Friday, May 28, 2010

Fortuna/Talisman backs off Disposal Well Plans

Last week the residents of Van Etten (Chemung County, NY) got some good news: Talisman USA (previously Fortuna Energy) is withdrawing their request to test the Mallula well for potential use as an underground injection well.

Back in October 2008 Talisman obtained a State Pollutant Discharge Elimination System (SPDES) permit from NYS Department of Environmental Conservation (DEC) that would allow them to conduct injectivity testing on the Mallula well. The well, drilled 9300 feet deep into Trenton-Black River (TBR), was no longer producing gas, so Talisman figured they might convert it to a disposal well. 

The permit, good for six months, allowed the company to inject brine from neighboring TBR wells under pressure to determine whether the formation would accept the wastefluid. And if they didn't get around to running the tests, they had the option of renewing the SPDES permit every six months for up to five years. 

And if the tests came out positive - indicating that the rock could accept well waste fluid - then Talisman would be able to apply for a permit to convert the non-producing Mallula well into an Underground Injection (disposal) well. They renewed the permit twice without running tests. Then, last week, decided to discontinue with the testing.

Both DEC and EPA confirmed that Talisman will not be conducting any tests on the well.Company spokesman Mark Scheuerman said, “With our ever expanding operations in Pennsylvania, and so many other development priorities, we simply felt that our focus should be there [in PA] right now.”  Though he claimed public antipathy toward the project had little to do with Talisman’s decision, Scheuerman was quoted earlier this year as mentioning public opposition as a reason for putting their testing on hold.

Talk to people on the town board and you get a different story. They learned of the plans for testing - and potentially converting the well into a disposal well - only after the SPDES permit had been issued. Town board members and residents were outraged that they had no voice in something that would have an impact on their town.

After a few fractious community meetings, Talisman put the testing plans on hold. They promised to notify residents before they commenced with the injection testing, and also promised to test well water for anyone in the drilling unit.

But their promises weren’t enough to mollify residents who were concerned that injection of brine and flowback might contaminate the groundwater supplying their drinking wells. And Talisman did nothing to address the concerns of landowners in the drilling unit who has explicitly deleted storage clauses from their leases. This is important because the Mallula well is horizontal and goes under those parcels with no storage clauses. The landowners firmly believe that while their leases allow for drilling and completion of wells, they do not contemplate the later use of the well for disposal of brine, frack fluid or any other liquid drilling waste. 

But if not Mallula well, then where? According to EPA hydrologist Karen Johnson, underground injection wells offer the safest alternative for disposal of drilling waste fluids. The problem is that NY has only six active injection wells, so drillers have to truck their brine to one of Ohio’s 159 state-regulated injection wells. Johnson predicts that, as the drilling increases, gas companies will “go back to depleted and unproductive wells and try to use them as underground injection wells.”

And she's not the only one thinking this way. "There is renewed interest in the Trenton-Black River (and other deep formations) as a potential site for underground injection wells,” says Tom Murphy, a Penn State extension agent in Lycoming County.

So even though the Mallula well has been checked off the list, there are plenty of other potential disposal wells in the area. Of the 146 TBR wells in NY, 62 are located in Chemung and Tioga Counties. Most of these are horizontal wells, but nine are vertical – the same type of well Chesapeake was interested in converting to a disposal well in Pulteney earlier this year.

Tuesday, May 25, 2010

Gone Farmin'

Oil continues to gush into the Gulf, drillers are fracking Marcellus shale across the northern Appalachians, but while the sun shines I've gotta cultivate a relationship with my half-acre garden. And no, this isn't my tractor - we use a BCS walk-behind and a wheel hoe. I'll be back with Marcellus news on the first rainy day.

