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DEP Consent Agreement Allowing Shale Gas Drilling To Resume Under Dimock, Susquehanna County Sets New Drilling, Water Supply Protection Standards, Imposes $444,000 Penalty

On December 12, the Associated Press reported the Department of Environmental Protection lifted a 12-year old ban on shale gas drilling under Dimock, Susquehanna County the same day [November 29] Coterra Energy (formerly Cabot Oil & Gas) pleaded no contest to criminal charges by the Office of Attorney General for polluting their water supply. Read more here.

The consent order and agreement the Department of Environmental Protection signed on November 29 with Coterra Energy to allow shale gas drilling to resume under the 9 square mile Dimock/Carter Road Area of Susquehanna County includes new drilling and water supply protection standards and imposes a $444,000 penalty for past violations.

The order also codifies the settlement of criminal charges with the Office of Attorney General requiring Coterra Energy to pay $16.29 million for the construction of a new public water supply in the Dimock Area and pay the water bills of the property owners with affected water supplies for 75 years. Read more here.

The order specifies Coterra Energy cannot apply for new shale gas drilling permits until at least the interim water supplies are provided and the funding set aside for water supply replacement and plug 18 additional shale gas wells along with developing any new wells and remediate pressure concerns at the Gesford K Pad 3 and 9 wells are investigated and alleviated. [Page 12]

The order also lays out a series of other conditions Coterra Energy must meet to resume drilling, including having an operations and monitoring plan for wells it plans to drill and produce and paying the civil penalty stipulated in the order.

The order requires the vertical portion of the wells drilled or produced to be located outside the Dimock/Carter Road Area. Only the horizontal portion of the well may traverse under the Area to produce the natural gas.

Actions Since 2011

The order describes the steps taken since 2011 to inspect and evaluate 43 shale gas wells within the Dimock/Carter Road Area and identify the issues that lead to widespread contamination of local water supplies.

Since that time the order says 18 of the shale gas wells have been plugged, six have been remediated and eight have been remediated and are still being evaluated through pressure testing and other methods.

“Based upon the results of the testing and monitoring described in [the order], the [additional] conditions contained in [the order] are appropriate mitigation measures to allow Coterra’s new drilling, hydraulic fracturing, and production of wells with laterals that traverse under the Dimock/Carter Road Area,” DEP concluded. [page 7]

Requirements To Restart Drilling

The order contains a series of conditions Coterra Energy must comply with before the company can submit new permit applications to DEP to request drilling under the Dimock/Carter Road Area. No vertical drilling will be permitted inside the Dimock/Carter Road Area.

Replacing Water Supplies

The first condition is Coterra Energy cannot submit any applications for drilling until the basic water supply restoration and replacement obligations as outlined in the order are met and the $16.29 million payment is made to the Office of Attorney General to supply public water to affected residents. [Page 9]

Coterra Energy is directed to offer to install and pay for interim water treatment systems to the affected residents until the public system is completed.

The water system is expected to be in place and providing water by December 31, 2027, but that completion date is subject to change, the order notes.

“Upon the Public Water System becoming available to the owners of the Subject Water Supplies and/or the Department’s approval of the Long Term O&M Plan, Coterra shall be deemed to have satisfied its obligations to restore or replace the Subject Water Supplies under this Consent Order and Agreement.” [Page 12]

Submitting New Well Permits

The order specifies Coterra Energy cannot apply for new shale gas drilling permits until at least the interim water supplies are provided and the funding provided for water supply replacement and plug 18 additional shale gas wells along with developing any new wells and remediate pressure concerns at the Gesford K Pad 3 and 9 wells. [Page 12]

Coterra Energy may then submit permit applications to drill “new wells and may drill, complete, and produce permitted wells in accordance with Department-issued permits….” [Page 12]

Plugging Additional Wells

The order specifically requires Coterra Energy to plug the 18 additional shale gas wells within the Dimock/Carter Road Area by no later than December 31, 2032. [Page 13]

Operations Monitoring Plan

For each well Coterra Energy proposes to drill, complete and produce that will traverse under the Dimock/Carter Road Area, Coterra Energy must submit, and DEP must approve, an operations monitoring plan. [Page 13]

The written plan must "simultaneously monitor and evaluate nearby gas wells identified on Exhibit G [the 18 wells Coterra must yet plug], water supplies, and other potential receptors for any changes as a result of the drilling or stimulation of any wells or well laterals under the Dimock/Carter Road Area along with an implementation schedule that allows monitoring to occur during drilling completions and plugging.”

The order sets specific areas Coterra is responsible for monitoring--

-- Real-time monitoring of the 18 wells yet to be plugged within 2,000 feet of the vertical wellbore and 2,000 feet on the surface for the entire length of the new horizontal wellbores;

-- Plug and abandon the 18 wells located within 1,000 feet on the surface for the entire length of a proposed new horizontal wellbore; and

-- Monitoring drinking water wells within 3,000 feet of the surface location of new wellbores for dissolved methane [current regulations require a shale gas well to be setback 500 feet from water well, and a 2,500 area from an unconventional well where drillers are presumed responsible for any contamination].

