on the books to help protect all Americans from the dangers of fracking.
Republicans in Congress have been urging the Obama administration to back off federal regulation of fracking because the industry is creating jobs and securing the country's energy future.
Senator Jim Inhofe, the ranking member on the Senate environment committee, who spoke with EPA Administrator Lisa Jackson on Thursday, said "EPA's conclusions are not based on sound science but rather on political science."
He called the findings "premature" since the report has not been subject to peer-review.
Kevin Book, an analyst at ClearView Energy Partners, agreed that the EPA's report was not yet conclusive.
"The EPA has made the circumstantial case that fracking led to the pollution, but they stopped short of stating that definitely," Book said.
The EPA said it issued the draft report precisely to seek peer review of the research. The agency opened it up to a 45-day public comment period and a 30-day peer review.
The EPA's authority over fracking is limited by a 2005 energy law that mostly exempted the practice from federal oversight under the Safe Drinking Water Act.
In recent months, though, the EPA has moved ahead with regulations of those areas shale gas production that do fall under its purview, including waste water and air emissions. (Additional reporting by Edward McAllister in New York; and Roberta Rampton, Ayesha Rascoe, in Washington; editing by Bob Burgdorfer and Marguerita Choy)