June 25--HARRISBURG -- State House and Senate committees voted today to advance bills that would separate environmental regulations for the traditional drilling industry from rules designed for shale gas development.
Identical bills introduced in the House and Senate would require the state'?s environmental rulemaking board to differentiate between the conventional and unconventional drilling industries in all regulations that apply to oil and gas wells.
The bills declare the conventional industry environmentally benign, even as Department of Environmental Protection records show traditional oil and gas producers regularly fall short of the current rules and laws.
The bills come after months of intense lobbying by the conventional oil and gas industry, which argues that new rules and stronger enforcement are to blame for the decline in the number of shallow wells drilled each year. They say further proposed regulations would make the conventional industry's small businesses a casualty of efforts to police large operations run by powerful unconventional drilling companies extracting gas from the Marcellus and Utica shales.
A new trade group, the Pennsylvania Grade Crude Oil Coalition, was formed last summer to promote shallow oil and gas production in the face of "burdensome regulations being proposed and implemented by the DEP," according to its mission statement.
An older organization, the Pennsylvania Independent Petroleum Producers Association, retained a lobbyist and a communications firm last year whose monthly bills now amount to 81 percent of the association's expenses, according to the association's? March newsletter.
The two trade groups have publicly touted the conventional industry's? historical and ongoing economic significance in a brochure and video distributed to legislators while privately pressuring the Corbett administration to rein in environmental regulators.
In an email to the governor's? policy director, energy executive and DEP secretary in February, the crude oil coalition's? lobbyist Robert Taylor questioned whether the administration "want[s] this small business industry to continue and to grow in the commonwealth." He said draft legislation to split the drilling regulations was crafted because DEP's? actions and proposals "seriously exceeded" the legislative intent of the state's? 2012 drilling law, known as Act 13.
"Please understand, we are NOT moving forward with any legislative agenda prior to talking with you and determining the Administration's? final position on the matter," he wrote.
"The Secretary has been VERY willing to talk and work with PGCC, and we deeply appreciate that effort. His Deputy and others at the agency appear to have other agendas in some cases, and we seek understanding whether those approaches are endorsed by the Governor."
The crude oil coalition has said DEP underestimated by as much as $1.5 billion the costs that the conventional industry will bear to comply with a major proposed revision of the oil and gas regulations, a calculation that DEP officials say is wildly inflated.
DEP production statistics that put the number of producing conventional wells at about 90,000 based on companies'? 2011 data is "certainly understated," because the production reports can only be submitted by operators electronically, the coalition said. "There is a significant constituency of legacy well owners who choose not to own a computer or be connected to the Internet."
Both bills that the committees approved today, House Bill 2350 and Senate Bill 1378, begin by declaring the General Assembly's? finding that the "conventional oil and gas industry has had a benign impact on human health and the environment in this Commonwealth" since the 1984 Oil and Gas Act became law.
The bills' sponsors, Rep. Martin Causer, R-Turtlepoint, and Senate President Pro Tem Joe Scarnati, R-Jefferson, wrote in memos to lawmakers that the legislation "would not relieve the conventional oil and gas industry from any existing or future health or safety regulations [that] may be appropriate or necessary."
Critics of the bills say conventional and unconventional drilling poses risks and causes harm to human health and the environment.
The Pennsylvania Environmental Council wrote to state senators in May asking them to oppose Senate Bill 1378.
The group said the bill "creates a new and potentially vast exemption for natural gas operations, undercutting necessary environmental protections for on-site containment, drinking and surface water protection, air emissions and other siting and control standards."
William Belitskus, board president of the Allegheny Defense Project, another environmental group, pushed back against suggestions the conventional industry should be excused from complying with proposed new regulations.
In public comments submitted this spring, he cited as one reason for the strict rules an oil tank explosion at a conventional well site in Warren County that killed a 26-year-old worker in March.
DEP compliance statistics show that the conventional oil and gas industry often fails to meet even current environmental standards.
As of mid-May, state environmental regulators found nearly three times as many violations (540) at conventional well sites this year as at unconventional sites (189), even though regulators conducted 200 more inspections at unconventional sites.
Conventional operators also had a worse compliance rate last year.
On average, regulators found a violation during one in every eight inspections of conventional well sites in 2013 but only one violation in every 25 inspections at unconventional sites.
In some forums, conventional producers openly acknowledge that some companies continue to get rid of the brine that comes up with the oil or gas pumped out of wells by dumping it on the ground, ignoring environmental laws that are three decades old.
The Pennsylvania Independent Petroleum Producers Association surveyed its members last year to find out how they manage the waste, also known as production water, in order to prepare for stricter enforcement of the laws that prohibit such dumping.
Of the 80 producers that returned the surveys, 30 said they haul wastewater to a treatment plant, seven recycle it and 13 spread it on roads to suppress dust or ice -- all of which are acceptable solutions under the law.
Twenty-five operators said they release the brine to the ground from tanks at individual well sites, and 20 said they release it to the ground from a central tank connected to several wells.
Nine discharge it to a stream without a permit. Some operators reported more than one practice, so the totals are higher than the number of companies that responded.
Asked what they would change if DEP started enforcing wastewater regulations, 17 of the operators said they would not change anything, and 49 said they would shut down completely. Seven would look into getting a permit to treat the water to meet state standards and release it to a stream.
The next month, the association printed a form letter that citizens could send to regulators to say that it "is emphatically wrong from a historical standpoint" for DEP to enforce the no-dumping rule on functioning wells that were drilled before the state passed the Oil and Gas Act in 1984.
Such wells "have had production water disposed of on the ground for more than 125 years, and this has never presented a major problem," the letter said.
In an email, a DEP spokesman disputed that brine dumping is harmless. "Disposing of wastewater on the ground has the potential to impair both surface and groundwater supplies," spokesman Eric Shirk said.
DEP is also "mindful that the conventional oil and gas industries in Pennsylvania are significant contributors to the local economy and that there are regulatory areas where it is appropriate to distinguish between conventional and unconventional operators," he said.
Laura Legere: email@example.com.
(c)2014 the Pittsburgh Post-Gazette
Visit the Pittsburgh Post-Gazette at www.post-gazette.com
Distributed by MCT Information Services
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer