The Department of Environmental Protection recently released a scathing report about the conventional oil and gas industry’s widespread disregard for environmental regulations. The industry goes back over 100 years in Pennsylvania and includes production and storage wells that are different from the wells drilled into the Marcellus Shale formation.
Journalist Laura Legere reported on DEP’s assessment of the industry for the Pittsburgh Union Progress, published by striking workers from the Pittsburgh Post-Gazette. The Allegheny Front’s Kara Holsopple spoke to her about it.
LISTEN to their conversation
Kara Holsopple: Overall, what did DEP say in its report?
Laura Legere: The report called out the conventional oil and gas industry for having not just noncompliance issues, but actually for having what it called “a culture of noncompliance as an acceptable norm.”
There were two main issues that the report highlighted. One dominant problem is abandoning wells without properly plugging them. So that means that a company has a well that hasn’t produced oil or gas for at least a year. That is the standard for abandonment. There can be other signs of abandonment.
The other issue that they saw a lot of was that conventional and gas companies were not filing required reports on how much oil and gas and waste their wells produce, as well as reports on whether the wells are structurally sound or show signs of leakage or decay. Those were the major violations.
The abandonment violations, there were more than 3,000 of them over five years. It was by far the largest violation category. If all 3,000 of them end up being the responsibility of the state, it could cost taxpayers about $200 million at current plugging prices.
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Holsopple: Why did DEP put this report out now?
Legere: As part of last year’s budget agreement, the governor agreed to let a bill become law without his signature, and that bill was passed by the Republican-led legislature to block an increase in bond rates for conventional oil and gas wells.
Bonds are kind of an insurance payment. Generally, there’s an upfront payment that’s made at the time when a well permit is issued, and it’s meant to at least partially cover the cost of cleaning up a well if an operator walks away from it.
Bond rates in Pennsylvania were established in 1985, and they have not been raised since then. The per well bond rate is $2,500. There were environmental groups that petitioned state regulators to raise those bond rates to something closer to the true cost of plugging a well.
[Unplugged wells] can frequently leak oil. They can leak gas. They can leak salty wastewater called brine…They have been linked to explosions
So when the governor let this bill become law, he asked for a state of the compliance record of this industry, knowing that this one really important tool had essentially been taken off the table. The bill forbids state regulators from raising bond rates for a decade.
Holsopple: What are the environmental issues that could result from noncompliance of these regulations?
Legere: For well abandonment, essentially, you have an open conduit to an oil and gas-bearing formation in the earth. They can frequently leak oil. They can leak gas. They can leak salty wastewater called brine. Some of them are very close to homes. They have been linked to explosions when gas leaks into an enclosed space.
And methane, which is the key component of natural gas, is a really potent greenhouse gas. So collectively, hundreds of thousands of these wells leaking even what seems like a little bit of methane add up to quite a significant climate impact.
Holsopple: I was going to ask, what is the scale of the problem? How many wells are we talking about?
Legere: Pennsylvania has a current industry, an active industry, and it also has one from prior eras. The number of legacy, unplugged oil and gas wells is estimated to be around 200,000. Those are not all discovered. We don’t even know where they are. And to plug them all would probably cost something like $6 billion.
So there are still tens of thousands, roughly around 100,000 active conventional wells. Some of those have never reported any of these annual reports on how much gas they produce. It’s unclear how many of them might already be abandoned.
Holsopple: What are the steps DEP recommends in the report for enforcing regulations going forward?
Legere: So the good news, and DEP calls it that in this report, is that they have the authority to take extra actions under existing laws. They wouldn’t need to necessarily pass a new law.
A key tool would be to create a standard legal order. Their proposal is when an inspector finds a violation for an abandoned well, at the very same time, they would also hand out a legal order saying you have to plug this abandoned well and you have to do it within this many days. At the same time, they would start the paperwork to start forfeiting the bond payment, if there is one. All of those things right now are separate, arduous steps that would be taken one at a time.
What they’re saying is, if we have all this packaged and ready to go, we can start issuing orders with every violation. The reason that matters is that a violation notice is not an official action that allows the state to take other enforcement steps. But an order is If an order has been issued and that order is violated, DEP can start blocking that company from getting new permits to drill new wells, or from selling or giving away its wells to another company that may want them.
They do also recommend just more consistently using their authority to issue fines when there are violations, filing liens against companies if they have a plugging obligation that they’re not meeting, and even making criminal referrals when that’s warranted.
Holsopple: Why isn’t DEP doing that now? And do they have the resources to follow the report’s recommendations?
Legere: The report says that in order to do that, they’re going to need some resources. Right now, they’re saying they would need that both in the oil and gas department and in the legal department to come up with these legal orders.
[DEP] said that some of the failures to follow rules were so common “as to be the rule rather than the exception.”
Pennsylvania’s oil and gas regulators are significantly funded by oil and gas permits. They’re not funded by taxpayer dollars, generally. Permits have been declining for many years.
Marcellus Shale well permits are quite expensive, but they don’t need that many of them to produce quite a significant amount of gas. So for years, the oil and gas department has been saying that they are going to run out of money.
Last February, they said that they expect to have a $5 million deficit by the end of this fiscal year, which ends in June. So getting some kind of a structural funding solution in place will really be required, not just to run the program as it is, but to take on the extra work that this kind of enforcement effort would require.
Holsopple: Has the industry responded to this report?
Legere: They did not answer my requests for comment, and I haven’t seen anything in any kind of publication – they do put out newsletters – and I haven’t seen anything. They did strongly argue for the bill that capped bonding rates at its current level. They were afraid of having to face significantly higher bond amounts.
But I have not seen them respond to what DEP essentially concluded – [DEP] said that some of the failures to follow rules were so common “as to be the rule rather than the exception.” They basically said that the industry is just not doing a very good job.
Holsopple: I wondered if it was unusual for DEP to put out this kind of a report calling out an entire industry.
Legere: I’ve never seen anything like it. This industry has tended to be less prominent than the shale industry and doesn’t always get that much attention. But no, this is unusual. It is a difficult industry in that there are so many wells included in it.
There are very different types of operators. Some of them only have a handful of wells, and yet at the same time, the largest well owner in the country has a specialty in just buying up these old, low-producing wells. So that one company has more than 20,000 wells in Pennsylvania alone.
Holsopple: Is there any federal money? I know that there’s federal money for mine land reclamation as part of the federal Infrastructure Law. Is there any help here for this kind of cleanup?
Legere: The federal Infrastructure Law dedicated a significant amount of money to cleaning up abandoned oil and gas wells. That money is not intended to be spent on newly abandoned wells.
The idea of that law was certainly not to excuse operators from walking away from their cleanup obligations when they actively own a well and have benefited from the price of oil and gas. That’s really meant to address the legacy problem from a century of drilling, where plugging a well at the time meant sticking a cannonball down it or just covering it over with dirt.
We have enough on our plate with that issue, and I think that’s some of the real urgency to not let new wells be abandoned when there’s someone there who should be. responsible for paying to clean it up.
Laura Legere reported on this story for the Pittsburgh Union Progress, published by striking workers from the Pittsburgh Post-Gazette.
