Pennsylvania Gov. Proposes Marcellus Shale Natural Gas Drilling Regulations

Monday November 7, 2011
Posted at 15:35

Shale natural gas drilling uses a controversial extraction method known as hydraulic fracturing, or fracking, to get at massive stores of natural gas. Fracking can offer huge economic benefits and help the U.S. meet its future energy goals but has been criticized for potentially producing severe public health risks. On Monday, Pennsylvania Governor Tom Corbett announced his plan for resolving the risks and rewards of shale natural gas drilling in his state.

Corbett’s proposal calls for drilling companies to pay a per-well fee of $40,000 to help recoup costs associated with drilling, offset the wear and tear on transportation infrastructure caused by the drilling industry and fund enforcement of tougher state environmental standards by individual counties that will hold drilling companies accountable for environmental damage.

Corbett’s proposal was highly anticipated in Pennsylvania, where fracking is a hot topic. The state sits on the Marcellus Shale, the nation’s largest gas reserve. While expanding drilling at the shale could help provide an economic boost to the state’s sagging economy, residents, environmentalists and lawmakers are concerned about the negative effects that unregulated drilling may have on public health and infrastructure, such as roads and bridges.

“Affordable, reliable energy allows companies to grow,” Corbett said at a recent event in Pittsburgh, “but how do we get there? We have to make sure that we do this right, from the very beginning.”

Lawmakers Disagree About Who Should Benefit from Shale Drilling Regulations

Corbett said his plan provides the “smart, sound, evenhanded, level-playing-field regulation and legislation” necessary to achieve a balance between business interests and consumer protections with regard to shale natural gas drilling in Pennsylvania.

Corbett’s plan allows counties to set a fee of no more than $40,000 per well that would be reduced over time until, after 10 years, it would be eliminated. Three-quarters of the money would remain in the counties where the wells are drilled and go towards industry regulation, infrastructure improvements and social services such as affordable housing.

The remaining money would fund state programs, such as gas-related environmental protection, infrastructure improvements, heath studies related to drilling, pipeline safety and emergency response. According to Corbett, his plan would generate $120 million in the first year and could increase to $195 million within six years as more wells are drilled.

However, Senate Pro Tempore Joe Scarnati, a Republican from Jefferson, said the proposal would unlikely be approved in its current form because it too narrowly benefitted the roughly 40 counties were shale natural gas drilling occurs. Scarnati has pushed his own legislative proposal that calls for an impact fee that not only assists communities affected by drilling but also funds related environmental programs on a statewide level rather than through the efforts of individual counties. Scarnati has estimated that his plan would generate $200 million a year for the state starting as early as 2012.

Lawmakers and Environmental Advocates Say Regulations Don’t Go Far Enough

Doug Hill, executive director of the County Commissioners Association of Pennsylvania, said he was pleased that Corbett’s plan would reimburse counties for the activities of drilling companies. However, Hill expressed concerns that the plan would place undue administrative burdens on counties responsible for collecting and distributing the fee revenue while creating potential “border wars” between counties that assessed a per-well fee and those that did not.

Other lawmakers say Corbett’s proposal doesn’t go far enough. Former Gov. Ed Rendell said the fees levied against drilling companies wouldn’t generate enough revenue to take care of the counties and help the environment. Meanwhile, some Republican lawmakers, complaining that Corbett’s plan doesn’t go far enough, are proposing an outright shale tax. Rep. Gene DiGirolamo and House Rep. Tom Murt, both Republicans, have introduced a bill that would impose a 4.9 percent extraction tax on drillers that’s estimated to generate as much as $562 million.

For their part, environmentalists have a mixed view of Corbett’s proposal. Activists claim that the plan does a good job of increasing setbacks for wells near water supplies, setting aside funds for plugging abandoned wells and doubling civil penalties against companies that break the law, but doesn’t provide the money needed to offset the damage that fracking does to the environment. According to Maya van Rossum, head of the Delaware Riverkeeper Network, Corbett’s impact fee represents a “drop in the bucket.”

