Gas company to stay despite regulatory climate

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An official with Texas-based Chief Oil and Gas LLC Thursday said the company has no intention of pulling up stakes and leaving Pennsylvania, in spite of what she called a "challenging" regulatory climate.

"We're very committed to Pennsylvania," Chief spokeswoman Kristi Gittins said. "We've got a significant investment there."

Gittins' remarks came on the heels of a quarterly meeting of the Susquehanna River Basin Commission in Bel Air, Md.

The commission is the agency charged with regulating water quantity issues in the Susquehanna River Basin. The agency issues permits for the consumptive use of ground and surface water in the basin.

Consumptive use is considered to be any use in which most of the water used is not returned to its source. The agency must issue a permit for consumptive use once that use reaches a certain volume threshold.

During the meeting, the commission approved regulation changes designed to both streamline the water use application process and provide added protection to the state's water resources.

The new regulations include provisions that allow all requests for consumptive water use by the gas industry to go through a simplified "approval-by-rule" process,which basically is an administrative procedure.

The commission expanded the water sources applicants can use consumptively, including public water supplies, discharges from wastewater treatment facilities and other reclaimed waters, and other sources requiring separate permits.

Other regulation changes include:

Regulating projects on a drilling pad basis rather than on a leasehold basis that might include many pads over a large area.

Requiring drilling companies to certify compliance with state and federal laws pertaining to the treatment and disposal of flowback fluids or brines from drilling operations.

Requiring all quantities of water withdrawn or used for natural gas development to be reviewed regardless of whether they reach certain permitting threshold amounts.

Limiting commission approvals to five years versus the standard 15-year approval for other types of projects.

Until recently, water consumption by the gas industry has not been considered an issue.

However, new industry technologies, such as hydrofracturing - also called "fracing" - have been developed that allow the removal of gas trapped deep beneath the ground in a shale formation known as the Marcellus Shale. The shale formation runs from southern New York through Pennsylvania and into Maryland and West Virginia.

Because the process requires the use of massive quantities of water, the commission had to react to protect the basin's water supply, commission executive director Paul Swartz said.

The regulation changes approved Thursday, as well as those made during the summer, were needed to allow the commission to "respond in an orderly fashion as we fulfill our dual mission to protect the basin's vital water resources and support economic development opportunities," Swartz said.

Swartz said requiring gas companies to seek approval for water consumption regardless of the amount of water used helps protect water resources while boosting industry compliance "by eliminating any uncertainties as to what amount of water would be regulated in (the basin)."

Gittins admitted the situation in Pennsylvania "is challenging" because gas exploration companies must deal with multiple regulating agencies. For example, the state Department of Environmental Protection regulates water quality issues associated with the gas drilling industry.

"In most states, you have one governing body. In Pennsylvania, you've got three, possibly four," Gittins said, adding, "I feel everyone's come to the table. I feel they want to work it out. They've seen the economic benefits in other parts of the country."

Gittins said the commission showed its willingness to work with the industry by changing its stance on several issues.

"I think the (commission) as well as the state regulatory agencies have been working very hard to accommodate activity in the Marcellus Shale," Lycoming County Commissioner Rebecca Burke said.

"I think the industry has already made significant investments in the Marcellus Shale and Lycoming County and I anticipate increased activity after the first of the year," said Burke, who also chairs the county Community Gas Drilling Task Force.