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Shale gas violations down as DEP steps up inspections

Pennsylvania oil and gas producers pinched by the lowest prices in years are not catching any breaks from state regulators.

The Department of Environmental Protection’s oil and gas office conducted 1,700 more inspections during the first seven months of the year, an 11 percent increase over the same period in 2014, according to department data.

A boost in office staff last year and a big slowdown in drilling because of low prices have given inspectors time to eyeball more wells and related records. New wells require more inspections during drilling and fracking.

“A big reason is the decline in drilling,” said Scott Perry, the deputy DEP secretary who oversees the oil and gas office and its staff of 227, up from 202 early last year. “They’re getting back to older wells.”

The results of the increased scrutiny are mixed.

Shale gas operations had only 205 violations through July, the department’s online compliance reports show. That’s down from 283 through the same period last year, despite a nearly 16 percent increase in inspections to 8,100.

“It’s proof positive that the industry is focused on being compliant and doing a good job,” said Dave Spigelmyer, president of the North Fayette-based Marcellus Shale Coalition.

On the other side, the department is finding more violations in the lower-profile conventional oil and gas industry, whose more plentiful wells are generally older, shallower and less productive than those tapping the Marcellus and other shale layers. The DEP reported 1,552 violations by those operations through July, a 25 percent increase from last year.

“With all these inspectors, and so few wells being drilled, I guess you find more,” said Bruce Grindle, co-founder of Oil & Gas Management Inc. and vice president of the Pennsylvania Grade Crude Oil Coalition. His Westmoreland County-based company operates about 300 conventional oil and gas wells.

“Talking to colleagues in the northwest corner — it’s mostly oil folks there — in many cases they’ll have multiple inspections per week,” said Grindle, a member of the Conventional Oil and Gas Advisory Committee that Gov. Tom Wolf formed to advise the DEP on regulatory changes.

Related: DEP releases final draft of new environmental rules governing oil and gas operations

Conventionals struggle

The department is rewriting some environmental rules for shale and conventional drilling — so-called Chapter 78 regulations — which has generated tensions between DEP and producers. The conventional advisory board said it would reject the latest version of the rules in its non-binding advisory vote, raising “serious concerns about the legality, the need for, and specific details” of them. The DEP says it expects a lawsuit.

The DEP’s data “underscore the need for stronger regulations” for conventional drillers, said John Walliser, vice president of the Pennsylvania Environmental Council in the Strip District.

“We’ve really been disheartened by the chatter we’re hearing that we need to relax the regulations for conventionals,” said Walliser, a non-voting member of the DEP’s Technical Advisory Board, which Wolf revamped to focus on shale drilling.

Perry said the department does not emphasize checking conventional operations. An administrative change involving reporting requirements for conventional wells might have boosted the numbers, he and Grindle said.

Operators have a new form to fill out quarterly and submit to DEP annually that lists measurements including pressure in lines and around casings for each conventional well. Perry said producers have struggled with filing the forms on time. Grindle said he heard that inspectors take measurements at wells to audit the reports.

“If they dispute what the records are saying and what they measure, they’re writing a (notice of violation),” he said.

A review of DEP’s compliance reports shows a greater percentage of this year’s violations — 43 percent — were classified as administrative, compared to 37 percent last year.

Corporate culture

The decrease in violations among shale producers continues a five-year trend. Last year’s 412 violations were a third of what the industry logged in 2010.

“Some opponents would say the sky is falling. The evidence is bearing out the opposite,” Spigelmyer said.

Several high-profile fines against shale drillers that the DEP announced this year — including a record $8.9 million penalty that Range Resources has appealed — date to cases from 2011. Department spokesman Neil Shader said such investigations involving stray gas in water supplies take a long time to investigate.

Walliser said the decline shows the shale industry has “jumped the learning curve” as it improved over the past 10 years.

It proves Pennsylvania was right to not ban shale drilling early on, Perry said. Improvements in how drillers build well pads to protect land and water around them and ways to safely handle waste could only happen in the field.

“Sometimes you need to operate in order to innovate,” Perry said, noting large shale producers have the resources and a “corporate culture” to support spending money on safety and environmental protection improvements.

“Some conventional operators are not as diligent as their counterparts in the industry, and not keeping pace with the culture of safety and performance,” he said.

Adding expensive requirements in the Chapter 78 rewrite and increasing inspections when smaller operators are weathering low prices won’t help, Grindle said.

“It doesn’t make sense if you look at the downturn in the activity,” he said, noting conventional operators are on pace to drill 360 wells this year, down from 4,800 in 2007.

The downturn is no excuse to slow regulation, Walliser said. If anything, concerns about operators’ finances should prompt more scrutiny.

“What are they going to leave us with when they go out of business and probably abandon a lot of wells?” he asked, noting the problem the state faces in plugging decades-old abandoned wells. “We have very serious concerns about long-term pollution from these wells.”

This article was written by DAVID CONTI from The Pittsburgh Tribune-Review and was legally licensed through the NewsCred publisher network.

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