New Report Further Underscores Pa.’s Effective Oil, Natural Gas Regulations

This week, the Pa. Department of Environmental Protection (DEP) released its first-ever 2013 Oil and Gas Annual Report, highlighting both the incredible opportunity that safe, tightly-regulated shale development presents for the entire Commonwealth as well as the strong and effective enforcements policies in place to ensure that we continue to protect our environment.

Here are key excerpts from the report, which is available in full here:

ENERGY SECURITY

Since 2008, Pennsylvania’s natural gas production has increased exponentially as a result of unconventional drilling techniques including hydraulic fracturing and horizontal drilling. This increasing trend in shale gas production is resulting in energy security that translates to national security in the form of less dependence on fossil fuels from other parts of the world. Increased shale gas production has resulted in a number of significant benefits including less expensive energy costs and improvements to Pennsylvania’s air quality as a result of the increased use of cleaner burning natural gas.

Act 13 of 2012, for the first time, included an “impact fee” that is paid for by the natural gas industry. During the past three years, more than $630 million has been collected by the commonwealth and these monies have largely been allocated to Pennsylvania’s counties and municipalities, in addition to providing funds to support state agencies and organizations that oversee natural gas drilling activities. DEP receives $6 million annually in new revenue from the impact fee. Although the production of oil and natural gas provides tangible benefits, it must be done in a way that is protective of Pennsylvania’s citizens and the environment.

NATIONALLY & INTERNATIONALLY RECOGNIZED

Pennsylvania is recognized nationally and internationally as having successfully developed a regulatory approach that both protects its environment and citizens while also providing for optimal development of oil and gas resources. Over the past several years, representatives and officials from many countries around the world have traveled to Pennsylvania to meet with DEP’s Office of Oil and Gas Management to learn more about its programs and practices. Closer to home, DEP’s regulatory approach has served as a model to other state environmental agencies as well.

In May 2013, the State Review of Oil and Natural Gas Environmental Regulations, Inc. (STRONGER) conducted a programmatic and regulatory review of DEP’s Oil and Gas program. STRONGER is a non-profit, multi-stakeholder organization whose purpose is to assist states in documenting the environmental regulations associated with the exploration, development and production of crude oil and natural gas. The organization shares innovative techniques and environmental protection strategies and identifies opportunities for program improvement.

On Sept. 20, 2013, STRONGER published the results of its most recent independent peer review of DEP’s oil and gas regulatory program at www.strongerinc.org and found it to be proficient and ready to address the increase in oil and gas operations in Pennsylvania. STRONGER recognized the following actions taken by DEP to strengthen the following key areas:

  • Increased staff levels to address additional permitting, inspection and enforcement activities related to increased unconventional gas well development;
  • Expanded the program’s public participation activities associated with the abandoned well sites program;
  • Initiated a comprehensive evaluation of radiation levels specifically associated with unconventional gas development, the first of its kind in the nation;
  • Mandated that operators performing earth disturbance activities associated with oil and gas activities develop and implement erosion and sedimentation control best management practices to minimize the potential for erosion and sedimentation; and
  • Advanced its hydraulic fracturing program and required that well operators conducting well casing and cementing to maintain control and prevent migration of gas or other fluids into sources of fresh groundwater.

ENHANCED REGULATORY OVERSIGHT

Natural Gas Compression Facilities General Permit (GP-5 permit): On Feb. 2, 2013, DEP finalized revisions to a general plan approval and general operating permit for natural gas-fired engines, dehydrators, storage tanks and other equipment at natural gas compression and/or processing facilities (aka, GP-5 permit). Compressor stations help move gas from well sites into transmission pipelines. This revised general permit establishes requirements for best available technology, authorizes the construction, modification and operation of these natural gas facilities. These minor sources typically are not subject to major source permitting requirements including Title V and New Source Review of the federal Air Pollution Control Act. The new GP-5 permit was developed after considering public comment and includes significantly lower allowable emission limits than the previous general permit. The GP-5 permit imposes emission limitations that are 75 to 90 percent more stringent than previously permitted emission limits for natural gas-fired engines used at compressor stations. In addition to more stringent emission limitations, this general permit includes municipal notification, source testing, recordkeeping and reporting requirements. Operators of facilities authorized to use the GP-5 permit must demonstrate that their facilities continue to be minor sources as defined by the Clean Air Act which allows for operational flexibility. In addition to the air quality benefits, this general permit has streamlined the overall air quality permitting process.

