Marcellus Shale Gas Play: Part 4

Too often "regulation" means strangulation to resource development. Of course we must do as little harm to our environment as possible. Of course we must improve our civil and social structure. There has to be a balance, but we can do it. It has been done. It is being done. It can be done if government doesn't over-regulate and tax the industry to death.

How much regulation is too much? Read the following article to get an idea of how complex this regulation gets and how easy it is to kill development rather than encourage it.

Look to Texas, visit Ft. Worth, look at the Barnett Shale example. Ask people in Louisiana if they like the Haynesville Shale Gas Play. Look at the Bakken Play in the Williston Basin of eastern Montana and western North Dakota. Let's keep our energy dollars in America.

Peter

Regulating Natural Gas Exploration
Regulating the expanding gas industry is a central
concern for government agencies. It is important to
remember that in addition to the social and economic
changes that may accompany drilling there is the
possibility of significant impacts on the environment
and natural resources.

Several principal state and
federal groups are involved in regulating natural

gas exploration in Pennsylvania, including two state
agencies and two commissions created by federal
regulations: the Department of Environmental
Protection (DEP), the Department of Conservation
and Natural Resources (DCNR), the Susquehanna
River Basin Commission (SRBC), and the Delaware
River Basin Commission (DRBC). Each of these
groups derives its regulatory authority from various
sources, including state statutes and federal regulations.
In addition, several other state agencies affect
natural gas activity.

Role of the Department of Environmental Protection (DEP)
The Pennsylvania Department of Environmental
Protection enforces Pennsylvania’s oil and gas laws
relating to resource management, well construction
activities, and waste management practices. The
DEP’s Bureau of Oil and Gas Management is
responsible for the statewide oil and gas conservation
and environmental programs. The bureau facilitates
the exploration, development, and recovery of Pennsylvania’s
oil and gas reservoirs in a manner that
is intended to protect the Commonwealth’s natural
resources and the environment. It also develops
policy and programs for the regulation of oil and gas
development and production in accordance with the

Oil and Gas Act, the Coal and Gas Resource Coordination
Act, and the Oil and Gas Conservation Law;
it oversees the oil and gas permitting and inspection
programs, develops statewide regulation and
standards, conducts training programs for industry,
and works with the Interstate Oil and Gas Compact
Commission and the Technical Advisory Board.

An operating gas company must secure a bond
before applying for a well permit. It is DEP’s
responsibility to approve bonds and well permits,
inspect wells and environmental controls, and permit
and inspect waste disposal facilities and waste
management activities. Operators must submit reports
on well completion, waste management, annual
production, and well plugging.

Well operators are
required to report production annually, and state
agencies must keep this information confidential
for five years, except for enforcement proceedings,
as provided in the Oil and Gas Act. DEP has the
authority to take action to enforce compliance
with applicable laws and to seek civil penalties for
violations of these laws. Depending on the project’s
acreage, the local county conservation district may
also play an important role in regulating construction
activities relative to erosion and sedimentation control.

Municipalities can be alerted regarding well
permit applications filed with DEP though a no-cost
subscription service called ENotice.

ENotice notifies
municipalities with an e-mail when a well permit
application is received. This system enables municipalities
to receive notice of a permit application at
the same time that DEP receives the application. This
will allow the municipality to obtain information
about potential drilling activity much earlier in the
process so bond requirements can be considered
in advance of operations. ENotice can be accessed
through DEP’s Web site: http://www.depweb.state.pa.us/.

Role of the Department of Conservation and Natural Resources
The Department of Conservation and Natural
Resources has authority under the Conservation
and Natural Resources Act to lease state forestland
for natural gas exploration. The act also gives the
department the ability to lease state forestlands for
underground storage of natural gas—a practice
currently less common in Pennsylvania than in other
areas of the country. The Oil and Gas Lease Fund
stipulates that all rents and royalties from these leases
are to be placed in a fund used exclusively for conservation,
recreation, dams, or flood control or used to
match any federal grants for those purposes.

Thumbs up for creating jobs.

Role of the Susquehanna River Basin
Commission (SRBC) and Delaware River Basic
Commission (DRBC)
The DRBC and SRBC hold more influence than
the DEP in regulating water usage and other waterrelated
aspects of gas well drilling that fall under
their jurisdiction. SRBC’s regulations are intended to
protect the environment and existing water users from
unapproved water use and water-use conflicts. The
agency regulates issues such as water withdrawals,
deep well injection of fracing waste fluids, and
disposal of fracing fluids from constructed lagoons.
In cooperation with the DEP the DRBC will also
investigate and manage situations in which drilling
damages neighboring wells. Companies operating
without prior water-use approval for drilling and
other water-related activities will be considered in
willful noncompliance if they continue to operate
after receiving the distributed notice sent out in early
June 2008.

