Marcellus Shale Driller Hit with Record $1 Million Fine

Pittsburgh Tribune-Review
18 May 2011
By Brad Bumsted

HARRISBURG -- The state Department of Environmental Protection on Tuesday imposed its largest fine ever against a gas driller in the Marcellus shale boom.

The nearly $1.1 million in fines against Chesapeake Energy Corp. includes $900,000 for contaminating private water wells in Bradford County and $188,000 for a Feb. 23 tank fire in Washington County that injured three subcontractors.

"Natural gas drilling presents a valuable opportunity for Pennsylvania and the nation. But with this opportunity comes responsibilities that we in Pennsylvania expect and insist are met," DEP Secretary Michael Krancer said while announcing the fines. "We have an obligation to enforce our regulations and protect our environment."

Chesapeake, based in Oklahoma City with an office in Cecil, has the greatest number of wells in the state, according to DEP records. Officials said in a statement that the company had voluntarily entered into an agreement with DEP on the $188,000 civil penalty.

"Through the course of our investigation, we have identified practices that can improve our operations," company spokeswoman Stacey Brodak said. "With that said, we are grateful the three contract employees who were injured are recovering. Safety is a top priority in every facet of our operations whether it involves our employees, contractors, neighbors or the environment."

The company signed an agreement for the Bradford County incidents that puts $200,000 into a DEP fund used to plug wells.

The $900,000 fine for the Bradford County portion must be paid by Saturday, DEP spokesman Kevin Sunday said.

Chesapeake has 15 days to pay the $188,000 fine.

"The water well contamination fine is the largest single penalty DEP has ever assessed against an oil and gas operator, and the Avella tank fire penalty is the highest we could assess under the Oil and Gas Act," Krancer said.

The fines occur as lawmakers, critics and industry advocates debate stricter environmental regulations and how to get money from the drilling boom. Gov. Tom Corbett has pledged to reject any taxes on extraction of the gas, but would agree to impact fees. The Senate's top Republican this week introduced a fee plan that would collect at least $10,000 per well each year.

Travis Windle, a spokesman for the Cecil-based Marcellus Shale Coalition, said the industry group is working with the state to develop regulations.

"This is a historic opportunity that we're absolutely committed to getting right," he said.

The state announced the fines the same day an environmental group chose the Susquehanna River as the most endangered river in the United States, in part because of what it claims is inadequate regulation of gas drilling by Corbett's administration.

Jeffrey Schmidt, lobbyist for the Sierra Club, cited Corbett policies that Schmidt believes have weakened environmental regulation and led to a decline in enforcement actions.

Corbett spokesman Kevin Harley said policies "will be based on fact and science, not emotion and hyperbole."

"The Corbett administration is committed to protecting the environment and enforcing all environmental regulations and laws," he said.

In the Bradford County case, the department said that improper well casing and cementing allowed natural gas to seep into groundwater and contaminate 16 families' drinking water wells. The department began investigating the complaints last year.

DEP conducted an investigation of the Avella fire and determined the cause was improper handling and management of condensate, a wet gas only found in certain geologic areas, the agency said.

Mick Vitari, 51, owner of Vitari's Vittles, an Avella restaurant, said he supports gas drilling in his community but believes companies should be fined if they break state law.

"If they're going to fine them $200,000, that means they were doing something wrong," he said. "If you're going to do something wrong, then you should pay for it. If they're not going to abide by the rules, then I think they should hit them hard."

The action yesterday might be the largest fine, but it is not the biggest Marcellus shale-related payout. In December, the agency announced a settlement with Houston-based Cabot Oil & Gas Corp. to pay $4.1 million to residents in the northern Pennsylvania town of Dimock where private water wells were contaminated with methane gas. Cabot agreed to pay the state $500,000 in the case.

DEP has levied heavier fines against other industries.

Brad Bumsted can be reached at or 717-787-1405.