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Friday, September 30, 2011

Pennsylvania Fines Marcellus Shale Company More Than $1 Million

From Yahoo News. Jason Gallagher – Wed May 18, 12:54 pm ET

In response to well-water contamination and a fire at a drilling site, the Pennsylvania Department of Environmental Protection fined Chesapeake Energy more than $1 million. The fine is the largest ever levied against an oil or gas driller in Pennsylvania. While hydraulic fracturing, or fracking, continues to be a hot button for Pennsylvania residents, this fine is the state's way of sending a message to drilling companies. Here are some answers to questions about the fine.
Why was Chesapeake Energy fined?
Because of improper well casings in some Bradford County wells, natural gas seeped into the ground water contaminating the private water supply for 16 families. The fine amount for the water contamination was $900,000; a portion of that fine, $200,000 will go the DEP to help plug abandoned oil and gas wells. The company was also assessed a penalty of $188,000 for a fire that occurred Feb. 23, injuring three people.
What else does Chesapeake Energy have to do?
In addition to the fines, the company will take action to improve the wells in question, as well as report any and all water supply complaints to the DEP. Plus, Chesapeake will have to establish an account to pay for the water treatment equipment the affected families with contaminated wells now have to purchase. Since the investigation by the DEP determined that the fire was a result of mishandling condensate gas, the company must also submit a plan that identifies proper safe handling of the gas and for fixing the gas wells in question.
Is this the largest fine in the state for a Marcellus Shale company?
Yes, the fines of more than $1 million represent the largest fine issued by the state on any oil or gas driller. However, in December 2010, Cabot Oil & Gas Corp. agreed to pay $4.1 million to some residents of the Pennsylvania town of Dimock where water wells were contaminated with methane gas from the fracking process. The fine Cabot received was $500,000.
Will the fine hurt Chesapeake Energy?
Considering Chesapeake Energy reported a profit of $1.6 billion on revenues of $9.3 billion in 2010, paying a fine that totals a little over a million dollars should not greatly impact the company.
Why aren't the fines higher?
State lawmakers would need to amend the Pennsylvania Oil & Gas Act in order to impose harsher fines on companies. Many environmental organizations and state residents want the Act amended to reflect the use of the fracking process, which was not commonplace when the law was written.
Jason Gallagher is a former travel professional and long-time Pennsylvania resident. These experiences give him a first-hand look at developing situations in the state and everything included in the travel industry from technology to trends.

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