Friday, January 29, 2010

More Pennyslvania Regs for Natural Gas

By Jon Hurdle

Regulatory News

PHILADELPHIA, Jan 28 (Reuters) - Pennsylvania Gov. Ed Rendell on Thursday proposed new rules to strengthen state regulation of natural gas drilling to protect drinking water supplies and announced the hiring of 68 new inspectors.

The measures reflect the Democratic governor's environmental concerns while still aiming to promote development of the massive Marcellus Shale formation.

Marcellus is one of four major shale formations that could provide the United States with an abundant energy supply but whose exploitation could be inhibited by regulators.

The regulations are designed to prevent the escape of drilling chemicals into domestic water supplies, following numerous local reports of contamination from a process called hydraulic fracturing.

They would require energy companies to restore or replace water supplies affected by drilling; require operators to notify regulators of any leakage of gas into water wells; and direct drillers to construct well casings from oilfield-grade cement designed to prevent leakage of drilling fluid into underground water supplies.
To bolster enforcement, the state's Department of Environmental Protection was hiring 68 new inspectors in addition to the 120 already on staff.
Pennsylvania officials say energy companies have applied for 5,200 permits in the Marcellus Shale this year, almost triple the number in 2009, as drillers scramble to develop the huge gas field underlying about two-thirds of Pennsylvania and parts of surrounding states.
The field is estimated to contain enough high-grade natural gas to satisfy total U.S. demand for at least a decade.
"We want to encourage development of this resource because it's a tremendous opportunity for the state, but we will not allow that to happen at the expense of our environment," said Rendell, who wants to launch a tax on gas drilling in this year's budget.
Critics of gas drilling say toxic chemicals in drilling fluid cause water to turn cloudy, foul-smelling or in some cases flammable because of the escape of methane into private water wells. Some of the chemicals can cause serious illnesses including cancer, researchers say.

U.S. lawmakers are debating a bill that would require energy companies to disclose drilling chemicals and allow federal regulators oversight of the natural gas industry. The bill is opposed by some Pennsylvania Republicans who argue that regulation should remain with the states.

Ken Komoroski, a spokesman for Cabot Oil & Gas (COG.N), which operates Marcellus gas wells in northeastern Pennsylvania, said it was too early to comment on the proposals. (Reporting by Jon Hurdle; Editing by Daniel Trotta; Editing by David Gregorio)

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