Thursday, December 29, 2022

DEP Report Finds: Conventional Oil & Gas Drillers Routinely Abandon Wells; Fail To Report How Millions Of Gallons Of Waste Is Disposed; And Non-Compliance Is An ‘Acceptable Norm’

On December 29, the Department of Environmental Protection released the
first-ever assessment of how well conventional oil and gas drillers comply with state environmental laws and concluded, “(the) conventional oil and gas industry’s recent record of compliance with Pennsylvania law is simply not good, particularly with regard to improper abandonment of wells.”

“A significant change in the culture of non-compliance as an acceptable norm in the conventional oil and gas industry will need to occur before meaningful improvement can happen.”

“This record of non-compliance will require DEP to further develop and refine its techniques for deterring violations and encouraging compliance with relevant statutory and regulatory provisions. 

The report looked at environmental compliance in the industry between 2017 through 2021.

Specifically, the report found--

-- Abandoning oil and gas wells most frequent violation, noting conventional operators were issued 3,123 notices of violation for the practice during the five years reviewed;

-- Huge gaps exist in reporting waste generated by conventional wells: Over 56 percent of conventional well operators fail to report the amount of waste they generate and how it is disposed of meaning more than half of the wastewater being produced may be unaccounted for-- roughly 118 million gallons-- but we don’t know for sure due to the lack of reporting.

-- Failure to report mechanical integrity of wells by over 59 percent of conventional well operators means they are not making sure their oil and gas wells are not leaking fluids into groundwater or surface water or natural gas into the air or operating their wells safely.

-- Puts off a decision on banning the practice of road dumping conventional oil and gas wastewater to the future.

Overview Of Non-Compliance

DEP reports between 2017 through 2021, the agency did 63,026 inspections of wells belonging to 1,512 conventional oil and gas well owners operating 34,812 wells.

DEP issued 16,568 violations to 503 operators (33.3%) covering 4,083 oil and gas wells.

Of the top ten violations during this time period, DEP reported abandoning wells without plugging them was the number one violation by far.  Five other violations involved illegal disposal or handling of liquid or solid waste.

Failure to get a permit to drill or operate an oil and gas well-- 216; failure to plug a well to prevent the vertical flow of fluids or gas-- 217; failure to comply with erosion and sediment control requirements-- 197-- round out the top ten list.

“Clearly, there is significant non-compliance with relevant laws in the conventional oil and gas industry in Pennsylvania. The bad news is that the resources and enforcement tools and techniques available to the Department have not made an appreciable dent in compliance rates and numbers over the past five years.”

DEP said it has “undertaken significant efforts to force compliance or penalize operators for their non-compliance” by, among other measures, imposing $1.3 million in penalties on conventional operators and issuing 44 administrative orders over the five reporting years.

[Note: Only 15 of the 256 conventional operators issued notices of violation for abandoning wells without plugging them, for example, were assessed monetary penalties between 2016 and 2021.  Read more here.

[And those penalties ranged from $500 to $1,000. Read more here.

[DEP now estimates it costs taxpayers $78,000 to plug a well, so a few thousand dollars is no deterrent to future abandonments.]

Why The Assessment?

DEP’s assessment was promised by Gov. Wolf in July after he allowed legislation to become law without his signature that prohibited DEP from increasing conventional oil and gas well plugging bond rates for ten years that would have helped deter new well abandonments.  Read more here.

Gov. Wolf said at the time, “The legislature's action to withdraw the Environmental Quality Board's authority to establish bonding amounts for the conventional industry provides an appropriate occasion to revisit whether the Commonwealth is doing enough to ensure that this industry is being a good environmental steward by preventing the abandonment of wells and meeting its obligations as a prudent trustee of Pennsylvania's public natural resources for current and future generations.

“Evidence on this count is discouraging. 

“Over the past five years, DEP has identified more than 17,000 violations at conventional oil and gas wells, and DEP has issued over 3,300 Notices of Violations to the conventional industry specifically due to attempts to abandon wells since July 1, 2017. 

“In addition, over the past five years, operators of conventional oil and gas wells have failed to report production for an average of around 36,000 conventional oil and gas wells per year.”

Routine Well Abandonments

“Most disturbingly, the most frequent “environmental/health/safety” violation that DEP has noted is the violation of requirements in the 2012 Oil and Gas Act and Chapter 78 for the proper abandonment of oil and gas wells.”

Between 2017 and through 2021, conventional oil and gas drillers were issued 3,123 notices of violations for new well abandonments and 217 violations for failure to plug a well to stop the vertical flow of fluids or gas out of the well.

