Pennsylvania’s governor outlines what he won’t let companies drilling for gas do.
http://www.timesleader.com/news/Corbett__No_forced_pooling_04-27-2011.html
Posted: April 27, 2011
Corbett: No forced pooling
MARC LEVY
PITTSBURGH — Gov. Tom Corbett told a crowd from the region’s booming natural gas industry Tuesday that Pennsylvania needs its help to climb out of the recession, but he also warned that he would aggressively enforce environmental laws and that he opposes a controversial change in law sought by drilling companies.
“Forced pooling” is tantamount to private eminent domain, and he doesn’t agree with it, Corbett told the seminar crowd in suburban Pittsburgh, which is a fast becoming a hub for multinational energy companies exploring the Marcellus and Utica shales beneath Pennsylvania, Ohio and West Virginia.
“I’m sure there’s many here, many here that would like to see” forced pooling for Marcellus Shale gas, he said. And then he told what he called “maybe a dirty little secret” about companies that say they would be willing to pay a severance tax that is the subject of much debate in the state Legislature.
“They never add the caveat that I know that many of the companies that have gone to Harrisburg have said, ’Yeah, we’ll take the tax if we get certain things in regulation, including the forced pooling,’” Corbett said.
Forced pooling is on the books in some other states and can be used to force holdout landowners to lease their below-ground gas rights under certain conditions. The issue, at the top of the industry’s wish list since at least last year, has gained little traction in the Legislature. Companies say it would help limit the number of roads and wells built to extract gas.
Corbett also opposes a severance tax on gas extracted from the Marcellus Shale, the nation’s largest-known gas reservoir.
On Tuesday, he reiterated his stance against it, and tried to underscore the urgency of competing for the industry’s money and equipment. The Marcellus Shale beneath Pennsylvania is one of six natural gas deposits vying to offer the best return on investment for energy companies, he said.
“I need, we need, Pennsylvania needs the jobs today to get out of this recession,” he said.
Pennsylvania is the nation’s largest natural-gas producing state that does not tax the activity.
Corbett, who said the media would call Tuesday’s crowd of several hundred a “friendly audience,” accepted nearly $1 million in donations to his gubernatorial campaign from people in the natural gas industry.
However, he closed his 35-minute speech by promising to vigorously enforce environmental laws and saying he will use his power to grant drilling permits to punish companies, if necessary.
“I know how to get the attention of your CEOs, whether they be here in Pennsylvania or in Oklahoma or in Texas or in Louisiana, and that’s through the permit,” Corbett said.
He spoke a week after he asked natural gas drillers to stop one of their most troubling environmental practices: taking polluted wastewater from gas wells to riverside treatment plants that aren’t equipped to remove all the contaminants.
The audience heard numerous warnings about losing the public relations battle over the industry’s environmental record and the possibility of stronger regulations, both on the federal level and in states from Texas to West Virginia.
Drawing gas from shale deep underground is being touted by the industry as a major new source of cheap, homegrown energy, thanks to the recent combination high-volume hydraulic fracturing and the new technique of horizontal drilling. Nearly 3,000 wells have been drilled in Pennsylvania’s Marcellus Shale.
However, hydraulic fracturing, or fracking, has sparked concern from some environmental groups and public officials, particularly as people in drilling communities in Texas, Pennsylvania and elsewhere come forward with tales of contaminated air and well water. It also has drawn scrutiny from the U.S. Environmental Protection Agency.
Drillers escape taxes, group says
http://standardspeaker.com/news/drillers-escape-taxes-group-says-1.1137967
By robert swift (Harrisburg Bureau Chief)
Published: April 27, 2011
HARRISBURG – The vast majority of natural gas drillers in Pennsylvania don’t pay the state corporate income tax and benefit from federal tax incentives and state tax breaks, according to a report issued Tuesday by a Harrisburg think tank.
The report by the Pennsylvania Budget and Policy Center is more fodder for the statehouse debate over whether the companies that produce natural gas in the Marcellus Shale boom should be subject to a special state tax or local impact fee levied by municipalities. Gov. Tom Corbett has steadfastly opposed a severance tax saying it will drive investment to other states. Republican senators plan to outline an alternate local impact fee proposal later this week.