The Marcellus Shale Coalition, an organization that represents 244 gas companies, said Corbett’s plan would allow the fast-growing shale drilling industry to flourish. Coalition president Katherine Klaber said it would allow Pennsylvanians to reap the “countless benefits” of shale drilling, including lower energy costs, economic revival and the “environmental advantages of increased natural gas use.”

Sources

Corbett Offers Fee Proposal for Gas Drilling,” The Philadelphia Inquirer, Oct. 4, 2011.

Natural Gas Drilling Under Fire in Texas over EPA Regulations

Friday October 14, 2011
Posted at 08:26

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Natural gas drilling has gone under the microscope in Texas for the controversial drilling technique known as hydraulic fracturing, or “fracking,” and the proposed government rules meant to regulate it.

Industry supporters and environmentalists squared off at a public hearing in Arlington about regulations that the U.S. Environmental Protection Agency (EPA) proposed in June to limit pollution and public health problems allegedly caused by the technique, which uses horizontal drilling to access large, previously inaccessible stores of natural gas from more than a mile underground.

Industry advocates say that fracking is safe, or at least safe enough, and allows well operators to get at needed supplies of natural gas, while consumer and environmental advocates say the drilling technique leads to water and air pollution and to illnesses such as cancer.

The EPA’s rules regulating fracking, proposed after a lawsuit was filed by two environmental organizations in July, seek to curb the practice by requiring that oil and natural gas well operators capture and sell the natural gas that is currently allowed to escape into the air. The agency’s proposed rules would apply new pollution control standards to the roughly 25,000 natural gas wells that are hydraulically fractured in the United States each year.

Fracking Debate Highlights Fissure Between Prosperity and Public Health

The EPA hearing was contentious, perhaps made more so because of the venue. Arlington, which sits atop the natural gas–rich Barnett Shale, is situated in a region with vast urban natural gas drilling. The region is crowded with people who profit from fracking and those who claim to have suffered from it. While one side of the aisle pointed to the jobs and prosperity that result from less-regulated drilling, the other side argued that the risk of toxic spills, drill site explosions, polluted air and tainted drinking water simply isn’t worth it.

Teddy Carter, a spokesman for the Texas Independent Producers and Royalty Owners Association, said that the EPA’s proposed rules were so complicated that compliance would not only be difficult, it would present a financial hardship that could threaten the state’s 5,000 oil and gas well operators and be especially hard on the smaller operations.

Carter said that the EPA’s reduced-emission completion regulations should be “encouraged but not mandated” because “one size does not fit all.” According to Carter, regulation for regulation’s sake “is a dangerous path that can potentially cause greater harm than good” and the agency shouldn’t be presenting solutions to problems that don’t exist.

Several other members of the oil and gas industry joined Carter in urging the EPA to delay its current timeline, which would see the rules take effect next spring. The members asked the agency to extend its public comment period by 90 days and its final action date by six months to give companies more time to review the proposed regulations and plan for changes.

Critics of fracking who attended the hearing, including state Rep. Lon Burnam, a Democrat from Fort Worth, denied industry members’ claims that the process is safe. According to Burnam, fracking has caused air pollution in Texas to steadily increase over the past five years. Burnam told the hearing that he was “tired of being sick and tired” when companies talk about things like cost effectiveness and acceptable risks at the expense of the heath of children in his district.

Burnam went on to say that the EPA proposals would “do what the Texas Legislature and state agencies that oversee oil and gas production have failed to do: protect public health by placing reasonable limits on air pollution that will both reduce emissions and increase industry revenues.”

According to the EPA, its proposal, when fully implemented, could reduce emissions of smog-forming volatile organic compounds by about 25 percent, or roughly 540,000 tons, including reducing methane emissions by about 26 percent and hazardous air pollutants, such as benzene, by almost 30 percent.

To comply with the agency’s rules, drilling companies would have to spend millions of dollars. However, the government estimated that the proposed regulations could save the industry almost $30 million by 2015 from sales of captured natural gas. Industry members disputed the government’s claim.

Sources

EPA Holds Hearing in Texas on Natural Gas Drilling,” Bloomberg Businessweek, Sept. 29, 2011.