Air Quality Permit Exemption Criteria Modification: Since 1996, oil and gas well sites in Pennsylvania had been granted blanket exemptions from obtaining air quality plan approvals and operating permits (i.e., Exemption Criteria Category 38 for Gas Well Sites). Given the recent expansion in natural gas exploration and production activities in Pennsylvania this blanket exemption has been modified and on Aug. 10, 2013, DEP finalized new exemption criteria. These criteria require actions to be taken that are more stringent than the EPA’s standards for new emission sources and result in emission levels of minor significance.

STRONG INSPECTION RECORD

Another important responsibility of DEP is to conduct rigorous inspections at oil and gas sites across the state. Inspections at well sites are necessary to ensure that permit requirements are achieved at the actual well sites. In response to enhanced oversight and in conjunction with the notification requirements contained in the 2012 Oil and Gas Act, the Office of Oil and Gas Management has significantly increased the number of inspections conducted at conventional and unconventional well sites. Likewise, DEP has increased the number of its inspectors since 2009 to its current level of more than 80 inspectors. The total number of all well inspections has steadily increased from 2008 through 2012; and remained steady in 2013.

In 2008, the Office of Oil and Gas Management conducted 1,262 inspections of 377 unconventional wells. By 2012, the number of inspections increased to 12,680 inspections of 4,859 unconventional wells. This reflects an order of magnitude increase in the number of inspections that were conducted during this five-year period. The inspection rates remained steady during 2013 with 12,391 inspections of 5,559 unconventional wells. While the number of inspections of conventional wells has increased over time since 2008, the significant increase in the number of inspections of unconventional wells, coupled with inspections of oil and gas well pad sites and administrative inspections, has resulted in a significant increasing trend of total oil and gas inspections over the past five years.

INNOVATIVE APPROACHES TO ENSURE PROTECTION

Comprehensive Oil and Gas Development Radiation Study: Generation of Technologically Enhanced Naturally Occurring Radioactive Material (TENORM) in solid waste generated by the oil and gas industry has increased in Pennsylvania over the past several years due, in part, to the expansion of unconventional natural gas production. In January 2013, DEP announced it would undertake a study to assess levels of naturally occurring radioactivity in the by-products associated with oil and natural gas development. The purpose of this study is to develop a final report with findings that are scientifically-based to determine whether any further actions are warranted by DEP to ensure the continued protection of the public and Pennsylvania’s environment. On April 4, 2013, DEP released a detailed project scope and sampling and quality assurance plans for this comprehensive study. This represents the most comprehensive study of its kind in Pennsylvania and perhaps the nation.

Long-Term Air Quality Monitoring Study: DEP is currently conducting a long-term study to measure air quality at sites that could potentially be impacted by nearby natural gas compressors and processing stations. The monitoring sites were selected near permanent facilities that have been shown to be a source of methane, nitrogen oxides, carbon monoxide and hazardous air pollutant emissions. The samples collected during the study are subjected to rigorous quality-assurance and data validation criteria. A final report is expected to be released in 2014. DEP previously conducted three short-term sampling studies in various drilling regions of the state and detected no levels of any pollutant that would violate federal ambient air quality standards or would be expected to cause air-related health issues.

Pipeline Safety and Inspections: DEP inspects well sites and natural gas gathering pipelines; however, rugged terrain associated with linear pipeline development in remote mountainous areas of Pennsylvania often presents significant challenges in reaching long stretches of gathering pipelines for inspection purposes. In 2013, the Office of Oil and Gas Management initiated a pilot project using department-owned all-terrain vehicles to access remote natural gas gathering pipeline operations to conduct inspections. This project was designed to monitor and inspect pipelines prior to, during and after construction operations to assess compliance with the Department’s Erosion and Sediment Control General Permits and other environmental laws and regulations. The initial pilot project was successful; therefore, DEP plans to expand this initiative in 2014 to target additional pipeline locations. The department also intends to continue existing inter-agency communication, cooperation and partnering with the Pennsylvania Fish and Boat Commission, Pennsylvania Game Commission and PUC during the coming year. In addition, DEP intends to partner with PUC in 2014 to form a separate “Joint Pipeline Working Group” to examine and evaluate the current safety conditions and practices associated with the construction of gas pipelines in Pennsylvania.