The budget and policy center is a Harrisburg-based think tank that advocates tapping new state revenue sources, including a severance tax, to address Pennsylvania’s fiscal problems.
Most gas drillers structure their business as partnerships so they can instead pay the much lower state personal income tax, the report said. The state corporate income tax rate is 9.99 percent, while the state personal income tax rate is 3.07 percent.
A number also take advantage of the so-called Delaware loophole that allows businesses headquartered in other states to avoid paying the corporate income tax on their operations here, according to the report.
The federal incentives, such as allowing write-offs for a large portion of drilling and well-completion costs, make substantial dents in a driller’s taxable income, the report said.
rswift@timesshamrock.com
Corbett opposes ‘forced pooling’ of natural gas
Governor speaks at industry seminar as Senate leader gets ready to introduce impact fee bill.
http://www.mcall.com/news/local/mc-pa-senate-impact-fee-20110426,0,6499620.story
Gov. Tom Corbett said he is opposed to “forced pooling,” which would give the Marcellus Shale gas well industry the right to drill under and take gas from a property owner that has not signed a lease.
The pooling of gas drilling rights, which is at or near the top of the industry’s wish list, amounts to the use of eminent domain for private interests, the governor said.
The comments on forced pooling were made at the K&L Gates fourth annual Appalachian Basin Oil and Gas Seminar in Green Tree, Allegheny County, an event that drew about 400 people, many from industry and law firms.
“Private eminent domain, I don’t think that’s right,” Corbett said. “I was made aware that it’s on the industry’s wish list, but I don’t agree. If I see a bill that contains forced pooling, I won’t sign it.”
Corbett also repeated his opposition to a severance tax on Marcellus gas extraction.
His speech comes a day after workers were able to replace a damaged wellhead on a Bradford County gas well following last week’s blowout and wastewater spill.
Officials from Chesapeake Energy, who operate the Leroy Township drilling site, announced the completed repairs Monday night. The malfunctioning wellhead was part of the cause of last week’s accident, according to Chesapeake.
While briny wastewater spilled into a nearby creek tributary during the early hours of the incident, both the company and state Department of Environmental Protection have reported no significant impacts so far. DEP officials said Monday they did not have results yet from last week’s water sampling, and were doing additional testing this week.
As investigations by DEP and U.S. Environmental Protection Agency officials get under way, Chesapeake said its employees will continue to work with regulators on determining the cause of the equipment failure.
Neither state nor federal environmental regulators have indicated what potential penalties could be imposed on the company, but both are seeking information on what happened and the chemicals in the water that was released.
Meanwhile, the top Republican in the state Senate says he’ll unveil the “broad parameters” of a local impact fee on natural gas drillers on Thursday — the day after the Corbett administration’s own shale study panel meets to likely discuss the issue.
Senate President Pro Tempore Joe Scarnati, R-Jefferson, said he’ll hold a 9:30 a.m. conference call Thursday to outline the fee, which would be used to help municipal and county governments deal with the public cost of drilling.
In a brief interview, Scarnati, whose northwestern Pennsylvania district sits in the heart of shale drilling territory, said he’d only offer general details about his proposal, but would not be presenting formal, legislative language.
“It’s not a bill,” he said. “It’s a proposal for feedback.”
Scarnati’s chief of staff, Drew Crompton, said his boss would not be speaking for his caucus Thursday. A more formal proposal on behalf of Senate Republicans would come later.
“We’ve tried to incorporate everyone’s concerns,” Crompton said.
On Monday, Corbett said he’d be willing to look at whatever proposal lawmakers send him. In the past, the Republican has been adamant that none of the money raised from the fee go into the state’s general fund budget.
Jan Jarrett of the environmental group PennFuture said she’s sticking by her preference for a severance tax on drillers, arguing that the impacts from drilling reach far beyond the drilling area.
Jarrett said she favors a severance tax proposal put forth by Rep. Greg Vitali, D-Delaware, that would split the tax money three ways among local governments, the general fund budget and the Growing Greener environmental program.
Jarrett said she wants to “make sure all Pennsylvanians benefit from drilling.”
Such a scenario seems unlikely. Corbett has said he will not sign a severance tax bill.
Morning Call Harrisburg Reporter John L. Micek and Don Hopey and Laura Olson of the Pittsburgh Post-Gazette contributed to this story.
