Tuesday, July 13, 2010

PEC Releases Major Report On Marcellus Shale Drilling

The Pennsylvania Environmental Council today released a report calling for swift action on new regulations and greater oversight of drilling and extraction of natural gas from the Marcellus Shale formation, a major gas field that lies deep beneath much of Pennsylvania.
Called “Developing the Marcellus Shale,” the report challenges state government and the natural gas industry to adopt more stringent standards for drilling and extraction to prevent the kind of environmental impacts that have occurred throughout Pennsylvania’s industrial past.
The report also includes a number of specific legislative and regulatory changes that PEC believes should be made to minimize the risk of accidents, environmental damage, and public health hazards stemming from drilling operations.
Video Blog: Click here to view video from the press conference.
Among the recommendations called for in the PEC report include the creation of a Marcellus Shale Development Task Force, that would identify best practices in the industry and apply them to Marcellus Shale gas operations in Pennsylvania.
Additionally, PEC has called on the General Assembly to take the lead in requiring that any severance tax revenues that are realized from the development of the Marcellus Shale be specifically directed to the management of this industry, its environmental impacts and its regulatory enforcement. The Rendell administration has estimated that a state severance tax on Marcellus Shale gas operations could generate more than $200 million per year for the Commonwealth.
“The Marcellus Shale is a once-in-a-generation energy and economic opportunity for Pennsylvania,” said PEC president Don Welsh. “We have a deep historical, political and fiduciary responsibility to get this right for the citizens of this Commonwealth as well as future generations who will inherit the environment currently entrusted to us.”
The Marcellus Shale is a vast underground formation that contains an estimated 50-year supply of natural gas beneath the surface of Pennsylvania. However, the nature of these gas reserves are such that unconventional extraction methods are needed, which have environmental risks affecting local groundwater supplies, land use, habitat, and a number of other adverse impacts. Current regulations on oil and gas drilling in Pennsylvania were put in place at a time when conventional extraction techniques were commonly used.
There are currently an estimated 1,500 Marcellus Shale gas wells in Pennsylvania and industry officials predict an additional 35,000 to 50,000 more will be developed by 2030.
In the past year, Marcellus drilling operations have led to a number of accidents and reports of environmental contamination, including recent explosions at Marcellus drilling rigs in Penfield, Pennsylvania and Moundsville, West Virginia. This report takes aim at vulnerabilities in Pennsylvania’s gas drilling and environmental protection laws that PEC says do not adequately address the extraordinary nature of the Marcellus Shale.
“The stakes in developing the Marcellus Shale – both economic and environmental – are far too great to take a ‘business-as-usual’ approach,” said John Walliser, PEC’s vice president of legal and governmental affairs. “There is broad consensus statewide that we have to do this right and the recommendations outlined in this report provide the starting point for doing just that.”
The Marcellus Shale is widely considered to be one of the largest unconventional on-shore gas deposits in the world and holds great potential as an abundant fuel to help bridge the gap between today’s energy portfolio to a future supply that reflects a reduced dependence on foreign sources of energy. Tens of thousands or more new jobs are expected to be created over the next two decades, which will have a significant economic impact at both the local and state levels at a time when budget shortfalls are creating pressure to generate new sources of revenue.
“No one truly knows what the full extent of the local impacts from Marcellus Shale operations will be,” said PEC’s Walliser. “That’s why it’s critical to be mindful of the potential impacts and their associated costs now before drilling operations expand significantly. There’s no reason why everyone – the industry, the Commonwealth, communities, and land owners – can’t benefit from the development of this extraordinary resource provided we take the proper steps at the beginning to ensure we don’t leave behind a legacy of environmental and economic destruction for future generations.”
Other recommendations in the PEC report include:
-- Adopting a set of best practices from other deep shale gas-producing states, such as Colorado, which require companies to submit more detailed information about their operations, but which also streamline the permitting process.
-- More rigorous scrutiny in the permitting process, such as a two-tier drilling permit that would provide the Pennsylvania Department of Environmental Protection with more detailed information about a well site before drilling can begin.
-- Greater safeguards for private water supplies, which are the only available source of household drinking water for many rural families in Pennsylvania.
-- Providing greater authority to the DEP for the management of water withdrawal in large quantities, such as are needed for hydraulic fracturing in unconventional drilling.
-- Increase the frequency of inspections and monitoring of surface and ground water quality at and near gas well operations to detect any possible contamination. Similarly, air quality monitoring needs to be increased to assess the need for air emission control systems as appropriate.
-- PEC recommends that a stakeholders group be convened to create the structure of a trust-based alternative to the current bonding system to cover the cost of closing wells that have completed all production.
-- The Commonwealth should impose a temporary moratorium on the leasing of additional state forest land (i.e. the moratorium should not affect existing, valid leases) until a comprehensive environmental and community impact assessment can be completed.
-- Pennsylvania state government should proactively work with the natural gas industry and mineral rights owners to address concerns relating to natural gas extraction under state park lands. Factoring in site-specific considerations, the state and industry should design best management practices to avoid unnecessary or adverse impacts to the state parks.
The PEC report is based on the proceedings of a two-day Marcellus Shale Policy Conference held in Pittsburgh in May. This conference convened experts, industry executives, community leaders and government officials to explore the specific challenges associated with this industry and how other states have responded.
A copy of the report is available online.
PEC: Tougher Regulations Sought On Drill Operations

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