Environmental Agency Facing $58M Loss Responsible for Monitoring
Gas-Drilling Boom
Washington, PA Observer-Reporter
8 November 2009
By Michael Bradwell Business editor
mbradwell@observer-reporter.com
As the state Department of Environmental Protection works its way
through a $58 million funding cut, its press secretary said last week
that the agency will be able to maintain its oversight over natural gas
well drilling activities in the state's Marcellus Shale play across
Pennsylvania.
Teresa Candori said she couldn't be specific about the number of
positions that might be cut at DEP. While some sources have speculated
that as many as 300 positions could be cut, Candori said Tuesday that
the estimates are not those of the agency.
"There are no numbers or positions at this time," she said, adding that
the staff of the agency's oil and gas bureau, which has oversight of
drilling activities, is not being targeted.
Candori noted that the oil and gas staff is undergoing a 50 percent
increase, growing from 61 employees to 98 at DEP offices in areas where
Marcellus Shale drilling occurs.
"We are very confident we will be able to maintain our oversight" of
drilling activities, she said.
On Oct. 28, the agency announced it began collecting higher permit
application fees for all traditional vertical, non-Marcellus Shale oil
and natural gas wells drilled in Pennsylvania to cover the cost of its
permitting and enforcement work.
DEP Secretary John Hanger said the new fees, which went into effect
Oct. 26, are based on well length and type, and replace a flat $100 fee
established in 1984.
Under the new structure, vertical wells with a bore length of up to
2,000 feet will now have a base permit cost of $250 with an additional
$50 applied for each additional 500 feet of length.
The agency said a new fee structure was required to support the cost of
permitting and inspecting both conventional and horizontal drilling
projects.
"The money generated from the new permit fees is allowing us to hire
new staff at our Pittsburgh, Meadville and Williamsport offices to
better manage and monitor the drilling industry as it expands into new
areas of the state," Hanger said.
The new fee structure for vertical wells follows new fees the
department imposed in April for Marcellus Shale wells, which use a
horizontal drilling technology.
Marcellus Shale and non-vertical wells have a base permit cost of $900
for the first 1,500 feet of bore, with an additional levy of $100 for
every 500 feet beyond that length.
Range Resources spokesman Matt Pitzarella said the company went from
paying about $80 for a drilling permit to about $2,000.
"It was set up in such a way so that as drilling levels go up, the
inspector numbers go up," he said. "It's a self-funding mechanism."
He said Range has its own staff of field employees to monitor drilling.
"We want to make sure we're following the rules. We don't want to get
slapped with a bunch of fines."
While drilling in the Marcellus Shale has continued to grow over the
past several years, the majority of gas wells drilled in the state
continue to be vertical wells, according to DEP's numbers.
Through Oct. 23, DEP said it has issued 5,333 oil and natural gas
drilling permits this year, 1,516 of which are for the Marcellus Shale
formation. Of the 1,944 gas wells drilled so far this year, 403 are
Marcellus Shale wells. The department said it has performed 10,365
inspections of drilling sites during that period.
But drilling in the Marcellus Shale strata continues to grow.
The agency said that since 2005, it has issued 2,112 Marcellus Shale
permits, with a total of 660 Marcellus Shale wells drilled. Atlas
Energy Inc. said last week it plans to drill 30 wells in 2010 in
Fayette and Greene counties, while CNX Gas has set its projection at 24
wells next year and Range, 90 wells.
N.Y. drilling waste may be dumped here
While the three companies are the biggest players in the Marcellus
Shale locally, the DEP could eventually find itself busy with
inspections related to Marcellus Shale drilling from New York.
According to proposed Marcellus drilling regulations in New York now
being circulated for public comment, the state's Department of Energy
Conservation is recommending that wastewater from drilling sites be
sent to Pennsylvania for processing.
The draft proposal lists 11 out-of-state treatment plants for disposal
of New York flowback water. Two of the plants are in Washington and
Waynesburg, with others throughout Western Pennsylvania and one in
Wheeling, W.Va.
The DEC also says wastewater could be taken to publicly owned municipal
sewage treatment plants in New York, requiring them to notify it of any
new industrial waste they plan to receive. The proposed rules also
allow for the construction of private wastewater treatment plants that
the DEC would regulate.
Candori said the increased drilling in the Marcellus prompted DEP to
set standards for the first time this year for total dissolved solids
in the wastewater. The wastewater returning to the surface from
drilling operations, termed flowback, represents about 30 percent of
the water used to fracture the Marcellus Shale to release the gas.
According to Candori, for a driller to receive a permit, "they have to
tell us where they're going to get their water and where they're going
to dispose of it."
She said DEP is also permitting the construction of new wastewater
treatment plants for the Marcellus Shale drilling. One of those plants
under construction in Masontown is facing a legal challenge. An
environmental law firm, Earthjustice, filed an appeal last week on
behalf of Clean Water Action against a deal between DEP and
Shallenberger Construction that Earthjustice claims is being
fast-tracked without formal notice in the official Pennsylvania
Bulletin.
"We know that Pennsylvania is facing enormous pressure from gas
drillers who are generating contaminated water faster than the state's
treatment plants can handle," said attorney Deborah Goldberg in a press
release. "Still, the health of the 350,000 people who depend on the
Monongahela River for their drinking water should come first. We're
asking the state not to skimp on its due diligence." DEP says it does
not comment on pending litigation.
Earthjustice notes that while DEP requires other proposed treatment
plants that expect to handle gas well wastewater to limit or monitor
the amounts of toxic chemicals they discharge into drinking water, the
Masontown plant agreement "would allow dumping of untreated fluids into
the Monongahela River without any testing for most of the dangerous
chemicals common in gas wastes, including known carcinogens such as
benzene."
Range Resources said last month it is now recycling 100 percent of its
flowback water from its drilling projects.
Chief Operating Officer Jeff Ventura described the recycling as "an
exciting breakthrough" for the Marcellus region.
Unlike the Barnett Shale region in Texas, where Ventura said drillers
can send much of the wastewater into "deep zone" wells, the Appalachian
Basin has few deep zone wells.
According to Ventura, in horizontal drilling, between 15 and 30 percent
of wastewater is returned to the surface, while the remainder stays in
the ground.
"We can get back 30 percent and add 70 percent fresh water," he said.
"It's better environmentally and it's better economically."
According to the company, about 3 million gallons of fresh water are
added to 1 million gallons of salty flowback water per well. With the
new method, Range said it has reduced its water consumption by about 30
million gallons during the last six months. It said the new measure
also reduces its operating costs since it doesn't have to buy as much
water or pay to truck the water or to treat it, and said recycling also
has eliminated about 7,500 trucks from the road that would have been
needed to haul the flowback water to disposal facilities.
While water recycling is a "huge breakthrough," Ventura said, "we still
think water disposal wells are needed."
He explained that recycling works well when the company is employing
"pad drilling," which is when it drills a horizontal well that reaches
the shale beneath multiple properties.
Ventura said Range is sharing information about its recycling method.
"Ultimately, it's going to force everybody to step up," he said.