Tax paid by drillers disputed
http://www.timesleader.com/news/Tax_paid__by_drillers__disputed_04-27-2011.html
Report stating group pays little in fees uses faulty data, say those in industry, Pa. official
Posted: April 27, 2011
STEVE MOCARSKY smocarsky@timesleader.com
Making a case for a severance tax on natural gas in Pennsylvania, a research and policy center on Monday released a report showing that natural gas drillers in the state pay very little in state and local taxes, despite industry claims to the contrary.
Many drillers – including nine of the top 10 permit holders in the Marcellus Shale – structure their businesses as limited liability companies (LLCs) or limited partnerships (LPs).
This allows them to avoid the corporate net income tax altogether and pay the much lower personal income tax on company profits, according to a report by the Pennsylvania Budget and Policy Center.
Only 15 percent of the 783 companies to file state corporate net income tax returns owed any tax, netting the state $17.8 million. About half of the companies that had to file tax returns for capital stock and franchise tax had to pay any tax, which totaled $8 million. The state collected another $13 million in personal income taxes from drillers, bringing the grand total to $38.8 million that year, the report states.
In 2009, oil and gas drillers in Louisiana, Texas and West Virginia – states that have severance taxes – paid considerably more in state and local taxes than they did in Pennsylvania. Drillers paid $44 million in Pennsylvania sales and business taxes, while, in Texas, they paid $8.8 billion in drilling, property, sales and corporate taxes, according to the report.
“Texas has about 34 times as much oil and gas drilling as Pennsylvania, but took in 200 times as much in taxes from the industry,” said Sharon Ward, center director. “Clearly, drillers are getting big tax breaks in Pennsylvania that they don’t enjoy anywhere else.”
The report seems to debunk a statement by former Gov. Tom Ridge, now a board member of the natural gas industry’s Marcellus Shale Coalition, who said the industry “helped the state generate more than $1 billion in revenue to state and local governments.”
But Elizabeth Brassell, spokeswoman for the state Department of Revenue, said the report is “a narrow look at old tax data” and used “less than ideal research methodology.”
Brassell said the report was based on data the department provided a year ago, and the department has since identified better research methodologies.
Brassell said some of the information in the report is either “blatantly wrong or misrepresented.” For example, the assertion that only $13 million was paid by the industry in personal income taxes must be based on “faulty information,” she said, “because we can’t get that figure anywhere.”
In response to the claim that many companies structure as LLCs to avoid paying corporate taxes, Brassell said the department is finding “a number of cases” in which LLCs are owned by corporations rather than individuals and, in those cases, the corporations are paying “substantial” income taxes.
“In looking at it, state taxes paid by the industry so far in 2011 are already nearly exceeding what the industry has paid in all of 2010 and we’re totaling collections in the hundreds of millions annually rather than the tens of millions,” Brassell said.
Travis Windle, spokesman for the Marcellus Shale Coalition, said that according to independent Penn State University experts, Marcellus production generated nearly $785 million in tax revenues through 2010 in Pennsylvania while helping to create more than 88,000 new jobs.
“Further, a more recent Penn State analysis clearly demonstrates that state sales tax revenues, realty transfer tax collections, as well as overall tax income continue to soar in Marcellus producing counties,” Windle said, adding that tax income increased 325.3 percent in counties with 10 or more wells.
Steve Miskin, press secretary for House Majority Leader Mike Turzai, R-Allegheny, said the industry is creating “good-paying” jobs, the companies and employees are paying taxes and the companies are fixing roads and making other improvements.
State Sen. John Yudichak, D-Plymouth Township, on the other hand, supports a severance tax. In March, he introduced Senate Bill 905, which would evenly distribute severance tax revenue between the Commonwealth Financing Authority for water supply, wastewater treatment, stormwater and flood control projects; the Environmental Stewardship Fund; and local governments directly affected by natural gas drilling.
Environmental Protection Agency steps into probe of fracking spill
http://www.pennlive.com/midstate/index.ssf/2011/04/environmental_protection_agenc.html
Published: Tuesday, April 26, 2011, 12:00 AM
By DONALD GILLILAND, The Patriot-News
The federal Environmental Protection Agency has thrown an elbow against Pennsylvania regulators in the job to regulate natural gas drilling in the Marcellus Shale.
