In a move anticipated by oil and natural gas producers, the Susquehanna River Basin Commission (SRBC) said Monday it was suspending 64 water withdrawal permits due to ongoing drought conditions in the basin, the highest number of suspensions since it began issuing permits in 2008.
According to the SRBC, 33 companies — the majority of them operators in the Marcellus Shale — operating in 13 Pennsylvania counties and one county in New York are affected by the suspension.
“It’s a combination of our current pass-by conditions, our current pass-by policy being based on very conservative numbers…[and] the fact that we’re entering a very dry period,” SRBC spokeswoman Susan Obleski told NGI’s Shale Daily on Tuesday.
Earlier this year the SRBC, which issues permits and manages water withdrawals in the 27,510-square mile Susquehanna River Basin, suspended permits for similar reasons (see Shale Daily, May 3; April 20).
“We’ve been on a roller coaster,” Obleski said. “Our first suspensions actually triggered in February, and this spring we were in drought-like conditions. We got a lot of rainfall in late April and May, and that helped the streams to recover. Now we’ve been slowly chipping away at those improvements in hydrological conditions.
“If conditions were to persist, we would continue to see numbers in the upper 50s and 60s in terms of suspension.”
In Pennsylvania, water withdrawal permits in Blair, Bradford, Clearfield, Clinton, Lackawanna, Lebanon, Luzerne, Lycoming, Potter, Susquehanna, Tioga, Wyoming and York counties were suspended on Monday, as were permits in Chemung County, NY. The most suspensions, nine, were in Susquehanna County, PA.
Some of the oil and natural gas operators affected by the suspensions include Chesapeake Appalachia LLC, Cabot Oil & Gas Corp., Carrizo Oil & Gas Inc., Chevron Appalachia LLC, EXCO Resources Inc., Southwestern Energy Production Co., Stone Energy Corp., SWEPI LP, Talisman Energy USA Inc., Tennessee Gas Pipeline Co., Ultra Resources Inc., WPX Energy Appalachia LLC and XTO Energy Inc.
Richard Hunter, vice president of investor relations for Carrizo, said the suspensions were not a surprise and were part of a seasonal dry season in the basin. He added that the Houston-based company had already shifted its operations to Wyoming County.
“This is seasonal,” Hunter told NGI’s Shale Daily on Tuesday. “In Susquehanna County, [the SRBC] restricts water access every year about this time, so we didn’t plan to have any activities there. We completed some wells and drew some water there in the first quarter, but we’ve moved our operations down to Wyoming [County] for the dry season. We’ll move back up into Susquehanna once it starts raining again.
“We’ll do this exactly the same way next year. It’s not having any impact on our operations at all.”
Talisman spokeswoman Berta Gomez said that company would also not be affected by the suspensions. “Looking at Talisman’s current activity level based on natural gas prices, we do not see an impact on our overall operations,” she told NGI’s Shale Daily on Tuesday. “We are not conducting any hydraulic fracturing activity in the Marcellus.”
Although representatives for additional producers could not be reached for comment, Obleski concurred with Hunter that most of the operators in the region have anticipated the suspensions.
“The industry, as a whole, knows the patterns of our basin and that during dry periods certain withdrawals will be suspended,” Obleski said. “They have numerous different permits to diversify their sources. They can go to public water supply sources. They can share water amongst themselves, if they’ve been approved to do that. And they knew to take a lot of water and store it for these low-flow periods.”
Under the SRBC’s “pass by flow” restrictions, when streams fall to pre-determined protected low-flow levels, project sponsors that are required to meet the commission’s requirements have to stop taking water and may not resume taking water until the streams have “recovered above the protected level for at least 48 hours.”
Regulated project sponsors are required to install tamper-proof water meters to automatically record their water withdrawals on a daily basis. The SRBC also monitors gauges from the U.S. Geological Survey on a daily basis to determine which ones have triggered, and field staff conducts frequent spot inspections to verify compliance with pass by requirements.
Not all SRBC approvals contain pass by restrictions, such as approved withdrawal amounts that are so small that they would not affect the protective levels of streams. In those cases, companies may continue to take water during low-flow periods.
The SRBC is proposing to modify the pass by flow restrictions, looking at seasonal flows instead of annual averaging flows.
“Annual averaging on flows tends to be on a more conservative number,” Obleski said. “Our new proposed policy, if we’re able to adopt it, we’ll look at more seasonal flows, natural cycles. If you looked at the number of permits suspended today, under our new low-flow policy, you may have fewer triggers.”
The Susquehanna River Basin covers half of Pennsylvania and parts of New York and Maryland, and makes up a sizeable portion of the Marcellus Shale play. It is managed by the SRBC, a compact set up by the federal government in 1971. Representatives from the three aforementioned states and the Army Corps of Engineers serve as commissioners.
With 1,780,000 net acres, Chesapeake Energy is the largest acreage holder in the Marcellus Shale. Rounding out the top five are Range with 900,000 net acres, Shell (East Resources) with 850,000 net acres, Seneca Resources (745,000) and Chevron (714,000).
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