In addition, the order specifically requires Coterra Energy to investigate alleviating potential natural gas pressure and volume in the vicinity of the Gesford 3 and 9 wells. [Page 15]

Stipulated Penalties

The order contains pre-set or stipulated civil penalties for violating sections of the order ranging from $5,000 per day to $250 per day payable on the 15th day of each succeeding month. [Page 16]

Penalty Assessment

The order requires Coterra Energy to pay a civil penalty of $444,000 to settle violations and to pay DEP’s costs related to violations included in the order. [page 16]

Click Here for a copy of the consent order and agreement. [Note: The names of the property owners with affected water supplies are redacted from this order.]

Legislative Lobbying

Legislators like Sen. Gene Yaw (R-Lycoming), Majority Chair of the Senate Environmental Committee, have been lobbying DEP for years to lift the ban on shale gas drilling in the “box” around Dimock, including at Senate hearings on DEP’s budget and during the confirmation of former DEP Secretary Patrick McDonnell. Read more here. Read more here.

Coterra Energy Compliance Record

On November 29, Coterra Energy became one of only a handful of shale gas or pipeline companies in Pennsylvania ever to plead no contest or guilty to criminal charges related to activities they were responsible for.

As part of the plea settlement, Coterra will pay $16.29 million for the construction of a new public water supply in Dimock, Susquehanna County and pay their water bills for 75 years. Read more here.

According to DEP’s Oil and Gas Compliance Database, Coterra Energy also received over 650 notices of violation from DEP since January 1, 2016. The violations include--

-- Failure to meet well casing and cementing well construction standards;

-- Failure to prevent discharge of wastes into streams;

-- Failure to dispose of fluids, residual waste properly; and

-- Many other violations.

If You Break It, You Fix It

DEP’s consent order with Coterra Energy implements a limited version of the “If You Break It, You Fix It” policy now found in the way DEP regulates the impacts of underground longwall coal mining under Act 54 of 1994.

Longwall coal mining removes all the coal in underground corridors hundreds of feet wide causing the surface of the ground to slump down causing damage to buildings, water supplies and streams on the surface.

Act 54 requires companies to take steps to prevent this damage, but if it happens the coal companies are responsible for fixing everything they break.

Pre-mining surveys document the conditions in the surface areas where the mining will impact to set the baseline. [Read more here]

This approach was the result of a stakeholder negotiation led by the Western PA Conservancy that was agreed to by the coal industry and environmental groups and put into law.

There are real arguments over how effective Act 54 is being implemented and suggestions the law needs to be strengthened, but it does represent a clear precedent for extractive industries to be held accountable to prevent and fix damage they cause.

DEP’s consent order with Coterra Energy makes the company responsible for water supplies in the Dimock “box” and for plugging abandoned wells that could be impacted by their shale gas drilling-- both the vertical well and along the horizontal laterals that can extend for miles underground from the drill pad.

DEP does have what is known as the Area of Review requirement that imposes a duty on shale gas drillers to assess the likelihood of “incidents” on the surface where their horizontal fracking operations may impact water wells and abandoned wells.

But the legal requirement to plug wells or prevent damage or the presumption to replace water supplies impacted by fracking along the horizontal lateral does not automatically follow in the area of review as a result of the way Act 13 of 2012 is written.

In addition, studies since shale gas drilling began in Pennsylvania nearly 20 years ago show shale gas drilling and infrastructure have environmental and health impacts beyond just water supplies and abandoned wells. Read more here.

The absolute requirement to prevent damage and health and environmental impacts and to make shale gas operators responsible for fixing problems they cause over the entire area drilling and natural gas infrastructure impacts should be firmly incorporated into Act 13 of 2012.

A version of that principle is used in underground coal mining and it can certainly be improved and applied more broadly to shale gas facilities and pipelines.

(Photos: Maps of the Dimock “box” showing well pad locations (left) and topography (right).)

Related Articles - Dimock Settlement In 2010:

-- Dimock Residents To Share $4.1 Million In DEP Settlement With Cabot Oil

-- PennVEST OKs Public Money For Drilling-Affected Water Supplies In Dimock

-- Scarce Public Infrastructure Dollars To Replace Drilling-Affected Water Supplies In Dimock

-- DEP: Dimock Residents Will Be Provided Permanent Replacement Water Supply

-- DEP Issues Cabot Oil & Gas Second Order To Correct Water Problems In Dimock

-- Video Blog- Dimock Residents Talk About Well Explosions, Water Problems Related To Gas Drilling

-- DEP/Cabot Agreement To Prevent Natural Gas Migration, Restore Water Over 9 Square Miles

NewsClips:

-- StateImpactPA - Susan Phillips: ‘Gasland’ Driller Will Pay Millions For New Water System In Dimock

-- AP: Pennsylvania Lifts Ban On Shale Gas Drilling In Polluted Dimock, Susquehanna County