The EPA announced Monday afternoon that it is investigating last week’s spill of drilling fluids at a Chesapeake Energy site in Bradford County.
Pennsylvania’s Department of Environmental Protection remains the lead investigating agency, but the EPA has asked Chesapeake officials for lists of fracking chemicals used, if any radioactive compounds were in the spill, and what affects there were to drinking-water sources.
“We want a complete accounting of operations at the site to determine our next steps in this incident and to help prevent future releases of this kind,” said EPA Regional Administrator Shawn M. Garvin.
EPA’s action marks “a significant change in approach,” former DEP Secretary John Hanger said Monday.
“The EPA is asserting jurisdiction in a manner that it did not during my time as secretary or prior to this incident,” said Hanger. “It means that the gas-drilling industry in Pennsylvania will be regulated in practice by both DEP and EPA, at least in some cases and respects.”
An EPA spokesman said such information requests are “a common fact-finding tool which we use when necessary,” but they are apparently a first for the agency in regard to the Marcellus Shale.
Much of what EPA would do duplicates what DEP is already doing, and consistency in regulation — be it strict or otherwise — is what the business needs, those in the industry said Monday night. Having two monitors could foster confusion.
“Each and every one of EPA’s questions will be answered by DEP, as required under new state regulations,” said one. “This action is clearly more about politics and grabbing headlines.”
The New York Times recently reported an internal battle within the EPA over whether the agency should intercede in Pennsylvania to clamp down on drilling in the Marcellus Shale.
That coverage was less than flattering for the agency, which some see as hamstrung by powerful industry lobbying.
Nevertheless, the EPA fared better than Pennsylvania regulators, whom The New York Times story portrayed as bumbling and beholden to drilling interests.
The timing of the EPA’s move — last week’s spill involved no injuries, no damage and minimal environmental impact — had some in the industry questioning it.
There might also be personal politics involved. EPA administrator Lisa P. Jackson recently said she had attempted to call Gov. Tom Corbett about regulation of Marcellus Shale, but Corbett never called her back.
Corbett’s news secretary, Kevin Harley, denied that the office received such a call.
Some environmentalists believe Pennsylvania has been too permissive and have been calling for the EPA to step in.
DEP did not address EPA’s entry into the matter directly.
“DEP has been on-site around the clock since the beginning of this incident, and as the regulatory agency, we continue to lead the way, “ DEP spokeswoman Katy Gresh said late Monday.
“DEP issued Chesapeake a comprehensive notice of violation Friday morning, telling the operator to respond to important questions that we have,” she said.
Those questions are similar to those asked by the EPA.
Chesapeake Energy has said an equipment failure caused the drilling brine — also known as fracking fluid — to gush out of the well and overwhelm containment systems. Some of the fluids reached a tributary of the Susquehanna River, but by the following afternoon that was stopped. The well was brought under control Thursday.
David Sternberg, the media officer for EPA’s Region 3 in Philadelphia said: “The information requested includes data on the cause and environmental consequences of this accident. EPA will evaluate this information promptly, in consultation with DEP, and take whatever action is needed to protect public health and the environment.
A Chesapeake spokesman said, “We intend to comply with the EPA’s request for information and have already communicated with the agency about how best to prioritize its requests in relation to the overall and ongoing response efforts.”
Chesapeake voluntarily suspended operations in the Marcellus Shale last week as it investigates the spill.
State geologists mapping deep aquifers
http://thedailyreview.com/news/state-geologists-mapping-deep-aquifers-1.1137358
by robert swift (Harrisburg Bureau Chief)
Published: April 26, 2011
State geologists are mapping the location of the deepest water aquifers in response to the upsurge in natural gas drilling in the Marcellus Shale formation.
With Marcellus wells reaching several thousand feet deeper than traditional shallow gas wells, locating the deep aquifers will tell geologists where potable water supplies that could be affected by drilling operations can be found.
The Pennsylvania Topographic and Geologic Survey, one of state government’s oldest offices dating to 1836, is taking on new work as a result of Marcellus development, survey director George Love told the citizens’ advisory council for the Department of Conservation and Natural Resources.
Geologists are also consulting an extensive water well inventory as part of this effort. Under state law, drillers of water wells are required to submit a public record after completing a new well.
