Pa. DEP Levies Biggest Gas Drilling Fine Ever on Chesapeake Energy

Pennsylvania’s Department of Environmental Protection fined Chesapeake Energy $1,088,000 for violations related to natural gas drilling activities.

Under a consent order and agreement, or COA, Chesapeake will pay DEP $900,000 for contaminating private water supplies in Bradford County, of which $200,000 must be dedicated to DEP's well-plugging fund. Under a second COA, Chesapeake will pay $188,000 for a Feb. 23 tank fire at its drilling site in Avella.

"It is important to me and to this administration that natural gas drillers are stewards of the environment, take very seriously their responsibilities to comply with our regulations, and that their actions do not risk public health and safety or the environment," said DEP Secretary Mike Krancer. "The water well contamination fine is the largest single penalty DEP has ever assessed against an oil and gas operator, and the Avella tank fire penalty is the highest we could assess under the Oil and Gas Act. Our message to drillers and to the public is clear."

At various times throughout 2010, DEP investigated private water well complaints from residents of Bradford County's Tuscarora, Terry, Monroe, Towanda and Wilmot townships near Chesapeake's shale drilling operations. DEP determined that because of improper well casing and cementing in shallow zones, natural gas from non-shale shallow gas formations had experienced localized migration into groundwater and contaminated 16 families' drinking water supplies.

As part of the Bradford County COA, Chesapeake agrees to take multiple measures to prevent future shallow formation gas migration, including creating a plan to be approved by DEP that outlines corrective actions for the wells in question; remediating the contaminated water supplies; installing necessary equipment; and reporting water supply complaints to DEP. The well-plugging fund supports DEP's oil and gas program operations and can be used to mitigate historic and recent gas migration problems in cases where the source of the gas cannot be identified.

The Avella action was taken because. on Feb. 23, while testing and collecting fluid from wells on a drill site in Avella,Washington County, three condensate separator tanks caught fire, injuring three subcontractors working on-site. DEP conducted an investigation and determined the cause was improper handling and management of condensate, a wet gas only found in certain geologic areas. Under the COA, Chesapeake must submit for approval to the department a Condensate Management Plan for each well site that may produce condensate."Natural gas drilling presents a valuable opportunity for Pennsylvania and the nation," Krancer said. "But, with this opportunity comes responsibilities that we in Pennsylvania expect and insist are met; we have an obligation to enforce our regulations and protect our environment."

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