Pennsylvania's Department of Environmental Protection (DEP) has ordered EOG Resources Inc. to suspend all of its natural gas well drilling activities in the state following a blowout last week at a company well in Clearfield County, PA.

While the Pennsylvania order prohibits EOG from drilling activities for up to seven days, from engaging in fracing operations for up to 14 days and from completing or initiating post-fracing operations for 30 days in any wells in the state, none of the activities may resume until DEP has completed a comprehensive investigation of the incident and EOG has implemented any required changes, according to DEP Secretary John Hanger.

"DEP staff, along with an independent expert, will conduct a detailed investigation of not just the incident that occurred last week in Clearfield County, but of EOG Resources' drilling operations as a whole here in Pennsylvania," said Hanger. "The Clearfield County incident presented a serious threat to life and property. We are working with the company to review its Pennsylvania drilling operations fully from beginning to end to ensure an incident of this nature does not happen again."

EOG, which operates approximately 265 active wells in Pennsylvania, 117 of them in the Marcellus Shale formation, has been fully cooperative, Hanger said.

EOG said Monday it is cooperating with DEP and has voluntarily suspended operations in the state."EOG will cooperate with [DEP] in the event these time periods need to be modified. During the suspension period, both EOG and [DEP] will be conducting thorough reviews of EOG's operations. EOG has hired an independent industry expert who has already begun an investigation into this incident and these findings will be shared with the PADEP," EOG said.

The well "experienced a control issue" last Thursday at about 8 a.m., EOG said. A service rig operated by a contractor was in the final stages of completing the well when the blowout occurred. The well, which had produced brine water and natural gas, was shut in and secured shortly after noon Friday, the Houston-based company said. Three other wells on the same pad that have been drilled and fractured remain plugged and are not in danger, according to DEP.

A preliminary DEP investigation determined that a blowout preventer on the well failed, but the agency does not know if that failure was the main cause of the incident. EOG said it appears that the seal integrity between the pipe rams of the blowout preventer (BOP) and the tubing was compromised, allowing pressurized fluids and some natural gas to flow. The cause of this compromise is being investigated. As part of EOG's routine operating and safety procedures, the BOP had been successfully tested Thursday morning.

There were no injuries, no fire and no significant impact to the environment as a result of the incident, EOG said.

The well, Punxsutawney Hunt Club #36H, is located in an unpopulated area about 11 miles from Penfield, PA. EOG personnel and representatives from a specialty well control firm were on location Monday, the company said.

Natural gas and fracing fluid shot approximately 75 feet high and flowed from the well for approximately 16 hours, according to Hanger. Approximately 35,000 gallons of drilling wastewater was released during the incident, he said.

"Our preliminary assessment is that the environmental damage was modest as the frac fluid was contained and did not appear to reach any streams, but DEP is continuing its monitoring efforts because sometimes the impacts of a spill like this are delayed. We have noted that a spring in the area has shown a spike in conductivity and that discharge is being collected by EOG for proper disposal."

According to EOG, containment trenches and sump pumps captured the majority of the fluids that flowed from the well during the incident.

"At this time, EOG believes that any impact to area streams and springs and to the environment is minimal," the company said.

EOG does not expect the suspension of activity in Pennsylvania will impact its previously issued 13% total company production growth target for 2010. Current EOG production in the Pennsylvania Marcellus Shale is approximately 11 MMcf/d and accounts for less than 1% of the company's total daily production volumes.

In an unrelated incident, seven drilling company employees were taken to a hospital, several with serious burns, after an explosion at about 1 a.m. Monday at a well near Moundsville, WV, about 50 miles south of Pittsburgh. Fort Worth, TX-based Union Drilling Inc. was operating a rig targeting the Marcellus when it apparently hit an inactive coal mine shaft, igniting methane gas that had collected there, according to a spokesperson for the West Virginia Department of Environmental Protection (WVDEP). Initial reports are that the drilling had progressed a little more than 1,000 feet when the explosion occurred.

At midday Monday WVDEP spokesperson Kathy Cosco said flames were still shooting 50-75 feet into the air. She said Union Drilling and other federal and state officials on the scene were working on a plan to extinguish the well and cap it. "Our fellows at the scene said they expected it would take most of the day to get it under control," Cosco said.

There are a number of old mines in the area of the accident and special precautions are usually taken because of the possibility they can contain methane. "We have some of [the tunnels] mapped, but not all of them. They knew about this one, though," Cosco said. She said she expected state environmental agency officials and representatives of the federal Occupational Safety and Health Administration to investigate the incident.

The well had been permitted only about a week ago. The Associated Press reported that Chief Oil and Gas LLC is a part owner and is responsible for the well.

Another accident was reported in Texas Monday, with three dead and at least 10 people missing following a natural gas pipeline explosion (see related story).

The accidents come at a particularly tough time for the industry and Marcellus drillers, who are facing the prospect of tougher wastewater regulations in Pennsylvania (see Daily GPI, May 18). The entire oil and gas industry is also under increased scrutiny from some quarters because of the oil spill in the Gulf of Mexico, which resulted from a mid-April well blowout that sank the BP-contracted Deepwater Horizon drilling rig and killed 11 crew members. (see Daily GPI, June 7a; June 7b; April 22).

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