In addition to locating aquifers, the survey is starting to examine the impact of hydrofracking operations on groundwater supplies, he added.
Love said the survey’s aim is to provide unbiased information.
The survey’s geologists routinely provide information about groundwater supplies, geologic formations and hazards and the location and extent of mineral deposits to state and local officials, commercial firms and the public as well.
The survey’s regional studies are of particular use to local and regional planning commissions, said Love.
Long before the Marcellus drilling became a phenomenon, the survey’s oil and gas division conducted extensive studies of Pennsylvania’s oil-and-gas producing areas to show where future prospecting would pay off.
By studying geologic data from oil and gas wells, the survey produces maps and cross-section diagrams as well annual production reports for minerals.
The roots of the survey lie in the development of the coal and iron industries in the early 19th century. The anthracite fields of Northeast Pennsylvania were among the first areas surveyed. The early surveys also identified potential routes for roads and railroads serving the new industries.
In the modern area, the survey provides information about sinkholes in the limestone-bearing regions of southern Pennsylvania and likely underground storage sites for any future program to sequester carbon emissions from coal-fired power plants.
The survey is perhaps best known for its series of quadrangle and county topographic maps that are the basis of planning, land development, agriculture and recreation projects.
Contact the writer: rswift@timesshamrock.com
Residents claim negligence, sue Chesapeake
Arbitration sought by Bradford County families. Contaminated water claimed.
SCRANTON – Attorney Todd J. O’Malley on Monday filed what he called the first in a series of lawsuits against natural gas drilling companies on behalf of families he said have been harmed by negligent drilling activities.
Representing three Bradford County families, O’Malley, of O’Malley & Langan in Scranton, and New York attorney William Friedlander, filed a petition in U.S. District Court seeking to force Chesapeake Energy Corp. into arbitration, claiming the company contaminated their water, devalued their land and caused many other hardships.
Chesapeake Appalachia LLC and Nomac Drilling LLC are also named as respondents.
The petition states that Wyalusing residents Mike and Jonna Phillips, Scott and Cassie Spencer and Jared and Heather McMicken, all living in homes along Paradise Road, entered into 10-year oil and gas leases with Chesapeake in 2007 or 2008.
The petition also states that the families “suffered water and property contamination caused by the negligent and grossly negligent oil and gas drilling activities” of the companies, which “caused the release, spill, discharge, and emission of combustible gases, hazardous chemicals, and industrial wastes from their oil and gas drilling facilities.”
The releases caused damages including loss of home values, costs of property remediation, loss of quality of life, emotional distress and punitive damage. The amount in dispute exceeds $75,000, the petition states.
O’Malley said clauses in the leases require arbitration for such disputes, but the companies have refused to arbitrate. He said arbitration would be faster than a full-blown court case and the families need relief now.
O’Malley said water purification systems Chesapeake installed for the families work poorly if at all and improper installation led to flooding and mold problems in one family’s home.
“It has been one nightmare after another for them,” he said.
A Chesapeake spokesman, who was unaware of the petition, said he would look into the matter but did not call back on Monday.
Nels Taber, regional director for the North Central regional Office of the state Department of Environmental Protection, said DEP was informed of the gas migration problems in July 2010 and determined that the residents’ water wells “had been impacted by gas drilling activities.” He said Chesapeake took “some remedial activities” and Chesapeake installed three new drinking water with water treatment systems.
Taber said the possible levying of fines was “an ongoing matter.”
O’Malley said his clients were “not going to get rich” through the gas leases because each family owns only 2 acres of land. He said they signed the leases because a land man convinced them it would reduce the nation’s dependence on foreign oil.
O’Malley said he is representing about 10 other families in different locations who have suffered similar problems that he says were caused by Chesapeake or Chief Gathering.
Penn State study assesses state taxes on Marcellus Shale production
http://live.psu.edu/story/52988#nw69
Thursday, April 21, 2011
University Park, Pa. — The ongoing utilization of Pennsylvania’s Marcellus Shale natural gas deposits has the state weighing the pros and cons of taxing the drilling activity. A study recently released by Penn State’s College of Agricultural Sciences used state tax information in an effort to begin an objective analysis of the drilling’s impact on local economies and state tax collection.
