PA Environment Digest

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Gov. Wolf, Senate, House Republicans Again Fail To Hold Conventional Oil & Gas Drillers Accountable For Protecting The Environment, Taxpayers On Hook For Billions

For the second time in his administration, Gov. Wolf and Senate and House Republicans let a bill become law that fails to hold conventional oil and gas drillers accountable for protecting the environment from over 100,500 active wells and continues to put the burden of plugging the wells the industry routinely abandons on state taxpayers.

On July 18, the Governor let House Bill 2644 (Causer-R-Cameron) become law without his signature. The bill blocks any increase in conventional oil and gas well plugging bonds for 10 years, continues exempting pre-1985 wells (which is most of them) from any bonding leaving taxpayers liable for $5.1 billion in cleanup costs. Read more here.

In June 2016, the Governor signed Senate Bill 279 (Hutchinson-R-Venango) that killed a comprehensive update of conventional oil and gas drilling environmental protection regulations started under the Rendell Administration, proposed under the Corbett Administration and finalized under the Wolf Administration. Read more here.

Both bills were free-standing bills whose provisions were not included in other omnibus bills and both had significant opposition from Democratic lawmakers in the Senate and House.

Democrats opposed House Bill 2644 in the Senate 29 to 21 and in the House 115 to 85.

A spokesperson for Gov. Wolf’s office told the Pittsburgh Post-Gazette-- “The [Wolf] administration is currently exploring the next steps to ensure the [conventional oil & gas] industry is held accountable in order to protect the environment and that we don't lose out on millions of dollars in federal funding for well plugging.”

On July 19, DEP officials told the DEP Citizens Advisory Council “certainly there are concerns” about how the new law blocking increases in conventional oil and gas well bonding will impact the funding Pennsylvania is in line to receive under the new federal Bipartisan Infrastructure Law to plug abandoned conventional oil and gas wells. Read more here.

Another official said the new state law may also have an impact on whether DEP can meet federal requirements for regulating oil and gas drilling wastewater injection wells. Read more here.

It was noted, “They have taken one tool out of our toolbox, but they haven't eliminated all of the tools.” Read more here.

House Bill 2644

House Bill 2644 was introduced to head off a proposal accepted for study by the Environmental Quality Board in November to increase the well plugging bonding amounts for both conventional oil and gas and unconventional shale gas drillers to what it now costs taxpayers to plug a well when operators walk away from their obligations. Read more here.

Conventional oil and gas drilling industry-- which is responsible for leaving Pennsylvania with over 200,000 abandoned and orphan wells-- continues to walk away from their obligations because of inadequate or no bonding requirements. Read more here.

The token increases included in the bill for plugging bonds for individual wells and the blanket bonds for an unlimited number of oil and gas wells do not meet this one simple test-- the amounts are nowhere near the real cost state taxpayers have to pay to plug those wells.

It’s merely there to camouflage the real purpose of the bill.

Sen. Comitta’s Comments

Sen. Carolyn Comitta (D-Chester), Minority Chair of the Senate Environmental Resources and Energy Committee, said this about House Bill 2644 on the floor of the Senate--

“I am voting no.

“Oil and gas wells are a big problem – both for our environment and for our taxpayers.

“They are the 10th largest contributor to methane emissions – a greenhouse gas that’s up to 86 times more potent in its warming potential than carbon dioxide.

“They carry a tremendous liability for taxpayers.

“The cleanup of existing abandoned oil and gas wells in Pennsylvania could cost an estimated $5 billion – that’s about half our budget surplus.

“Current efforts to plug abandoned wells in Pennsylvania may not be sustainable, but this bill makes an untenable solution even worse.

“It does so by locking in bonding amounts that are already insufficient at the very time that the Environmental Quality Board is looking at increasing those amounts.

“And while the federal funds are a significant benefit, this bill is not the way to administer them.

“If we want to pursue a sustainable plan for plugging Pennsylvania’s abandoned oil and gas wells, we need to:

-- Take steps to prevent the continued abandonment of wells – which appears to be prevalent in the oil and gas industry.

-- Hold operators accountable with bonding that is more realistic and more in line with the actual costs of plugging.

-- Support DEP’s efforts with the staff and resources it needs to adequately do its job.

“This bill goes in the opposite direction – it sets into law bond amounts to better accommodate the oil and gas industry – an industry that has created the very environmental crisis we are facing today.

“Again, I ask for a no vote.

“We can do better when it comes to addressing abandoned oil and gas wells in Pennsylvania.”