Monday, May 17, 2010

PA Environmental Quality Board Adopts tough Regulations to Protect Water from Drilling Waste

Today, the PA Environ-mental Quality Board (EQB) approved regulations that will protect waterways from the effects of natural gas drilling wastewater. Their goal is to enable companies to develop Marcellus Shale reserves without sacrificing the health and quality of Pennsylvania’s vital water resources.

Dept. of Environmental Protection Secretary John Hanger told the press that the new regulations are an appropriate and necessary measure to ensure that drilling wastewater containing high concentrations of Total Dissolved Solids, or TDS, does not pollute drinking water supplies, damage industrial equipment, or endanger delicate aquatic life.

"Drilling wastewater contains TDS levels that are thousands of times more harmful to aquatic life than discharges from other industries," Hanger said. "Without imposing limits on this pollution, treatment costs for this wastewater are passed downstream." Hanger pointed out that other industries in PA are responsible for the waste they generate. "The drilling industry should be no exception," he said

The new regulations for TDS would require wastewater discharges from new and expanded facilities to meet a concentration threshold of 2,000 milligrams per liter; wastewater discharges from drilling operations cannot exceed 500 mg/l. The lower standard was set for the drilling industry because drilling wastewater is so heavily polluted. Also, drillers have options other than returning water to rivers and streams, such as reusing and recycling wastefluids or injecting them deep into caverns or EPA-approved underground injection wells. 

New York and several other states, among them Texas, OklahomaVirginia, Arkansas and Tennessee, prohibit returning any drilling wastewater to streams. That's because drinking water treatment facilities and industrial water users are not equipped to process water with high levels of chlorides and sulfates.

The new PA ruled place limits on the amount of total dissolved solids that can be discharged into surface waters. In the past two years,  TDS levels have exceeded the EPA’s secondary drinking water standards of 500 mg/l in western Pennsylvania’s Monongahela River. The elevated levels led to complaints about foul-smelling water and damage to laundry and dishes. Industrial users complained of equipment damage caused by polluted river water.

In addition, high TDS levels contributed to a toxic algae bloom that killed all fish and aquatic life in a 30-mile section of Dunkard Creek in Greene County last year.

EQB members also approved  rules that will strengthen Pennsylvania’s well construction standards and define a drilling company’s responsibility for responding to gas migration issues, such as when gas escapes a well or rock formation and seeps into homes or water wells. Once finalized, the new rules will require well operators to conduct quarterly inspections of all wells and report the results to DEP. Read more here.

Saturday, May 15, 2010

Communities need to Think about Drilling Waste Disposal before Drilling Begins

A couple weeks ago three area experts spoke in Ithaca about drilling waste disposal. One of these was attorney Rachel Treichler. 

Even though horizontal drilling in Marcellus shale has yet to begin in New York state, some communities are finding themselves faced with questions about how to handle drilling waste. A couple Pennsylvania Marcellus wells are already sending their drill cuttings to landfills in NY and at least one municipal wastewater treatment facility is accepting drilling waste fluids from vertically drilled wells. Over the past year, representatives from EPA and Penn State have suggested that underground injection wells may be the "safest" method for disposal of frack flowback and brine from Marcellus wells.

Currently there are six active injection wells in NY, and eight in PA. Ohio, with 159 active state-regulated injection wells, is concerned about the amount of wastewater expected from increased Marcellus drilling; the state is considering a 20-cents/barrel tax on out-of-state brine. 

The good news, says Treichler, is that local governments have some say in where disposal wells can be sited. That is, if municipalities already have such laws in place. If they don't, then "they should waste no time in developing local legislation to regulate disposal wells," Treichler says. 

Injection wells are regulated by EPA under the Safe Drinking Water Act. In addition, DEC has its own list of criteria. While companies can drill a disposal well, a cheaper option may be to convert an existing deep well into an underground injection well. According to USGS geologist William Kappel (he's the guy in the middle), the geologic formations most likely to accept injected waste are the Oriskany and Medina sandstones and the Potsdam layer. But non-producing Trenton-Black River wells make good candidates, too, as they have larger spaces for liquids to fill.