The research, summarized in a four-page booklet titled “State Tax Implications of Marcellus Shale: What the Pennsylvania Data Say in 2010,” compared counties where there is Marcellus Shale drilling and production activity with non-Marcellus counties. The study was authored by Timothy Kelsey, professor of agricultural economics and Penn State Extension state program leader for economic and community development, and Charles Costanzo, an undergraduate student majoring in community, environment and development.
Data are drawn from the Pennsylvania Department of Environmental Protection’s report, “2010 Wells Drilled by County as of 02/11/2011,” as well as from the Pennsylvania Department of Revenue’s “Personal Income Statistics for 2007 and 2008” and its “Tax Compendium (2007-08 through 2009-10) with Statistical Supplements.”
Kelsey said while it’s still early in the natural gas drilling process, the analysis indicates that Marcellus Shale development brings some positive economic activity for communities.
The study found that state sales tax collections were up by an average of 11 percent in counties with major Marcellus activity, while collections dropped an average of more than 6 percent in counties without any Marcellus. Sales tax collections are an indicator that retail sales are booming in Marcellus counties.
“Tax revenues are only one side of finances, however, so this analysis only considers half of the issue,” Kelsey said. “The impact of Marcellus drilling on state and local government costs is yet unclear, so it is too early to understand the overall impact of Marcellus on the state government. This state tax analysis does not indicate the impact of Marcellus development on local government and school district tax collections, since royalty and leasing income is exempt from the local earned income tax, and local jurisdictions cannot levy sales taxes.”
Kelsey said researchers wanted to find out if state tax records could yield objective financial data on how local economies are being affected by Marcellus Shale development.
“The state tax information provides a glimpse at how sales activity and personal income are changing,” he said. “The state collects objective tax collection information every year, and that can provide a good snapshot of how residents’ income is changing and the amount of retail activity going on.”
Kelsey explained that the booklet can help the average citizen to understand that Marcellus Shale development is having a discernible economic impact on residents and in communities.
“We’re early enough in the development of the shale that much of what we ‘know’ is based on anecdotes and personal stories,” he said. “This analysis provides some real numbers behind those anecdotes. The data show clearly that there are economic benefits that are accruing because of the gas activity — higher personal tax collections, higher sales tax collections. Realty tax incomes in drilling counties are decreasing, but less than in non-drilling counties.
“The booklet will not tell you how those benefits relate to costs, because we weren’t able to look at that,” he added. “So, it is only a partial picture of what’s going on. You know there are dollars coming in but you don’t know if it’s a net gain or a net loss to the community.”
Kelsey cited increased highway repair and maintenance, greater administrative demands, changing human service needs, and law enforcement and courts among the costs that determine whether the drilling activity is adding to or subtracting from a county’s bottom line.
Kelsey stressed that, because the study focuses only on state tax collection, it doesn’t support assumptions about local tax changes. He points out that local governments don’t have the option of a sales tax, and that the personal income tax increases seen in the study are largely the result of leasing and royalty income, which are both exempted from earned-income tax.
“So we know from this analysis that state revenues are going up, but we don’t know if local tax revenues are increasing or decreasing as a result of the activity,” he said. “That’s a huge caveat.”
Single copies of “State Tax Implications of Marcellus Shale” can be obtained free of charge by Pennsylvania residents through county Penn State Extension offices or by contacting the College of Agricultural Sciences Publications Distribution Center at 814-865-6713 or by email at AgPubsDist@psu.edu. For cost information on out-of-state or bulk orders, contact the Publications Distribution Center. The publication also is available on the Web at http://pubs.cas.psu.edu/FreePubs/pdfs/ua468.pdf. Click here: State Tax Implications of Marcellus Shale
Pa. ponders penalties over Bradford County drilling site mishap
http://www.timesleader.com/news/Pa__ponders_penalties_over_Bradford_County_drilling_site_mishap_04-24-2011.html
Posted: April 25, 2011
LAURA OLSON Pittsburgh Post-Gazette
Once final seal is in place, Chesapeake can begin a probe of why the well blew out.
HARRISBURG — As workers on a Bradford County drilling site continued to prepare the now-stable well for a final protective seal, state environmental officials took a step toward assessing penalties for the accident.
