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Pennsylvania Lawmaker Proposes Costlier Bonds to Cover Shale Wells

A state representative from Southeast Pennsylvania has introduced legislation that would increase the bonding requirements for unconventional natural gas wells to ensure more resources are available to clean up any environmental problems if they occur after drillers cease operations.

Republican Rep. Thomas Murt, who serves parts of Montgomery and Philadelphia counties, introduced HB 2277 earlier this month to update the cost of bonds that operators must post to drill a shale well in the state. The last time the amount increased was in 2012 with passage of Act 13, which updated the state's oil and gas laws, to require bonds of $4,000 to $10,000 depending on the size of a well.

Murt's bill would add another $2 million to each well, payable with a well permit application and "conditioned upon the proper remediation of any release of any regulated substance, restoration and plugging requirements." The legislation would also provide for a blanket bond provision that would be equal to 20% of the cost for individual bonds to cover all an operator's wells.

"This bonding will be used in the case that fracking or the drilling of an unconventional well causes environmental damage," Murt wrote in a memo to lawmakers, seeking co-sponsors for the legislation. "The driller should be held liable for any clean-up as a result of drilling and not the host communities nor the commonwealth."

Blanket bonds can already be posted to cover all of an operator's wells in the state for a maximum cost of $600,000. Thousands of shale wells exist in the state, but the Department of Environmental Protection has not yet had to cover the costs of plugging any. The agency does track abandoned wells from earlier eras, saying in its latest annual report that there are 8,363 of them. To date, the agency has plugged another 3,036 abandoned wells.

The Marcellus Shale Coalition called the bill a "misguided proposal," saying it was "another Harrisburg solution in search of a problem," referring to the state capitol. "Act 13, a bipartisan industry-supported law that modernized and strengthened the commonwealth's natural gas regulations, significantly increased bonding requirements to one of the nation's highest levels and, along with other environmental laws, tightened environmental remediation requirements, regardless of cost to the operator," the organization said in a statement.

HB 2277 says that liability under the new bonding requirements would continue until any environmental issues are resolved or a well is properly plugged. The bill was referred to the House Environmental Resources and Energy Committee on Aug. 5.

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