“Wells that are improperly abandoned may pose environmental and public health and safety threats and may become the responsibility of the Commonwealth to plug along with remediation and reclamation of the well sites. 

“Unplugged or improperly plugged wells can cause a myriad of problems, including gas migration into occupied structures, water supply impacts, surface water impacts, hazardous air pollutant emissions, methane emissions, and soil and groundwater contamination. 

“Improperly plugged wells have been tied to fatal explosions in Pennsylvania and other states, so this is a category of potentially significant violations.”

“The issue of plugging obligations passing to the Commonwealth is especially critical for wells abandoned today but drilled before April 15, 1985 [about 60 percent of active conventional wells] as these wells have no bonds that could be forfeited to cover at least a portion of the cost of plugging them…”

“Failure to properly plug an abandoned well also means that the task of properly plugging the abandoned well might fall to the Commonwealth – “the plugger of last resort” – with the costs to do so passed along to Pennsylvania taxpayers.”

[Note: The Pittsburgh Post-Gazette reported DEP has only $15 per well available to plug the number of active conventional oil and gas wells now on the books with DEP and estimates are state taxpayers are financially responsible for $5.1 billion or more of well plugging costs due to woefully inadequate well bonding requirements.  Read more here.]

[Note: The new federal Bipartisan Infrastructure Law well plugging program provided DEP with funding to plug 277 conventional oil and gas wells in 2022-23.  Read more here.

[Through the end of September in 2022, DEP issued a total of 322 notices of violation to  conventional operators for abandoning wells without plugging them and 32 NOVs to unconventional shale gas operators for a total of 354 wells.  Read more here.

[This means without effective methods to deter new well abandonments, Pennsylvania will fall further and further behind in plugging potentially dangerous oil and gas wells.]

Remedies For New Abandonments

The report recommends DEP take a number of actions to deal with the wide-spread practice of conventional well abandonment--

-- Develop and issue a standard order whenever a notice of violation is issued for abandoning or failing to plug a well.

-- Develop and issue a standard bond forfeiture notice to go with the order for abandoning or failing to plug wells to begin the forfeiture process where bonds exist.

-- Develop and issue a standard penalty assessment for abandoning or failing to plug a well to collect civil penalties.

-- Deny additional well permits, block permit transfers and suspend permits if these orders are violated or if other significant non-compliance occurs.

-- Develop and issue a standard lien on property for failure to pay penalty assessments or court judgements.

-- Tighten requirements for permit transfers and designating wells as inactive to avoid setting up circumstances where wells can be more easily abandoned.

Developing standard documents will save DEP staff time and legal review before they are issued, meaning the whole process is much quicker than it is now.

The report also notes the DEP can refer oil and gas operators to the Office of Attorney General or county District Attorney for criminal enforcement and should “consider referral of appropriate cases to the Office of Attorney General for criminal prosecution under the environmental statutes.”

Limits On Well Plugging Bonding

The report notes changes in law in July limited the authority of DEP to recommend higher well plugging bond amounts as a deterrent to new well abandonments.  Read more here.

However, the report says-- “There might be other avenues to make improvements to Department programs designed to reduce future orphaned well burdens, such as alternative funding mechanisms for orphaned well programs to protect taxpayers from assuming additional liabilities, and reforms to programs relating to well transfer or temporary abandonment, as noted above. 

“The Department should compile information regarding how other states approach these issues and make recommendations for any reasonable legislative or regulatory changes that might assist in avoiding improper abandonment.”

Failure To Report Waste Disposal

Over 56 percent of conventional well operators-- 1,886-- failed to report not only their oil and gas production, but also how much liquid and solid waste they produced and how it was disposed of as required by state law.

“Overall performance is so poor among operators with 11 or more conventional oil and gas wells that the failure to report seems to be an industry-wide rule rather than the exception.”

[Note: This means there are huge gaps in reporting potential millions of gallons of liquid waste.  In 2017, conventional operators reported generating 93,416,526 gallons of wastewater for disposal or treatment.

[A rough calculation based on the 44 percent of operators reporting means more than half of the wastewater being produced may be unaccounted for-- roughly 118 million gallons-- but we don’t know for sure due to lack of reporting.]

“Other frequent violations include improper management of residual wastes and failure to properly manage production fluids. Both violations can be directly related to environmental harm, impacts to drinking water supplies and potential threats to public health and safety.”