Well-control specialists spent most of the day relieving pressure within the Chesapeake Energy well, a procedure that both company and Department of Environmental Protection officials said was not unusual. Those efforts were suspended late Friday afternoon, as rain began to fall, according to Chesapeake.
Company spokesman Rory Sweeney said they made “slow progress” toward completely plugging the well Friday, noting that no additional wastewater or gas had escaped since those leaks were stemmed Thursday evening.
Procedures to relieve well pressure are “something that is expected at this stage in the process” and raised no immediate concerns, DEP spokesman Dan Spadoni said.
Once the final seal is in place, Chesapeake can begin an investigation of why the well blew out during hydraulic fracturing late Tuesday night. That wellhead malfunction resulted in thousands of gallons of fracking wastewater spewing back to the surface, with some trickling into a tributary to Towanda Creek.
The well was continuing to leak wastewater Wednesday afternoon, when workers were able to put the briny fracking fluid in containers on the well pad. Neither the DEP nor company officials have estimated how much wastewater entered the tributary, though initial Chesapeake testing showed “minimal, if any” impacts on the waterway.
Incident reports posted on the Pennsylvania Emergency Management Agency’s website stated that “approximately 30,000 gallons of fresh water leaked out of a gas well and into a secondary containment area in Leroy Township.” A report issued Thursday also states that there are “no life safety or environmental concerns” from the accident.
A PEMA spokesman did not return a request Friday for additional information.
Chesapeake said it would account for the spilled wastewater as the investigation gets under way. “We’re not done here when the well is finally sealed,” Sweeney said.
For DEP officials, who have been involved in the accident response, the next investigatory steps are under way. The agency issued a notice of violation to Chesapeake on Friday, Spadoni said.
In the notice, the DEP asked the company to submit an analysis of what caused the equipment failure. The notice also stated that Chesapeake was expected to “be in a stand-down mode on hydraulic fracturing” as officials review what happened.
The company said it halted all post-drilling activities, which include hydraulic fracturing, “in order to conduct thorough inspections of wellheads used in completion operations throughout the Marcellus Shale.”
But environmental advocates from PennFuture called on DEP Acting Secretary Michael Krancer to shut down all Chesapeake sites until the agency conducts its review.
Two Bradford County lawyers representing local residents who say they have contamination-related ailments made a similar plea Friday.
Spadoni said the DEP would “evaluate the information that is provided to us by Chesapeake” and decide what additional steps may be necessary.
State calls for stop in using plants to treat tainted water. Drillers ready to comply.
End near for drill pollution
by DAVID B. CARUSO
April 24, 2011
Pennsylvania’s top environmental regulator says he is confident that the natural gas industry is just weeks away from ending one of its more troubling environmental practices: the discharge of vast amounts of polluted brine into rivers used for drinking water.
On Tuesday, the state’s new Republican administration called on drillers to stop using riverside treatment plants to get rid of the millions of barrels of ultra-salty, chemically tainted wastewater that gush annually from gas wells.
As drillers have swarmed Pennsylvania’s rich Marcellus Shale gas fields, the industry’s use and handling of water has been a subject of intense scrutiny.
The state’s request was made after some researchers presented evidence that the discharges were altering river chemistry in a way that had the potential to affect drinking water.
Locally, the Wyoming Valley Sanitary Authority has run into strong public opposition to a potential plan to build a treatment facility for the wastewater in Hanover Township. Many residents say they are concerned about environmental contamination as well as increased truck traffic bringing tainted water in for treatment.
The sanitary authority has consulted PA Northeast Aqua Resources to conduct a feasibility study on building a plant to treat wastewater produced by Marcellus Shale gas drilling.
John Minora of PA Northeast Aqua Resources said the initial study is complete, and the sanitary authority is now working on a second study with Red Desert/Cate Street Capital, a company seeking to build the plant next to the WVSA’s current facility.
For years, the gas industry has bristled and resisted when its environmental practices have been criticized.
But last week, it abruptly took a different tone.
Even before the initiative to end river discharges was announced publicly, it had received the support of drillers. By Wednesday evening, a leading industry group, the Marcellus Shale Coalition, had announced that its members were committed to halting the practice by the state’s stated goal of May 19.
“Basically, I see this as a huge success story,” said Michael Krancer, acting secretary of the Department of Environmental Protection. “This will be a vestige of the past very quickly.”
