Environment is Key Element in New Report About Drilling
Pittsburgh Post-Gazette
24 July 2011
By Sean D. Hamill
At 137 pages and 96 separate recommendations, the governor's Marcellus
Shale Advisory Commission report released Friday after four months of
work has no single main point.
Though the disputatious proposals that came from the commission on
impact fees and forced pooling grabbed most of the initial attention,
to the industry and environmental groups, it was clear where the
emphasis lies.
"The meat of that report focuses on the environment and safety
recommendations," said Matt Pitzarella, spokesman for Range Resources,
the dominant Marcellus Shale driller in southwestern Pennsylvania and a
member of the commission.
Of the 96 recommendations in the report, 43 of them were in the section
titled Public Health, Safety & Environmental Protection.
The reasons for that are clear to both sides: While financial issues
like forced pooling and impact fees have been the hot potato for state
politicians, down in the townships and boroughs where drillers and
residents come into direct contact, it is the environmental and health
issues that dominate the conversation.
So, while there are some broad environmental-related recommendations
such as allowing drillers to "adopt" orphan gas wells, giving drillers
good Samaritan protections if they use acid mine drainage water in
fracking, and give the Pennsylvania Department of Environmental
Protection the power to impose civil fines on drillers, the majority of
those 43 recommendations deal with on-the-ground issues, including
proposals to:
• Require well operators to track and report on the transportation,
processing and treatment or disposal of their frack water -- the water,
chemical and sand mixture used to fracture and hold open the shale and
release the natural gas held within the rock;
• Expand a well operator's presumed liability for tainting drinking
water at a neighbor's well, from within 1,000 feet to within 2,500
feet, and the time that it can detected from six months of completion
of a well to one year;
• Increase the setback standard for wells that now says a driller can
place a wellbore a minimum of 100 feet from a stream, spring or body of
water, to 300 feet away, and require that there can be no
"disturbance," like a well pad, within 100 feet of a stream or body of
water.
It is no mistake that half of the recommendations were environmentally
related, said John Walliser, vice president for legal and governmental
affairs for the Pennsylvania Environmental Council, which was also part
of the commission's environmental working group.
"It's obviously to us the most pressing issue. And, in terms of policy,
it's where you can accomplish the most," he said.
More practically, said Jeffrey Kupfer, a senior adviser for government
affairs for Chevron, who was on the environmental working group: "Part
of what we were doing was looking at an Oil & Gas Act passed in
1984 (before the Marcellus Shale was tapped) and not altered much
since. So we thought there were a decent amount of provisions in the
law that were ripe for reworking."
It's not clear how many of the 43 recommendations could eventually be
proposed as updated or new additions to the Oil & Gas Act, though
some of them clearly can only work as a new part of the act, not as
DEP-issued rules or regulations, which do not take an act of the state
Legislature.
Some of the proposals that require a vote by the Legislature include
increasing the setbacks, increasing bond requirements for drillers
(from $2,500 per well and a $25,000 blanket bond for each driller to
$10,000 per well and a blanket bond up to $250,000), and increasing the
possible civil penalties (from a general fine of $25,000 to $50,000,
and a daily penalty of $1,000 per day to $2,000).
Jan Jarrett, CEO and president of PennFuture, which was not a member of
the commission, said the bond requirement recommendation, in
particular, "is wholly inadequate."
The blanket bond amount is supposed to be money the state could use to,
for example, plug wells if a company walked away from them and didn't
do it itself.
"It costs up to $60,000 to plug a well," Ms. Jarrett pointed out. "The
$250,000 blanket bond would only cover the cost of about four wells."
John Hanger, the state's former DEP secretary who oversaw creation of
most of the rules and regulations that now govern the Marcellus Shale
industry, said beyond shortcomings like the too-low bond
recommendations, he noticed some glaring omissions in the report.
The report "doesn't seem to say anything about air quality emissions,"
he said. "Nitrous oxide emissions [that come from Marcellus production]
is a major issue that the state and federal governments need to come to
grips with."
The report is silent on proposing, for example, that the industry adopt
some existing technology that could prevent nitrous oxide emissions, he
said.
Despite some omissions, members of the working group that recommended
the proposals to the full advisory commission said the list was drawn
up by consensus at five official meetings and hundreds of hours of
discussions in person, via phone calls and emails outside of those
formal sitdowns.
"It was the exact policy discussion you hoped would happen, where at
the end of the day no one was perfectly happy with the result," said
Matthew J. Erhart, Pennsylvania executive director for the Chesapeake
Bay Foundation, and a member of the working group.
He said most of the environmental recommendations in the report began
with a proposal from one of the four environmental organizations
involved in the working group -- which the industry "let us throw out
as a first marker and then they'd respond," he said.
Still, Mr. Erhart said, "there are also pieces in there that didn't
have the outcomes we wanted."
Some of the provisions that irked environmentalists included:
• A provision in a different part of the report that the state's oil
and gas fund -- which takes in revenue from mineral leases and royalty
payments on state-owned land -- could be tapped for non-environmental
or conservation-related state projects;
• Instead of a prohibition on further disturbances and leases in state
forests, the final report includes a mere suggestion that the state
should try to "minimize" impacts there;
• A hope to direct some of the impact fee money to the state's Growing
Greener Fund and Environmental Stewardship Fund went nowhere.
Industry representatives would not cite specific provisions they wanted
but that did not get into the report.
But Mr. Kupfer said: "I wouldn't look at this report and say, 'Industry
provided a wish list and they all got into the document.' A lot of
things in here got in because of the environmental groups."
That shouldn't be too surprising, said Mr. Erhart, because "the
industry guys want to have a more defensible position" and so they
found a lot of common ground in environmental areas.
If all the recommendations were to become law, or at least become a new
state regulation or rule that doesn't require legislative approval,
would they help? The consensus is that they would.
"If a lot of these were adopted, it would improve regulation of the
industry," said Ms. Jarrett.
But will they be adopted?
That answer is less clear.
Mr. Walliser's organization, PEC, is hoping they will and has called
for Gov. Tom Corbett to call for a special legislative session to bring
legislators back early to rewrite the Oil & Gas act.
He believes about 30 of the environmental-related provisions could
become changes to the Oil & Gas Act, so, "let's get those done and
let's get them implemented and start enforcing them."
Mr. Kupfer wasn't sure a special legislative session was necessary.
Ms. Jarrett believes many of the recommendations will result in change,
but, "we'll see what comes out in the end."
Sean D. Hamill: shamill@post-gazette.com or 412-263-2579.