Of the top ten environmental violations listed by DEP most related to failure to manage well wastes properly, including--

#2 - Illegally operating a residual waste processing or disposal facility without a permit;

#3 - Failure to collect brine, production and other wastewater and allowing discharges into ground or surface water;

#4 - Illegal disposal of liquid and solid wastes, drill cuttings in a way that causes pollution of the ground or surface water;

#6 - Illegal dumping of waste on the ground, underground or in waters of the Commonwealth; and

#8 - Not disposing, storing or processing waste as required by regulations.

Putting Off Ban On Road Dumping

The report says upcoming proposed regulation changes covering conventional oil and gas waste management practices “will be silent as to the practice of roadspreading of conventional oil and gas well brine…” 

However, DEP continued, “but that practice could potentially be addressed through this rulemaking.” [page 21]

[Note: The language indicates DEP is leaving that decision to the Shapiro Administration.]

[Note: In May, Penn State University released a new study on road dumping conventional oil and gas wastewater that found runoff from spreading conventional oil and gas wastewater on unpaved roads contains concentrations of barium, strontium, lithium, iron, manganese that exceed human-health based criteria and levels of radioactive radium that exceed industrial discharge standards.  Read more here.

[Plus, it doesn’t work any better than plain water.

[In spite of the fact DEP continues to tell conventional operators the practice is illegal [Read more here], drillers reported road dumping over 977,671 gallons in 2021 and the practice continued in 2022.  Read more here.

[The Office of Attorney General was reported by the industry to be investigating the practice.  [Read more here.]

[In December, the Better Path Coalition reported 65 organizations and businesses and 2,700 individuals petitioned Gov.-Elect Shapiro to ban road dumping conventional wastewater just like DEP did for unconventional shale gas drillers in 2016.  Read more here.]

Failure To Do Mechanical Integrity Assessments

Over 59 percent of conventional well operators-- 1,980-- failed to report on the mechanical integrity of their wells, according to the report.

The integrity assessments provide the public with assurances their oil and gas wells are not leaking fluids into groundwater or on the ground or natural gas into the air and are operating safely

The report found that only about 30 percent of conventional operators submit their reports on time.

“The widespread reporting non-compliance by the conventional oil and gas industry denies DEP and the public critical information about the operating status of individual wells, the overall industry, and, in the case of mechanical integrity assessments, may pose a threat to public health and safety and the environment.”

Updating Conventional Regulations

The report notes DEP has been working on updating conventional oil and gas environmental protection and waste disposal and handling standards, after the last comprehensive update was “abrogated” by the General Assembly in 2016.  Read more here.

Since 2020 in particular, DEP notes it has worked with the PA Grade Crude [Oil] Development Advisory Council representing conventional oil and gas operators to restart the rulemaking process on two packages of changes.

The report says, “CDAC vigorously opposed adoption of the majority of the environmental protection standards rulemaking and adopted a report detailing CDAC’s concerns with the proposed rulemaking.”

But DEP concludes, “The Department should continue to move these proposed rulemakings forward to the Environmental Quality Board (EQB) for consideration and public comment.”

[Note: On December 1, Kurt Klapkowski, Acting DEP Deputy Secretary for Oil and Gas Management, said the schedule for considering updates to environmental protection standards for conventional oil and gas drillers will be up to the incoming Shapiro-Davis Administration.  Read more here.]

Need For More Resources

The report said, “It cannot be emphasized strongly enough, however, that increased oversight of the conventional oil and gas industry and enforcement will require additional resources for the Department, especially in the DEP Office of Chief Counsel and the Bureau of District Oil and Gas Operations. 

“Developing a stable funding source to fund these efforts will be critical to successfully altering the current course of widespread non-compliance in the conventional oil and gas industry in Pennsylvania.”

[Note: DEP has been warning policymakers all during 2022 that revenue from the per well permit fees is significantly below where it should be to pay for the costs of regulating the conventional and unconventional shale gas industry in Pennsylvania.  Read more here.

In February of 2022, DEP reported to the Environmental Quality Board conventional oil and gas drilling companies only paid $46,100 of the $10,600,000 it cost for DEP to regulate that industry in FY 2020-21.  Read more here.

DEP estimates 60 percent of these costs are accounted for by activities related to unconventional oil and gas well activities-- about $15,988,224 and 40 percent by conventional oil and gas wells-- about $10,658,816.  Read more here.

DEP’s current fees became effective in August of 2020, but they were out-of-date even before they were adopted.  

DEP estimated revenue from 2,000 unconventional shale gas permits a year was needed to support the program to regulate both the conventional and unconventional industries.  As of December 23, DEP received 731 permits for review in 2022. 

Currently, DEP has a staff complement in this program of somewhere around 190, when a fully staffed program would need 226+ people.  Read more here.

