Budget impacts on DEP and ability to regulate drilling

Note the potential for NY hazardous wastes to be dumped in PA.



Environmental agency facing $58M loss responsible for monitoring gas-drilling boom

By Michael Bradwell Business editor mbradwell@observer-reporter.com
This article has been read 811 times.

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.