Marcellus Shale Well Violations Discrepancies
Pittsburgh Business Times
19 August 2011
By Anya Litvak
Since the state Department of Environmental Protection began tallying
Marcellus Shale violations, a wide gap between regions has been
obvious, making southwestern Pennsylvania operators seem more
environmentally responsible than the rest.
But it’s the department’s own record keeping, rather than companies’
virtues or vices, that accounts for much of the difference, a DEP team
has found.
Marcellus drilling has been concentrated in two regions of the state —
in southwestern counties, mainly Washington, Greene and Fayette, and in
northeastern ones, mainly Bradford, Tioga, Susquehanna and Lycoming.
According to a Business Times analysis, for the first half of this
year, top Marcellus operators received about 14 violations for each 100
wells drilled in southwestern Pennsylvania, while in the northeastern
part of the state, drillers were issued more than one violation per
well.
A violation can range from improperly filled out paperwork to a well
blowout or frac fluid spill, with a small fraction of citations
resulting in either fines or other penalties, such as temporary work
halts.
Over the past three and half years, for which data is available and
since Marcellus exploration has begun in earnest, southwestern
Pennsylvania wells have consistently averaged less than half the
violations per wells drilled as the rest of the state.
Such inconsistencies were the impetus behind DEP Secretary Michael
Krancer’s controversial order that all new violation notices must go
through him, an initiative canceled after a few weeks this spring,
according to the DEP.
Less publicly, Krancer convened a team of DEP personnel and executive
staff to examine potential causes for inconsistencies in violations,
said DEP spokesperson Katy Gresh.
“One of the things that they learned through their research is that
there are a lot more violations being written in one region over
others,” she said.
The team has identified two major drivers contributing to a higher
per-well violation count in the northeast. If a well site is found to
be in violation of more than one environmental law, inspectors in the
northeast are more likely to issue identical violations for each law
the company is violating, while southwestern DEP staff are likely to
record that as one breach.
Similarly, southwestern inspectors tend to interpret a spill or other
impact at a well site as one violation, regardless of how many wells
have been drilled from the same well pad. In the northeastern part of
the state, inspectors are issuing as many violations as there are holes
in the ground at each well site.
That practice can be skewing the numbers in favor of southwestern
Pennsylvania and making it difficult to parse the safest operators from
the less safety-conscious ones, as, currently, only a few companies
have significant operations in both drilling regions. For those that do
— Range Resources and EQT Corp. — the difference in violations is
marked.
During the first six months of this year, Range’s southwestern
Pennsylvania operations are averaging about two violations per 10 wells
drilled. In Lycoming County, the operator has received about 12
violations for each 10 drilled wells.
Range spokesman Matt Pitzarella said company analysts, “take a deep
enough dive into the facts to understand the differences, and I believe
landowners are smart enough to see it with their own eyes.”
“However, it’s an issue and one that we’re pleased the secretary is
looking at,” he said.
EQT’s per-well violation rate this year varies between 7 percent in the
southwestern region and 80 percent in the northeast.
ASSESSING SAFETY
Such swings in safety indicators make it difficult for industry
observers and landowners evaluating a proposed contract with a driller
to perform accurate due diligence on the company. It also makes it
harder to spot bad actors.
Violations data is just one part of assessing the safety profile of a
Marcellus operator, said Jan Jarrett, president and CEO of PennFuture,
an environmental advocacy group. Whether a firm has an executive-level
officer devoted to environmental safety is another. For an in-depth
look at each company’s compliance record, Jarrett recommends doing a
file review at the DEP district office, where the agency keeps detailed
records of correspondences about each violation.
According to Gresh, “the most important thing to point out is (the
discrepancies don’t) have any effect on enforcement. The difference is
how these violations are being captured.”
Indeed, enforcement and fines are much more evenly distributed across
the regions, according to DEP data.
“The nice thing is, as far as the information that we’re getting,
everything is reported. It just might be reported in the notes section
as opposed to being reported in the actual violation,” Gresh said.
She said the team’s findings have gone to Krancer for evaluation, but
no action or directive has been issued yet to streamline the violations
process.
Anya Litvak covers energy, transportation, gaming and accounting.
Contact her at
alitvak@bizjournals.com or (412) 208-3824.