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DEP Budget Hearing: 40% Of Unconventional Natural Gas Well Permits Issued By DEP Were Not Used By Drillers

At DEP’s budget hearing on February 28, Republican members of the House Appropriations Committee repeatedly brought up the “urgent” need to review gas well permits faster, drill more gas wells and expand pipeline and export infrastructure in Pennsylvania to respond to the Russian invasion of the Ukraine.

What was overlooked was the fact the unconventional shale gas industry in Pennsylvania hasn’t drilled 40 percent of the gas wells they got DEP permits for.

DEP’s most recent workload report shows DEP has approved permits for 22,632 unconventional gas wells, however, the same report says the industry has only actually drilled 13,395 wells.

And the Independent Fiscal Office reported in its fourth quarter natural gas production report that only 10,322 horizontal wells were actually producing gas, and even then production was up 6.8 percent in 2021.

The gap of 9,237 in permitted wells-- 40 percent-- represents the number of unconventional wells never drilled-- just short of every other permit approved by DEP.

They were never drilled for several reasons, but probably waiting for higher natural gas prices is the biggest one. There could also be operational considerations, financial limitations on implementing a drilling plan, the timing just didn’t work out or they just let permits expire.

Unconventional drillers can request up to three years to drill a well. Permits expire after one year, but under 25 Pa Code 78a.17(b) an operator may request a 2-year renewal of an unexpired well permit.

You would be hard-pressed to find any other program in DEP with this kind of a record for unused permits.

Hopefully, the unconventional industry is improving its ability to submit well permit applications they will actually use.

This is particularly important because the Oil and Gas Program faces a $10.5 million annual funding deficit, nearly half of the approximately $25 million it costs to regulate conventional and unconventional drilling. This deficit has also cut staff from a full complement of 226 positions to 190. Read more here.

This experience of unused capacity unconventional drillers already have is consistent with what the Department of Conservation and Natural Resources reported to the Senate Appropriations Committee in 2021.

DCNR said 65 percent of the State Forest land already leased for unconventional shale gas drilling in 2008 and 2010 has not been developed and 68,000 acres of that leased land was actually returned to DCNR undeveloped. Read more here.

Reaction From Marcellus Shale Coalition

A representative of the Marcellus Shale Coalition Tweeted this response to the fact unconventional drillers didn’t use 40 percent of the well permits issued by DEP--

“So what? @PennsylvaniaDEP requires a well permit be in hand before an operator can even begin construction of a well pad - & then they take a year to issue a permit that should take 14 days. So DEP cashes a check for $12,500 just so an operator can apply for another permit."

Overall Permit Review Performance

DEP Secretary Patrick McDonnell said at the House hearing, DEP, overall, has met the Permit Decision Guarantee Program deadline 94 percent of the time for permit reviews, but that is not the only way the agency is managing permits.

“We are moving anywhere between 1,000 to 2,000 more permits [a month] than we are receiving to take significant bites out of that backlog,” said McDonnell. “And that includes permits that are not PDG [Permit Decisions Guarantee].”

“One of the other things that is going to be really helpful, we’re putting together a tool that you’ll be able to see online where [the permit] is in the process-- do we [DEP] have it or is it back with the applicant [or consultant] for some decision point for them,” said McDonnell. “Which is good transparency for you, but good transparency frankly for applicants and others if they know it’s back with their consultant.”

This tool is important because like the Cumberland County Conservation District testified before the House Environmental Resources and Energy Committee-- half of the erosion and sedimentation control plan applications-- the basic land development permit submitted to districts and DEP-- are incomplete when they come in the door and consulting engineers took an AVERAGE of 33 business days to respond to technical deficiencies-- more than six calendar weeks.

All this time lost in the permit review process is out of the hands of DEP and conservation district staff and this tool will put a spotlight on that fact. Read more here.

More Natural Gas Development

On the specific issue of oil and gas infrastructure, House Republicans forgot to mention the U.S. is already very close to full natural gas export capacity [Read more here] and it would take years to build more.

