Tuesday, April 19, 2011

No shale driller wants to rank high on this list

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The Pittsburgh Post-Gazette performed a public service yesterday in publishing data from a
PADEP list of violations and fines imposed on Marcellus Shale drilling companies between 2005 and Feb. 1, 2011.

We call it a public service because such disclosure (perhaps even more so than the size of the fines) motivates companies to pay closer attention to their operations and quickly address problem areas.

Every smart company wants to claim that it is vigilant when it comes to environmental protection. Consistently ranking high on such lists provides ammunition to those who would argue that such claims are bogus.

That's the theory, at least, and former DEP Secretary John Hanger said he saw it proven in the case of Chief Oil & Gas.

When the company landed near the top of several lists -- including the most fines of any Marcellus Shale drilling company in Pennsylvania -- its leadership requested a meeting. Hanger recalls that they flew up from Dallas and told him they were "taking steps taking steps to improve their environmental performance, improving their control of water, improving their command and control on site."

"No one wants to be on a list," Chief's spokeswoman Kristi Gittins told the Post-Gazette. "We've been drilling shale for 15 years and we're good at it, so, we were surprised by the list of violations and fines we received" in Pennsylvania.

Following its meeting with Hanger, Gittins says Chief conducted a review of its operations, fired some employees and subcontractors, and began lining its entire site with plastic to help contain any spill. The company implemented a closed-loop system to contain drill pit water, which was the cause of four of its nine fines.

Is potential public shame enough to get drillers to perform properly?  Some environmental groups think that higher fines would help as well.

"A fine for environmental drillers really should hurt the pocketbook," said PennFuture president Jan Jarrett. "Even that $24,000 average [fine], in terms of the cost of putting up one of those multimillion dollars wells, that's just so much background noise to these companies."

State Sen. Jim Ferlo, D-Highland Park, has a bill that would increase fines in the Oil & Gas Act that regulates the Marcellus Shale industry. His bill would increase the maximum fine from $25,000 to $100,000, and the fine for each day of continual violation from $1,000 per day to $10,500 per day.

Former DEP Secretary Hanger said he believes the state's Clean Streams Law, which is applied if well spills make their way to state waterways, also should be increased. Currently, a violation of the streams law is punishable by up to $10,000-per-day fine.

You may not be surprised to learn that industry representatives disagree.

"The way I hear the issue is it's not the amount of the fine, it's how do we improve performance to avoid them in the first place," said Kathryn Klaber, executive director of the Marcellus Shale Coalition, an industry group representing the state's operators.

Read the entire story: What fines reveal about drilling in state

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