This consumptive water use is regulated in several
different ways. Consumptive use in gas drilling is
considered any water that is used in a way that results
in it not being returned to the basin. An example
is the injection of waste fluids into a subsurface
formation where it would not be reasonably available
for future use or any diversions of water out of the
Susquehanna watershed. These consumptive uses are
defined in regulations through volume over a certain
period of days.

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

Land situated outside the basin commissions’
boundaries, such as in southwest Pennsylvania, are
solely under the regulatory authority of DEP and are
not monitored or regulated by a basin commission.

A pipeline through the forest. Some disruption is inevitable.

Role of the Fish and Boat Commission
The Fish and Boat Commission’s responsibility is to
preserve and protect the Commonwealth’s aquatic
resources while providing fishing and boating opportunities.
Their water quality officers work closely
with DEP field personnel to monitor the impacts of
drilling and other activities on stream quality and
aquatic life, and offer input to DEP on regulatory
decisions.

Role of the Pennsylvania Emergency
Management Agency (PEMA)
The Pennsylvania Emergency Management Agency
coordinates state agency response to emergencies
or disasters. The agency supports county and local
governments in the areas of civil defense, disaster
mitigation and preparedness, planning, and response
to and recovery from human-made or natural
disasters. PEMA is an important resource for local
governments adapting to the changing emergency
management needs arising from increased natural gas
exploration and drilling, and can provide training,
information, and resources to local emergency
responders.

If emergencies occur, the local municipality
should engage the local Emergency Management
Team prior to and during the response. The municipality
should have the site(s) listed in its Municipal
Emergency Operations Plan, including emergency

contact information. It is important that the municipality
has accurate information regarding the precise
location of the site in terms of GPS coordinates and
can identify the closest access road(s). The municipality
should also encourage the posting of signs
that list the name of the site operator, the address of
the actual site, the emergency contact number of the
company, and any additional information.

The type of roadways or access ways to a site may
make it difficult for standard firefighting, rescue, and
emergency medical services vehicles to access. These
vehicles may not have sufficient ground clearance
to traverse the roadways. Fire and rescue services
should be aware of the areas and test-drive the access
roads to ensure that the vehicles can gain access to
sites.

Additionally, sites may be in rural or extremely
rural areas and could be thousands of feet from any
inhabited structures. Despite remote locations, the
emergency plans and site plans should still include
the identification of the nearest inhabited structures
and list the distance and direction. Other structures,
facilities, and chemical or hazardous material sites
should also be listed.

Even though large quantities of chemicals are
not found on the well sites, the municipality and
the county Local Emergency Planning Committee
(LEPC) should be informed of the number, names,
and quantities of chemicals stored or used at the
site(s). The county LEPC and the Pennsylvania
Department of Labor and Industry PENNSAFE
Program are able to provide assistance and guidance.

Role of Pennsylvania Oil and Gas Act
The ability of municipalities to regulate natural gas
exploration is limited by the Oil and Gas Act, which
states that “no ordinances or enactments, adopted
pursuant to the aforementioned acts shall contain
provisions which impose conditions, requirements or
limitations on the same features of oil and gas well
operations regulated by this act.” Essentially, this
statutory provision means that the Oil and Gas Act
preempts a municipality or county from regulating
a matter that has been addressed in the act. As of
August 2008, the precise extent of the Oil and Gas
Act’s preemption of local regulation is not clear, as
there are two cases on this issue pending before the
Pennsylvania Supreme Court. Each of these cases
was appealed to the Supreme Court following a
Commonwealth Court decision ruling that the Oil and
Gas Act had preempted the municipal ordinance in
question.1

In light of pending Supreme Court cases, a municipality
should determine the current state of the law
before enacting an ordinance that will be regulating
natural gas drilling operations. A municipality also
should consult the Oil and Gas Act to determine the
specific issues that are the subject of state regulation.
The Oil and Gas Act addresses topics including
well permitting, well registration and identification,
well location, well site restoration, protection of
water supplies, bonding, reporting requirements, gas
storage, inspection of facilities and records, public
nuisances, enforcement orders, and civil penalties.

1 Great Lakes Energy Partners v. Salem Township, 931 A.2d
101 (Pennsylvania Commonwealth Court 2007); and Huntley &
Huntley, Inc. v. Borough of Oakmont, 929 A.2d 1252 (Pennsylvania
Commonwealth Court 2007).