The Susquehanna River Basin Commission this week notified 23 natural gas operators currently using or planning to use water to develop wells in the Marcellus and Utica Shale formations in the Susquehanna watershed that they must have approval from SRBC.

The process of developing natural gas wells in the two shale formations includes using water for drilling, for storage in on-site impoundments and subsurface rock fracturing known as hydrofracing.

Companies operating without prior water use approval for those and other water-related activities will be considered in willful noncompliance if they continue to operate after receiving SRBC’s notice.

More than 72 percent of the tri-state Susquehanna watershed, covering portions of New York, Pennsylvania and Maryland, fall within the Marcellus and Utica Shale formations. Advancements in technology for capturing natural gas in those two shale formations require operators to inject large amounts of water underground to break up deep rock formations.

“Given the nature of this technology for developing wells and its rapid application within the Susquehanna basin, the Commission is exercising its regulatory authority with regard to the natural gas industry,” said SRBC Executive Director Paul Swartz. “Companies meeting the Commission’s regulatory threshold for consumptive water use and water withdrawals will need prior approval.”

Swartz said, “With mounting concern over well development practices in the Susquehanna watershed, SRBC’s industry-wide notification will serve as a critical step as we work to achieve environmental protection and compliance while supporting the development of a potentially viable energy source.”

The specific regulatory authorities SRBC referenced in the notice are:

· 18 CFR, Section 806.4 – Consumptive water use of 20,000 gallons per day (gpd) or more during any consecutive 30-day period. Consumptive use is defined by SRBC as water that is used in a way it is not returned to the basin, including through evaporation, irrigation, use in products, injection of water or wastewater into a subsurface formation when it would not be reasonably available for future use, and diversions out of the Susquehanna watershed;

· 18 CFR, Section 806.4(a)(2) – Water withdrawals of 100,000 gpd or more during any consecutive 30-day period; and

· 18 CFR, Section 806.4(a)(2)(iii) – Consumptive water use that involves surface water or groundwater withdrawals.

SRBC also informed companies that it has the authority to make an across-the-board determination that well development activities in the Marcellus and Utica Shale formations may require approval regardless of the amount of water used. SRBC can exercise this broad authority if it determines the water-using activities may affect interstate water quality, may have a significant effect on SRBC’s Comprehensive Plan, or may have an adverse, cumulative, or interstate effect on the basin’s water resources.

SRBC’s regulations are intended to protect the environment and existing water users from unapproved water use and to help avoid water use conflicts.

SRBC is actively engaged with the environmental, conservation and fisheries agencies in New York and Pennsylvania to ensure good coordination during the inspection of existing and pending sites and during the review of applications.

Swartz said, “While SRBC anticipates enhanced compliance within the natural gas industry, the enforcement orders issued separately by SRBC and the Pennsylvania Department of Environmental Protection on May 30 against two companies hopefully served as notice to other potential violators.”

State resource agencies from Pennsylvania, New York and Maryland are also concerned about the sources of water some of the companies are targeting. With some of the most productive natural gas sources being in the upper reaches of smaller watersheds, companies are at times targeting water sources in the smaller headwater streams.

Headwater streams generally do not provide large volumes of water and they are critical for downstream aquatic habitat and for other water uses – making large volume water needs for well development incompatible. SRBC is coordinating its activities with these state agencies and is fully engaged in outreach with the industry to facilitate compliance.

Information on water use requirements is available online.

6/6/2008