Exempts Pre-1985 Wells From Any Bonding

House Bill 2644 again puts in law a provision exempting oil and gas wells drilled prior to April, 1985 from being required to have any plugging bond. An overwhelming majority of the over 100,500 active oil and gas wells in Pennsylvania were drilled before April 1985.

Obviously, having conventional operators put up $0.00 to plug these oil and gas wells again fails the simple test-- it doesn’t equal the cost state taxpayers have to pay to plug these wells if they are abandoned by operators.

Oil & Gas Operators Continue To Abandon Wells

DEP records show conventional oil and gas companies were issued over 4,270 notices of violation for attempting to abandon oil and gas wells without plugging them between 2016 and 2021. Abandoning wells is pervasive in the industry. Read more here.

During the second quarter, DEP’s Oil and Gas Compliance System reports conventional oil and gas drillers were issued 82 notices of violation and unconventional shale gas drillers 21 NOVs for abandoning oil and gas wells without plugging them for a total of 103-- 20 percent more than in the first quarter. Read more here.

Only $15/Well On Hand To Plug Wells

DEP records show the agency has less than $15 per well available to plug the over 100,500 active conventional oil and gas wells that now have permits because of woefully inadequate well plugging bonding requirements. Read more here.

The average cost to taxpayers to pay to plug a well is $33,000. Read more here.

It would cost taxpayers over $3.3 billion to plug these inadequately bonded wells, if operators walked away, and they try to do that almost every day.

In addition, any conventional oil and gas well drilled before April 1985 is exempt entirely from the need to post any bond.

It would cost taxpayers over $1.8 billion to plug these wells.

This means state taxpayers are on the hook to pay for over $5.1 billion in well plugging and cleanup costs. Read more here.

Risks Federal Well Plugging Funds

House Bill 2644 risks Pennsylvania not receiving the once-in-a-generation funding to plug oil and gas wells conventional drillers abandoned under the new well plugging program established in the federal Bipartisan Infrastructure Act.

The federal law requires states to review their regulations to prevent new wells from becoming abandoned wells. Making sure well plugging amounts are adequate to cover the taxpayer cost of plugging them is a big part of that prevention effort. Read more here.

By preventing any increase in the woefully inadequate bonding amounts DEP has now, this legislation gets in the way of that requirement and further burdens taxpayers.

The bill would also set aside 20 percent of the federal money Pennsylvania is receiving from the Bipartisan Infrastructure Act for conventional oil and gas well plugging to be used as grants to companies interested in plugging wells with few qualifications and no check on whether they have outstanding environmental or other contracting violations. Read more here.

The bill also sets limits on how deep a well must be plugged in terms of feet not in terms of the effectiveness of the plug in cutting off possible routes to contaminate ground or surface water and preventing methane emissions.

The bill also provides well plugging companies with civil immunity from any damage it causes and for any violations of environmental laws and regulations.

NewsClips:

-- Post-Gazette - Laura Legere: As PA Faces ‘Looming Crisis’ Of New Abandoned Oil & Gas Wells, State Law Will Freeze Well Bonding Rates For A Decade

-- Capital & Main - Audrey Carleton: PA Bill Jeopardizing Millions In Oil Well Cleanup Funding To Be Passed By Governor, Say Sources

Related Articles This Week:

-- DEP Concerned About Impact Of New Law Blocking Conventional Oil & Gas Well Bonding On New Federal Well Plugging Funds, Regulating Waste Injection Wells [PaEN]

-- PA Environmental Council: Without A Veto Of HB 2644, PA's Abandoned Oil & Gas Well Problem May Be All But Permanent [PaEN]

-- Guest Essay: Gov. Wolf, Don’t Give Money To The Oil Industry - By Rev. Mitchell Hescox & Kim Anderson, Evangelical Environmental Network

-- Evangelical Environmental Network Urges Senate To Vote Against The HB 2644 Subsidy & Bailout For Conventional Oil & Gas Drillers - ‘Stop Rewarding Industry For Not Being Responsible’ [PaEN]

-- PA Environmental Council/Environmental Defense Fund + 12 Other Groups: HB 2644 Unjustifiably Limits Bonding For Oil & Gas Wells, Risks Eligibility For Federal Well Plugging Funds [PaEN]

-- IRRC Unanimously Approves Part I Of Final Reg. Reducing VOC/Methane Emissions From Unconventional Shale Gas Facilities; DEP Moves To Avoid Federal Highway Funding Sanctions [PaEN]

-- Sen. Yaw To Deny Counties Act 13 Drilling Impact Fee Revenue If They Make Only 99% Of Their Land Area Available For Shale Gas Development [PaEN]

-- Natural Gas Producer Olympus Energy Earns Premier Environmental Performance Ratings From Project Canary [PaEN]