But the more fundamental issue is this-- as long as the U.S. ties itself closer and closer to energy sources where foreign energy markets and uncontrollable events set energy prices we pay, Pennsylvania will never have True Energy Independence [Read more here].

The European Union and its member countries now see the Russian invasion as a call to add more renewable energy sources that are under their control so they are not dependent on other countries or states for energy or its cost. [Read more here. Read more here.]

The following transcript gives you the flavor of the Committee discussion on expanding natural gas development in Pennsylvania between House Republicans and Secretary McDonnell--

Rep. Jesse Topper (R-Bedford) said, “What we do have is the ability to get stuff out of the ground, get energy out of the ground in terms of our natural gas and move it from point A to point B, and we can.

“I think someone described us once as the Saudi Arabia of natural gas. We can actually be helping not just our own state, but states around us and now Europe.

“And what we've seen with this conflict, for years we've said that energy policy really does come to national security.

“What can we do right now to get our resources out of the ground quicker and move from point A to point B in a way that actually contributes to what we're seeing going on globally, but also what we need to do right here in Pennsylvania?”

Secretary McDonnell said, “The brake that you see on the natural gas industry has been the price of natural gas in terms of pulling things out of the ground. We have wells that are being drilled that are not producing, or unable to produce simply because there's no need for that value.”

“I think you see in our state a number of pipelines built over the last eight years across the Commonwealth.”

Rep. Topper, “We’ve seen a lot stalled too.”

Secretary McDonnell, “Not on our end.”

Rep. Topper noted the increasing price of natural gas and energy overall and asked what can be done to bring those down.

Secretary McDonnell said, “ultimately, the thing none of us can control is what’s happening overseas and in terms of that kind of impact.”

Rep. Topper agreed, “We can’t control it.” “But I think what it does do is it highlights what we need to do here, and what many of us have been talking about for years,” which is producing energy within the state.

Rep. Topper, “The Biden administration came out and said they want to focus on renewable energies, not pulling more production. Do you agree with that or do you think we need to continue to get more out of what we have here in our natural resources?

Secretary McDonnell, “I think we already have a strong position on natural gas. We also have 15.7 gigawatts of solar [energy] in the PGM [electric grid operator] queue representing $17 billion worth of investment in the Commonwealth of Pennsylvania. So I think there is a discussion to be had around all of these energy sources and the impacts that they bring both positive and negative to the Commonwealth.”

He also pointed to the initiative to increase the number of electric vehicles in the state-- “... electrifying the fleet is a sure way of getting to the point of energy independence, because we’re powering it here and fueling it here.

“It’s when we’re relying on outages from other states that we truly run into trouble.”

“The Department of Defense has a significant interest [in climate change] because they look at it as a threat multiplier, specifically when you get into situations like we started to see this past week.” [Read more here.]

[Note: As far back as 2013, former Republican Gov. Tom Ridge and 37 other prominent political figures joined in a statement warning, “Climate Change is a national security threat.” This isn’t new. Read more here. Read more here.]

Click Here to watch a video of the DEP House budget hearing.

NewsClips:

-- The Epoch Times: Republicans Urge Gov. Wolf To Unleash PA’s Immense Natural Gas Reserves

-- Gov. Wolf Blasts Republicans For Exploiting Crisis In Ukraine To Line Pockets Of The Natural Gas Industry

-- Register Now For 2022 Shale Network Workshop In State College May 12-13

Resource Links - DEP

-- DEP Budget Testimony: Significant Investments In Environmental Cleanup, Improving Permit Review Times, Holding Polluters Responsible, Relief To Those Harmed By Pollution

-- DEP Budget Hearing: Unconventional Natural Gas Industry Didn’t Drill 40% Of The Wells It Had DEP Permits For

-- Senate Budget Hearings: PA’s Experience With New Pipeline Construction Shows State Laws Not Strong Enough To Prevent Environmental Damage, Protect Public Safety

-- 12 Unconventional Shale Gas Drillers Issued DEP Notices Of Violation For Abandoning Wells Without Plugging Them At 35 Well Pads In 17 Counties

-- DEP Posts Budget Hearing Materials

Resource Links - DCNR: