STATE COLLEGE - Gas companies are learning not to fool with the Susquehanna River Basin Commission.
During its quarterly meeting Thursday in State College, the commission accepted payments from three gas companies for not complying with state regulations regarding the withdrawal of water used for gas drilling.
The commission requires permits to withdraw water from any water source to be used for gas drilling.
Texas-based Novus Operating LLC began constructing two wells in Tioga County without receiving the proper water withdrawal permits from the commission, according to Thomas W. Beauduy, commission deputy director.
The company was ordered to cease construction and penalized $100,000, Beauduy said.
Another company, Southwestern Energy, also of Texas, began construction on a single well in Bradford County without acquiring permits from the commission, he said.
The company agreed to remove pipe it had installed in the ground and agreed to pay $50,000 in lieu of a fine, he said.
Chesapeake Energy Corp. of Oklahoma made a $20,000 payment after it discovered a contract water hauler had removed 10 percent more water than the company was permitted to take for gas drilling operations.
The water was removed from three public water supplies, he said.
According to Beauduy, the company reported the violation to the commission.
"They reported directly to us and implemented (measures) to make sure it didn't happen again," he said.
Beauduy said gas companies appear willing to comply with regulations or report violations when they happen. It is much less expensive to report a violation and pay a fine than to have a drilling operation shut down, he said.
The meeting included a presentation by James R. Grace, state Department of Conservation and Natural Resources deputy secretary for state parks and forestry, on the recent leasing of state forestland.
Oil and gas leases on state forestland brought $153 million to the state in the 60 years since it first began leasing state land for mineral extraction in 1947, Grace said.
The state's gas lease sale in 2008 surpassed that amount in a single day, he said.
The 2008 lease sale, which included 18 tracts totalling 74,000 acres in Lycoming and Tioga counties, brought in $168 million, Grace said.
A subsequent sale in January, which included six tracts totalling about 32,000 acres in Clearfield, Clinton, Potter and Tioga counties, brought in another $128 million, he said.
There is 2.1 million acres of state forestland, 700,000 acres of which has been leased for gas and oil exploration, he said. The state does not own the mineral rights on 290,000 acres of the leased land, he said.
So far, there are nine completed Marcellus Shale wells and 100 wells under development on state land, he said.
More than 170 wells were permitted in 2009 and another 250 well permits are expected to be issued this year, he said.
Over the next 10 to 20 years, there could be as many as 6,000 wells drilled on state land, Grace said.
While gas exploration in the Marcellus Shale can be an enormous economic opportunity for the state and nation, it also presents challenges not seen with shallow well development, Grace said.
"The logistic of drilling for Marcellus gas is beyond anything we've ever seen," he said. "The operations are huge, the drilling rigs are bigger."
The construction of pipeline on state land "is another huge activity," he said.
Gas exploration also requires the use of large amounts of water, which also must be treated after it is used, he said.
Grace said he believes stringent and sophisticated regulations related to gas drilling on state land can reduce the impact on land.
Regulations prohibit surface disturbance in special areas such as natural areas, he said.
The use of a single well pad on which to drill as many as six wells will significantly reduce surface disturbance on state land, he said.
"This is going to be one of those events that changes Pennsylvania forever," he said. "Hopefully, 20 years from now we'll look back and see we managed it properly."
Also speaking was Andrew Gavin, commission section chief of restoration and protection, on the commission's remote water quality monitoring network.
According to Gavin, the network establishes real-time monitoring in areas of concern in the Susquehanna River basin. Monitors target areas where activities such as gas drilling, water withdrawal and water disposal occur, he said.
John Hines, state Department of Environmental Protection deputy secretary for water management, discussed DEP initiatives designed to protect state's water resources fro the impacts of gas drilling.
Hines said the agency recently increased permitting fees, which allowed the agency to hire 37 new inspectors.
The agency is expected to hire another 69 staff and open a new field office covering the northeastern part of the state, he said.
The agency is working on strengthening well casing standards and is in the process of drafting new water quality related to the discharge of total dissolved solids.
Hines said the agency received 4,200 comments regarding the proposed water quality standards. Most of the commenters - 90 percent - "believe the department is heading in the right direction," he said.
Hines said most people believe the proposed standards concern only the oil and gas industry, though a wide range of industries will be impacted by them, he said.
