PERMITS: Pennsylvania Governor Tom Wolf’s Department of Environmental Protection has issued 128 shale gas well permits in his first 15 business days. That is a rate of one fracking permit every 56 minutes that the PA DEP is open. This puts Wolf on pace to issue 8,568 permits in his first term with 989 business days left. (1/21 – 2/10, See for yourself)
WELLS DRILLED: During the same period, drilling commenced on 54 new shale gas wells, almost four new wells per day. At this rate Wolf will oversee the drilling of 3,756 wells in Pennsylvania’s shalefields. (See for yourself)
VIOLATIONS: During the same period, the PA DEP Compliance Report already lists 20 violations cited by inspectors at just six different well sites.
Here is one lowlight of DEP’s inspections: On Monday in Bradford County, Chesapeake Energy was cited the following violations for a leaking waste pit:
CSL 402(b) – POTENTIAL POLLUTION – Conducting an activity regulated by a permit issued pursuant to Section 402 of The Clean Streams Law to prevent the potential of pollution to waters of the Commonwealth without a permit or contrary to a permit issued under that authority by the Department.
78.57(a) – CONTROL, STORAGE AND DISPOSAL OF PRODUCTION FLUIDS – Operator failed to collect the brine and other fluids produced during operation, service and plugging of the well in a tank, pit or a series of pits or tanks, or other device approved by the Department or Operator discharged brine or other fluids on or into the ground or into waters of the Commonwealth.
SWMA301 – Failure to properly store, transport, process or dispose of a residual waste.
OGA3218.2(A) – Failure to design and construct unconventional well site to prevent spills to the ground surface and off well site.
Chesapeake has received 14 drilling permits since the Wolf inauguration. However, the PA DEP has the authority to deny permits to any driller with outstanding violations they consider to be a “bad actor”. For any decent regulator, this would be an opportunity to discipline Chesapeake Energy for the violations this week and their 561 violations that have been cited since drilling began by denying them any new permits.
Will the Wolf administration issue a permit to Chesapeake Energy next week while the waste pit is still in violation? Probably.
WELL CASINGS: We noted in our recent report on cement well casing failures, that approximately four percent of wells have been cited for well casing violations in Pennsylvania since drilling in the Marcellus Shale began. Well casings are installed after the initial drilling phase to protect groundwater from high pressure gas and fracking fluids.
If the Wolf wells are cited by PA DEP for well casing violations at the same rate that Rendell’s and Corbett’s wells were, Wolf will add 150 failed well casings to the total based on his current pace. This adds insult to injury in a state where there are 251 proven cases of drinking water wells contaminated by oil and gas activity since 2007.
DRILLING STATE LANDS: Wolf, who has been lauded by other environmental groups for his pardoning of state parks for drilling, hasn’t spared the rest of the Commonwealth from the abuses of the shale gas industry.
We noted that Wolf is leaving 700,000 acres of state forests and gamelands on the table for drilling, pipelines, access roads, pits, and compressor stations, which deserves no praise in our opinion.
TAXING MEANS FRACKING: This week, Wolf unveiled a proposal to place an extraction tax on methane that hands his gas industry campaign contributors a blanket authorization for fracking, as long as they let him stuff Harrisburg’s coffers with cash.
The proposed five percent tax ensures that there will be no transition away from dirty energy in Pennsylvania’s near future. In an Orwellian move to placate his supporters, Wolf dubbed it the “Education Reinvestment Act” and announced it in an elementary school surrounded by children.
Many environmentalists believe the tax will somehow burden the industry in our favor. However, here in Susquehanna County, where the most methane from the Marcellus Shale has been produced, the drop in methane prices has not slowed the pace of drilling. In fact, 2014 was a record year for wells drilled here.
According to NASDAQ, the price of natural gas in 2008 was over $12 per thousand cubic feet and has plummeted to less than $3 per thousand cubic feet, more than a 75 percent drop since the beginning of the Marcellus Shale boom. If that drop hasn’t slowed operators, an added five percent tax will not slow the pace either.
In addition, the rate of permit applications, permitting, and subsequent drilling is dependent on methane prices, gas liquid prices, permit expiration, lease expiration, and the prospective for new demand like gas power plants and exporting gas overseas.
DEMAND ON THE RISE: The outlook is bleak. A significant increase in demand for shale gas would raise the price, inducing more shale gas operators to apply for permits and drill wells.
There are three big factors that could drastically increase the rate at which companies apply for permits and develop wells.
First, there are 32 proposed gas-fired power plants in Pennsylvania and the Wolf administration’s implementation of the EPA’s “Clean” Power Plan will largely determine the demand for methane gas regionally. The EPA rule recommends coal to gas conversion in electric generation as a priority and must be implemented by each state’s governor according to the Clean Air Act.
Second, the controversial Cove Point Liquefied Natural Gas export terminal in Lusby, MD is scheduled to come online in 2017. There are two major transmission pipeline projects serving it including the Columbia Gas Pipeline currently being upgraded and the proposed Atlantic Sunrise Pipeline. Methane produced in eastern Pennsylvania is already contracted to serve overseas customers via Cove Point.
Third, the demand will increase for gas liquids found in western Pennsylvania’s shale such as butane, ethane, and propane if the proposed Shell ethane cracker in Beaver County is built. Ethane crackers produce ethylene for plastics and the construction of Shell’s plant is listed as a priority in Tom Wolf’s “Fresh Start” plan.