The Pennsylvania Department of Environmental Protection (DEP) said Tuesday it plans to issue Range Resources Corp. a record $8.9 million fine for what it said was the company's failure to repair a faulty concrete job on a leaking natural gas well in Lycoming County.
Range has appealed a corrective order issued in May to the state's Environmental Hearing Board. A DEP spokesperson confirmed that the $8.9 million penalty is the highest the agency has levied in the shale era.
Prior to Tuesday's announcement, Range had paid the highest fine of $4.15 million for a series of violations at six of its water impoundments in southwest Pennsylvania (see Shale Daily, Sept. 19, 2014). The company agreed to pay that fine and took measures to fix those violations.
DEP Secretary John Quigley, who was appointed by Democratic Gov. Tom Wolf shortly after he took office in January (see Shale Daily, Jan. 14), told NGI’s Shale Daily that the fine is intended to reinforce the agency's regulatory mission.
"The long and short of it is this; there have been ongoing violations of the Pennsylvania Clean Streams Law and the Oil and Gas Act of 2012 -- near daily violations for the last four years," Quigley said of the oil and gas industry's operations statewide. "The maximum amount, according to our calculations, could have been many, many times the amount of this fine.
"The message is very simple: don't pollute the waters of the commonwealth. We'd rather not see these kinds of situations, but this is the fault of the operator and a matter of faulty drilling," he added. "They have a responsibility to get it right every time, because if they don't, it gives rise to further regulations and enforcement action."
Range is one of the state’s largest producers. It has been issued 1,970 horizontal permits to date and produced 310.6 Bcf of natural gas last year. In a statement, the company said it has data to prove that the leaking methane is naturally occuring at the surface and below, saying it would continue to work with the agency to show that the gas was present “long before our activity, and is not in any way related to our operations.
“We respect and share the department’s mission to safely produce natural gas while protecting the environment,” the company added. “We believe we’ve complied with DEP’s requests and while we have a disagreement about this situation, we are very confident in the mechanical integrity of the well and we are equally confident that the environment and community are not at risk.”
DEP said the well in question was drilled in early 2011 and fracture stimulation began later that year. An investigation revealed that methane contaminated private water wells and a nearby stream. The agency issued a notice of violation in September 2013, but the issue was never resolved. In May, under Quigley's leadership, DEP ordered the company to submit a plan to fix the defective well, but said the plan Range submitted was inadequate.
Quigley said he couldn't speak about why the previous administration did not resolve the problem in Lycoming County and said the case was one of the first he reviewed after taking office. The DEP conducted additional investigations over the last five months and decided to issue the corrective order in May.
"Range chose to appeal that order, and it led to [Tuesday’s] announcement," Quigley said.
Range submitted a plan to put the well back into production to avoid natural gas migration, but DEP rejected it because it did not include making the necessary repairs. Since the leak was first discovered, private wells, a pond and nearby streams have continued to show signs of gas migration, the presence of iron, aluminum and manganese, according to DEP. Dead foliage and gas escaping the soil have also been observed by regulators.
DEP said earlier this year that it would work to tighten up a series of proposed oil and gas regulations, which has partly prompted speculation about tension between the agency and the industry (see Shale Daily, April 8).
"We're doing our job," Quigley said in response to those concerns. "It's our responsibility to the citizens of Pennsylvania and the environment of Pennsylvania to prevent groundwater contamination and our job is to fix it. Quite frankly, it's the responsibility of Range Resources to fix the problem because they caused it. It's very simple, this kind of situation can be avoided when a well is drilled correctly."