After May 19, almost all drillers will either be sending the waste to deep disposal wells — mostly in Ohio — or recycling it in new well projects, he said.
While the movement to end the wastewater discharges followed years of environmentalists’ criticism, the most influential push may have come from within the industry itself.
Among major gas-producing states, Pennsylvania is the only one that allowed the bulk of its well brine to be treated and dumped in rivers and streams. Other states required it to be injected into deep underground shafts.
Publicly, the industry — and the state — argued that the river discharges were harmless to humans and wildlife.
Just months ago, the industry was actively opposing new state regulations intended to protect streams from the brine, saying fears about the river discharges were overblown.
But simultaneously, some companies were concerned.
John Hanger, Krancer’s predecessor as the state’s environmental secretary, said that as early as 2008 he had been approached by two of the state’s most active drillers — Range Resources, of Fort Worth, Texas, and Atlas Energy, now a subsidiary of Chevron, warning that the state’s permissive rules had left rivers and streams at risk from the salty dissolved solids, particularly bromides, present in produced well water.
“They came to me and said, if this rule doesn’t change, there could be enormous amounts of wastewater high in (total dissolved solids) pouring into the rivers,” Hanger said.
Almost since then, the companies have been working on alternative disposal methods.
“We never thought that it was a good practice to begin with,” said Range Resources spokesman Matt Pitzarella.
For months, drillers have been introducing technology that returns brine to deep wells, rather than discarding it as waste. By the end of last year, this reuse was being considered by most big drillers as the industry’s future.
Efforts to curtail the waste flow accelerated, though, after a series of critical media reports, increased pressure from the Environmental Protection Agency, and new research that raised questions about whether drinking water was being compromised.
After reviewing that research, Range Resources began lobbying other drillers to confront the problem once and for all, and to do it publicly, Pitzarella said.
The water that flows from active wells is often contaminated with traces of chemicals injected into the wells during a drilling procedure called hydraulic fracturing, or fracking, which breaks up the shale and frees natural gas. The flowback water also brings back from underground such naturally existing contaminants as barium, strontium, and radium.
Worries about the contaminants took on added urgency after the Monongahela River, a western Pennsylvania waterway that serves as a major source of drinking water for Pittsburgh and communities to its south, became so salty in 2008 that people began complaining about the taste.
The Department of Environmental Protection responded by curtailing the amount of wastewater sent to plants on the Monongahela. It also wrote new rules barring wastewater treatment plants from accepting more drilling wastewater than already permitted unless they were capable of turning out effluent with salt levels that met drinking water standards.
Those rules, though, left most of the existing wastewater treatment plants alone, and between 15 and 27 continued to pump out millions of gallons of water that scientists said was still high in some pollutants.
Over the past year and a half, a handful of researchers, including Jeanne VanBriesen, a professor of civil engineering at Carnegie Mellon University, and Stanley States, director of water quality at the Pittsburgh Water and Sewer Authority, have been collecting evidence on an increase in bromide in rivers that were being used for gas wastewater disposal.
The industry has, until now, expressed mostly skepticism about any possible link between drilling waste and water quality problems.
When The Associated Press reported in January that some drinking water systems close to gas wastewater treatment plants had struggled to meet EPA standards for trihalomethanes, the article was written off by industry groups as irresponsible, as was a similar report by The New York Times in February that focused on the presence of radium in drilling waste.
But in recent weeks, Range Resources arranged for VanBriesen and States to present some of their preliminary findings on bromide to a gathering of industry representatives.
VanBriesen said she cautioned that her own findings didn’t necessarily point the finger decisively at natural gas waste as the main culprit behind rising bromide levels.
Still, her presentations had an impact, she said.
“I think what you are seeing is a realization that the problem isn’t going away,” VanBriesen said. “I’m not pushing the panic button … but it’s a directional change that you don’t want to continue.”
Marcellus Shale Coalition President Kathryn Klaber said that after reviewing those findings, her group now believes the industry is partly responsible for the rising bromide levels.
In her letter to Krancer on Wednesday, she promised that the industry was taking action, but also encouraged state officials to evaluate whether other “sources” were contributing to the problem.
Krancer promised that evaluation would indeed happen, but he said he believed the gas industry’s actions would lead to immediate improvements in river bromide levels.