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Pennsylvania DEP Fines Chesapeake $565K for Multiple Incidents

The Pennsylvania Department of Environmental Protection (DEP) has fined a Chesapeake Energy Corp. subsidiary $565,000 for three incidents that occurred in the northern part of the state in the Marcellus Shale, including a blowout at a Bradford County well last April (see Shale Daily, April 25, 2011).

"The governor and I expect the highest standards to be met and when they are not, we take strong enforcement action," DEP Secretary Mike Krancer said of the fines levied against Chesapeake Appalachia LLC. "We will continue to be vigilant on that front. The protection of the state's water is paramount."

Oklahoma City-based Chesapeake responded that it has voluntarily entered into an agreement with the DEP to pay the fines associated with the three incidents.

"Chesapeake worked proactively with all appropriate regulatory agencies throughout the response and analysis of these incidents to achieve compliance, identify and implement operational improvements and ensure proper resolution," Chesapeake spokesman Brian Grove said Thursday. "Through the course of the analysis and response to each of these matters, we have identified ways to enhance our operations and have fully implemented them."

The DEP fined Chesapeake $190,000 for the blowout of the Atgas 2H well in Leroy Township, which occurred on April 19. Regulators said fluids used in hydraulic fracturing (fracking) mixed with rainwater and entered an unnamed tributary of Towanda Creek, then the creek itself. Chesapeake said the blowout occurred after a flange connection in the well's surface equipment failed during completion operations.

Chesapeake was also fined $215,000 for failing to implement adequate erosion and sediment controls at a well pad in Potter County (see Shale Daily, March 24, 2011). The DEP said heavy rain eroded an access road to the company's Beech Flats well pad in West Branch Township, causing sediment to enter the Right Branch of Wetmore Run, a high-quality stream, and damaged a municipal water treatment facility in Galeton Borough. The agency said Chesapeake has since paid Galeton $190,000 for repairs to the facility.

"Much of the sediment originated from a pre-existing, poorly maintained logging road that Chesapeake was working to upgrade during site development," the company said of the Beech Flats incident. "[Chesapeake] immediately responded as weather conditions worsened in coordination with the [DEP] to mitigate the runoff and establish enhanced safeguards to prevent it."

Regulators also fined Chesapeake $160,000 after discovering in July 2010 that part of its Elevation well pad near Towanda, located in Bradford County, was built on wetlands. Heavy rains that October then caused sediment from the well pad to enter Sugar Creek and an unnamed tributary.

On the Elevation issue, Chesapeake said it began working with the DEP and the U.S. Army Corps of Engineers in spring 2011 "to develop a wetland restoration plan...[which] will ultimately conclude in a fully restored wetland at the location."

The fines announced Thursday come less than one year after the DEP levied nearly $1.09 million in fines -- the largest in the agency's history for an oil and gas operator -- against the same Chesapeake subsidiary (see Shale Daily, May 18, 2011). Those fines were in response to the contamination of private water supplies in Bradford County (see Daily GPI, Sept. 21, 2010) and a tank fire at a drilling site in Avella, which is in Washington County (see Shale Daily, Feb. 25, 2011).

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