Click Here for a copy of DEP’s Conventional Oil & Gas Industry Compliance Assessment.

DEP Oil & Gas Dashboards:

-- Pennsylvania Oil & Gas Weekly Compliance Dashboard - Dec. 24 to 30  [PaEN] 

-- PA Oil & Gas Industrial Facilities: Permit Notices/Opportunities To Comment  [PaEN] 

-- DEP Posted 50 Pages Of Permit-Related Notices In Dec. 31 PA Bulletin  [PaEN]

Related Articles - Oil & Gas Industry:

-- PA Environment Digest Articles On Oil & Gas Industry Impacts

Related Article This Week:

-- - Laura Legere: ‘Rule Rather Than The Exception’: DEP Rips Conventional Oil & Gas Industry For Noncompliance

-- PA Oil & Gas Industry Has Record Year: Cost, Criminal Convictions Up; $3.1 Million In Penalties Collected; Record Number Of Violations Issued; Major Compliance Issues Uncovered; Evidence Of Health Impacts Mounts [PaEN]

Related Articles - Conventional Oil & Gas:

-- Gov. Wolf Announces Evaluation Of How DEP Regulates Conventional Oil & Gas Drilling & The Industry’s Compliance With Environmental Safeguards  [PaEN]

-- Conventional Oil & Natural Gas Drilling: An Industrial Machine Moving Across The PA Countryside Leaving Behind Big Liabilities & Spreading Pollution Everywhere It Goes  [PaEN]

-- Gov. Wolf Now Has To Decide To Hold Oil & Gas Drillers Accountable, Or Create A $5.1 Billion Cleanup Liability For Taxpayers   [PaEN]

-- New Abandoned Wells: DEP Records Show Abandoning Oil & Gas Wells Without Plugging Them Is Pervasive In Conventional Drilling Industry; Who Is Protecting Taxpayers?  [PaEN]

-- 12 Unconventional Shale Gas Drillers Issued DEP Notices Of Violation For Abandoning Wells Without Plugging Them At 35 Well Pads In 17 Counties  [PaEN]

-- Bay Journal: New Abandoned Wells - More Concerns Emerge Over Pennsylvania’s Conventional Oil & Gas Wells  [PaEN]

-- Conventional Oil & Natural Gas Companies Accelerating Pace Of Abandoning Wells Without Plugging Them Threatening To Put PA’s Taxpayer-Funded Well Plugging Program Even Further Behind  [PaEN]

-- DEP Issued NOVs To Conventional Oil & Gas Companies For Abandoning 55 Wells Without Plugging Them During September Alone, A Dramatic Increase In New Well Abandonments  [PaEN]

-- Only 15 Out Of 256 Conventional Oil & Gas Operators Who Abandoned Wells Without Plugging Them Were Fined By DEP; Small Penalties No Deterrent To Future Abandonments  [PaEN]

-- Penn State Study: Potential Pollution Caused By Road Dumping Conventional Oil & Gas Wastewater Makes It Unsuitable For A Dust Suppressant, Washes Right Off The Road Into The Ditch  [PaEN]

-- Bay Journal: Penn State Study: Conventional Oil & Gas Wastewater Spread On Pennsylvania Roads Bad For Health, Land  [PaEN]

-- Conventional Oil & Gas Drillers Reported Spreading 977,671 Gallons Of Untreated Drilling Wastewater On PA Roads In 2021   [PaEN]

-- Better Path Coalition: 65 Organizations, Businesses, 2,700+ Individuals Petition Gov.-Elect Shapiro To Ban Road Dumping Of Conventional Oil & Gas Wastewater  [PaEN]

-- DEP Tells Citizens Advisory Council Road Dumping Conventional Oil & Gas Wastewater Still Does Not Meet Residual Waste Regulations; Remains Illegal  [PaEN]

-- Attorney General’s Office Reported To Be Investigating Conventional Oil & Gas Operators For Illegally Road Dumping Drilling Wastewater  [PaEN]

-- DEP Advises 18 Municipalities Where Road Dumping Of Conventional Oil & Gas Drilling Wastewater Is Occurring The Practice Is Illegal And Considered Waste Disposal  [PaEN]

-- On-Site Conventional Oil & Gas Drilling Waste Disposal Plans Making Hundreds Of Drilling Sites Waste Dumps  [PaEN]

-- Conventional Oil & Gas Drillers Dispose Of Drill Cuttings By ‘Dusting’ - Blowing Them On The Ground, And In The Air Around Drill Sites   [PaEN]

[Posted: December 29, 2022]  PA Environment Digest

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