Shale Driller Chesapeake Appalachia is Fined by State DEP for Major Violations

Pittsburgh Post-Gazette
10 February 2012
By Sean D. Hamill and Laura Olson,

HARRISBURG -- The state Department of Environmental Protection Thursday said it has fined gas driller Chesapeake Appalachia a total of $565,000 for major violations at three Marcellus Shale sites that occurred since 2010, including a well blowout in Bradford County last April that took five days to secure.

"The governor and I expect the highest standards to be met, and when they are not, we take strong enforcement action," DEP Secretary Mike Krancer said in a statement. "We will continue to be vigilant on that front. The protection of the state's water is paramount."

Chesapeake said it has identified ways to improve its operations as a result of the incident.

"Chesapeake worked proactively with all appropriate regulatory agencies throughout the response and analysis of these incidents to achieve compliance, identify and implement operational improvements and ensure proper resolution," company spokesman Brian Grove said in a statement.

The fine announcement comes a day after Pennsylvania state legislators approved a significant increase to penalties for environmental violations and boosted the department's authority for revoking permits.

In documents signed Feb. 3, Chesapeake was fined $160,000 for encroaching on a wetland at a well site in Bradford County in October 2010, and $215,000 for allowing a sedimentation discharge into a stream in Potter County last October that damaged the filters in Galeton borough's water supply plant.

Chesapeake also paid $190,000 to the borough to repair and upgrade the plant.

The fine for the most high-profile incident of the three -- last April's well blowout in Bradford County -- was $190,000. Of that amount, $67,000 was to reimburse DEP for its costs. That's less than half of the $400,000 fine DEP's staff first proposed for the incident last year.

The reason for cutting the fine by more than half, according to DEP spokesman Kevin Sunday, is that initial testing indicated that three homeowners' wells may have been impacted by the blowout. Documents show that they had elevated levels of chloride, barium, strontium, iron and manganese, and there were spikes in surface samples near where the flowback fluid spilled during the blowout.

"But our original estimates were higher before the independent site characterization study was filed," Mr. Sunday said.

That study, paid for by Chesapeake and filed last fall, determined the homeowner with the worst contaminated water had elevated levels of chloride, barium and strontium, but had a problem specific to his well and unrelated to the spill -- even though Chesapeake had already agreed to help treat the water.

Other tests showed that relatively shortly after the blowout, any contamination dissipated quickly, in large part because of huge amounts of rain that fell the day of the incident and for several days afterward, diluting the impact of the flowback fluid, according to reports.

In short, Mr. Sunday said: "At the end of the day, the impacts are what inform our penalties, and there was no ground water impact."

"If that's the case, they got lucky," said Dave DeCristo, who owns property next to the well site where much of the flowback fluids that spilled ended up initially. "I really thought they were going to get a $1 million fine given how big it was."

When part of the wellhead on the Atgas 2H well, as it is officially called, in Leroy, failed at 11 p.m. on April 19 while crews were hydrofracturing the well, the flowback fluids that came up through the well head poured out at a rate of up to 168 gallons a minute, according to Chesapeake's initial estimate in the first few hours, according to documents in DEP's permit file.

Chesapeake said that the flowback fluids -- water, sand and various chemicals -- ran out uncontained for four hours. At the rate Chesapeake estimated in those first few hours, that would mean more than 40,000 gallons of the fluid potentially ran off the site and into a nearby unnamed tributary to Towanda Creek, which flows to the Susquehanna River.

But Chesapeake's analysis estimates only about 10,000 gallons made it off the site. The company could not explain the discrepancy.

Vacuum trucks and hastily created containment ponds managed to contain most of the rest of the flowback fluids that poured out of the well for a total of 36 hours -- pouring hundreds of thousands of gallons across the well pad.

Even though the flowback fluid was eventually staunched, it would take another four days, until April 25, for the well to be capped and secured by well control specialty company, Boots & Coots of Houston.

Sean D. Hamill: or 412-263-2579. Laura Olson: