Wednesday, January 23, 2019

Oil & Gas Program Losing $800K/Month Without Fee Increase; DEP Wants To Step Up Inspections Of Natural Gas Storage Fields

On January 22, Scott Perry, Deputy Secretary for Oil and Gas Management, told DEP’s Citizens Advisory Council his program is losing $800,000 a month and hopes to finalize a fee increase soon to properly fund the program.
DEP is proposing to increase unconventional well permit fees from $5,000 for nonvertical unconventional wells or $4,200 for vertical unconventional wells to $12,500 for all unconventional well permit applications.
Perry said DEP received 13 comments on the fee increase, many of them opposed and suggesting the agency use General Fund tax dollars to help finance the program, rather than increase fees on the unconventional shale gas drilling industry.
Other comments suggested the conventional oil and gas industry be asked to pay their fair share to support the program since they represent about half the workload, but only pay a minimum $250 permit fee for wells up to 2,000 feet deep.
The comment period on the proposed fee increase ended August 13.  The next Environmental Quality Board meeting is February 19.
Perry said permit review changes and workload shifts have resulted in decreasing drilling permit review times from 260 days down to 85 days in some regional offices.  He said he hopes reforms like e-permitting will cut that time further.
Expedited Permit Reviews
Perry said DEP will be discontinuing the 14-day expedited permit review program for oil and gas erosion and sedimentation permits covering 5 acres or less because an audit of the program found 80 percent of the permits issued had deficiencies in the design of erosion controls.
He noted DEP has lost several appeals of permits issued under this program and has had to pay attorneys fees to resolve the cases.
He said he is looking to create a new priority review program based on whether the applicant proposes innovative erosion controls that go beyond what is normally industry standard.  
Perry said he is reaching out to industry, The Nature Conservancy and other groups to design an evaluation system to determine what those innovative practices are and how to evaluate permit applications for priority review.
Gas Storage Fields
Perry said one area the additional permit fee funding will help his program is on improving the frequency of inspections for natural gas storage fields (Map).  The freeze on complement levels associated with funding shortfalls is preventing the hiring of more inspectors.
There are approximately 60 underground gas storage fields in 26 counties in the state, mostly in Western and Northcentral Pennsylvania, according to a DEP fact sheet.
Perry said DEP is not meeting its goal to inspect all gas storage fields at least 2 times a year.
He expressed concern about a recent incident in Greene County where a coal mine was seeking a permit to mine on top of a natural gas storage area and in the permit review process found 50 unplugged, abandoned gas wells.
The abandoned wells were not leaking, but filled with enough fluid to kill the well.  Mining through them would have reduced the hydrostatic pressure in the well and could change the dynamic and cause a problem for the gas storage area.
He said mining companies typically plug all abandoned wells in advance of mining.
DEP stepped up its attention to gas storage fields after a massive gas leak from a California storage area in 2015 and 2016 released over 100,000 tons of methane and caused thousands of nearby residents to be evacuated.
Abandoned Wells
Perry said DEP is encouraging the industry and others to plug as many of the estimated 200,000 abandoned wells in the state as possible to prevent gas migration and groundwater pollution.
He said they are promoting the Good Samaritan Gas Well Plugging Program by industry and underused Commonwealth Financing Authority funding.
He also noted the unconventional gas drilling industry plugs about 500 abandoned wells a year in addition to the wells plugged by the coal mining industry.
Perry expressed concern about recent actions to sell and transfer thousands of conventional oil and gas wells and their plugging liability to a single company-- Diversified Oil.  
Although there was nothing legally wrong with the transfer, Perry said he did not want to see a situation develop where DEP allowed the number of unplug, abandoned wells to increase.
Perry suggested this was an issue the Council could look into more deeply.
DCNR Funding For Plugging
To help reduce the number of abandoned wells on State Park and Forest land, Perry said the Department of Conservation and Natural Resources has committed $2 million a year in funding to DEP to handle plugging oil and gas wells on their land.
The Council also discussed a draft version of a transition paper identifying issues related to DEP for Gov. Wolf at the beginning of his new term in office and the General Assembly at the start of its new session.
Jerome Shabazz, vice chair of the Council, chaired the meeting since Don Welsh left to take a position with the Environmental Council of the States.
Click Here for a copy of DEP’s written monthly report to Council.
The next meeting of the Council will be held on February 19  in Room 105 of the Rachel Carson Building starting at 10:00. A conference call option is typically offered.
For more information and available handouts, visit the DEP Citizens Advisory Council webpage.  Questions should be directed to Keith Calador, Executive Director, 717-787-8171 or send email to:
(Photo: Map of natural gas storage fields in PA.)

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