Pennsylvania Tough Regs for Natural Gas Drillers

By Steve McConnell
Wayne Independent
Fri Nov 21, 2008, 05:34 PM EST
Story Tools: Email This Email This | Print This Print This
Wayne County -

As some county landowners await the natural gas boom, executives from major natural gas companies are saying it may be too difficult to drill here because of an over-demanding regulatory system that could put the brakes on the “gold rush.”
At a state senate hearing in Luzerne County on Tuesday, Wendy Straatman, president of Exco-North Coast Energy, which has signed more than 100 land leases in the county, said, in her written testimony, that the company may have to put its investments on hold due to an “uncertain regulatory and legislative environment.”
The company has experienced “permitting delays – unlike anything we have seen in any other state in which we operate,” according to her testimony.
John Baen, professor of real estate at the University of North Texas, said, in his report to the committee, that the commonwealth is a “disjoined jungle of agencies, boards, counsels, and regulatory bodies ... (with) unpredictable permitting success or denial based on any one ‘roadblock ... reducing the chance that the Marcellus Shale as a resource will ever be developed.”
In order to drill and maintain natural gas operations in the Marcellus Shale, drilling companies mainly need permits from the state Department of Environment Protection (DEP), which regulates the drilling process, public health and water quality issues, and the Delaware River Basin Commission (DRBC), which regulates water withdrawal and quality.
Besides the economic consideration that the Marcellus Shale could support U.S. natural gas energy needs for at least 14 years, according to Penn State geoscientist Terry Engelder, and provide well-paying jobs to the region, environmental regulators must walk the fine line of not stymieing the industry while ensuring that the commonwealth’s pristine environment - and public health - is not compromised.
“We have a responsibility here to give the industry thorough and timely (permit) reviews,” said DEP spokesman Tom Rathburn. “We’re not holding anyone up here. We’re getting it done.”
He said this year the department approved 7,700 permits in the traditional oil and gas fields in western Pennsylvania, a four-fold increase from last year, and 300 permits in the Marcellus area.

Regulatory Hurdles

To efficiently drill the Marcellus Shale, natural gas well operators must bust open gas seams, thousands of feet below the surface, through a process called “hydraulic fracturing,” which creates fractures in the rock seams trapping gas.
One well, however, may need more than one-million gallons of water, combined with sand and trade-secret chemicals, for the process.
To obtain the large quantities of water needed to bust a shale, gas operators need Delaware River Basin Commission (DRBC)’s permission to siphon water from the county’s rivers, streams, or ponds.
DRBC is a federal multi-state agency which regulates water resources in the basin, 36 percent of which is underlain by the Marcellus Shale.
“For the first time, this is an area ... the commission has not been involved in,” said Clarke Rupert, a DRBC spokesperson, about the Marcellus phenomenon. With “the large use of water, that’s why the review by the commission has become necessary.”
William Muszynski, water resources manager with DRBC, said, in his presentation at the senate hearing, that drilling operations are expected to have a “substantial effect” on the basin’s water resources.
But industry representatives say there are too many regulatory players and too many different permits, some of which are redundant.
Stephen Rhodes, president of the Pennsylvania Oil and Gas Association, an industry group, said there are also a myriad of other lesser known permits, environmental safety procedures, and regulatory groups like county conservation districts that the industry must satisfy.
“It’s unlike anywhere else in the country,” said Rhodes, of the state’s regulatory climate. “They are treating us like residential subdivisions or Wal-Mart. It’s a complex process (natural gas extraction) and we understand. We just need to find ways to streamline it. ... Nobody in this industry has any intent to operate in a way that is damaging to the environment.”
“The regulations are in place to protect the commonwealth,” said Dave Messersmith, of the Penn State Cooperative Extension Office in Wayne County. “They are there for a reason.”
“The turnaround time on applications is really pretty quick,” he added.
Rhodes said the regulation requirements are much stronger in the Marcellus Shale, in contrast to the long-standing permit requirements in the state’s traditional oil and gas fields.
“The review process is extremely detailed and involved,” said Rhodes. “This could stifle billions of dollars in investment if (the permit process) it is not streamlined.”
According to Muszynski’s testimony, DRBC is working to “streamline permitting requirements” and is expecting “increased (permit) application activity” in Wayne County.
Late October, DRBC received its first water withdrawal application for Marcellus-related operations, a request from Chesapeake Appalachia LLC, a subsidiary of Chesapeake Energy Corp., to draw 30 million gallons of water, in a 30 day period, from the East Branch of the Delaware River.