Texas Driller to Pay $4.1M Over Tainted Dimock Water

Washington PA  Observer Reporter
16 December 2010
Associated Press

HARRISBURG - The Pennsylvania Department of Environmental Protection has abandoned its plan to force a Houston-based drilling company to pay nearly $12 million to extend a public water line to residents whose wells have been contaminated with methane gas, citing a lack of political support.

Environmental regulators say Cabot Oil & Gas Corp. instead will pay residents of Dimock a total of $4.1 million under a settlement with the company announced late Wednesday. Cabot also has agreed to pay to install whole-house gas mitigation systems in each of the 19 affected homes and to pay DEP $500,000.

The settlement infuriated some residents, who say DEP caved to political pressure.

"Pretty nice that Cabot can do whatever they want," said Craig Sautner, a Dimock resident who is a plaintiff in a federal lawsuit against Cabot. "When Cabot pays all the bills, that's what happens. It's ridiculous. Now we're stuck here."

Environmental Secretary John Hanger had announced the water line plan in late September before cheering residents in Dimock, a small town in Susquehanna County where tainted wells have raised concerns nationwide about the environmental and health consequences of gas drilling.

Blaming the contamination of the residents' aquifer on faulty Marcellus Shale gas wells drilled by Cabot, Hanger declared that DEP would sue the company unless it agreed to pay $11.8 million to extend municipal water service from Montrose, about six miles away, to the Dimock residents. A state financing authority voted last month to front the money for the project through a combination of grants and loans.

But the water line provoked significant opposition among local elected officials, who called it a boondoggle and threatened to sue to block it. Cabot also balked, calling it "wasteful and environmentally disruptive" and blasting Hanger and his agency for abuse of authority.

Hanger told the Associated Press late Wednesday that he dropped the water line plan because of the significant opposition it faced. Hanger, part of the administration of outgoing Democratic Gov. Ed Rendell, leaves office in January. He said incoming Republican Gov. Tom Corbett could have easily halted the project.

"I personally think the line would have done a lot of good for the community, but a lot of people disagreed with me.

That's absolutely something we took into account when arriving at this settlement," Hanger said. "This line was not going to get built."

Hanger said each family will receive an amount equal to twice the value of its home, with a minimum payment of $50,000.

Cabot said in a statement that the settlement will permit the company to resume drilling in Dimock and that it plans to do so in the second quarter of 2011.

"This agreement provides a reasonable and pragmatic way forward for all parties," said Dan Dinges, Cabot's chief executive officer.

DEP began investigating reports of stray gas in Dimock water wells in January 2009, when the presence of methane led to the explosion of one resident's well. DEP said it has traced the gas to Cabot's drilling operations. Cabot denies responsibility for the pollution.