What hydro-geologists need to know, Kappel says, are how porous the formation is, how permeable the layer is, and the thickness of the layer. They also need to know the locations of abandoned gas or oil – or even drinking water – wells in the area before injecting waste, because any unplugged wells could provide a conduit for waste fluid to contaminate groundwater.

“It is important that they do an injection test prior to any sustained liquid injection and observe the limits of injection capacity,” Kappel stressed. In one case a company tied to inject too much fluid into their wells. As the wells filled, they increased the pressure. Eventually their injections set off seismic activity.

For the municipal officials attending the forum, the most encouraging news is that they have the power to regulate disposal wells. Before a company may drill a disposal well – or convert an abandoned deep well to that use – it must apply for a number of permits. These include: an EPA permit for a Class IID injection well; a DEC State Pollutant Discharge Elimination System (SPDES) permit for brine disposal; a SPDES permit for stormwater runoff; a DEC MRB well permit to drill a brine well or convert a well to that purpose;  a Municipal Special Use permit if required by local law; a State Environmental Quality Review (SEQR) for a brine disposal facility; and permission of the landowner.

“Municipalities may issue permits if their local laws require it or if zoning requires it” Treichler said. She encouraged all municipalities to adopt local laws without delay, as Marcellus drilling will produce a huge demand for disposal wells.

Tuesday, May 11, 2010

Proposed legislation would benefit landowners forced into drilling units

New York isn't allowing any horizontal drilling in the Marcellus Shale just yet, but that hasn't stopped some companies from planning ahead. Epsilon Energy is drilling into the Oriskany (just below the Marcellus layer) and at the last meeting with the Van Etten town board the Epsilon representative admitted that they were developing the pads and access roads for future Marcellus wells.

Over the hills, in the town of Maine, Inflection Energy has leased 3,000 acres for future Marcellus drilling. They told the press that they've signed leases for $6,000/acre with 20 percent royalties (minus "a few expenses"). All well and good for the landowners with leases, but what happens to people who are forced into drilling units through the process of "compulsory integration"?

Compulsory Integration assures that landowners involuntarily forced into drilling units will get paid for oil or gas taken from beneath their land - at the lowest royalty rate signed by a leaseholder in the unit, but no lower than 12.5 percent.

This practice does not sit well with most landowners who characterize it as nothing less than theft. So recently the NY Farm Bureau, goaded into action by landowner coalitions and outraged citizens, outlined some legislation changing this practice - and as of last week it looks like they found some sponsors in Albany. Assemblywoman Donna Lupardo introduced Assembly Bill 10956  (Senate bill 7758) that will, if it passes, provide "integrated" drilling unit landowners a royalty equal to the highest royalty in an existing lease in the spacing unit, but no less than 18.75 percent.

That, my friends, is a huge chunk of change! 

Lupardo justifies her bill this way: When a natural gas drilling company applies for a permit from the Department of Environmental Conservation (DEC) to drill a well, the company proposes the drilling unit from which gas will be extracted. Unit boundaries may cut across property lines and include land owned by people that have not signed a lease with a gas company for development.

The gas company only needs to have 60 percent of the land in the drilling unit leased to drill. Any other land in the unit is forced in through compulsory integration. Of course - that only allows the gas company the right to suck up the gas; no surface rights are transferred through compulsory integration.

Now, Lupardo points out, the technical advances in the drilling industry and the prospect of exploration in the Marcellus Shale formation have pushed up both the rental and the average royalty payments dramatically. Royalty payments are consistently in the 18 to 20 percent range, with some lease agreements offering up to 30 percent royalties.

This means that landowners who are involuntarily integrated into drilling units now are receiving considerably lower royalty rates than their neighbors in the same unit. Landowners don't think that's fair. Now they've managed to convince Assemblywoman Lupardo. On May 5 her bill was referred to the environmental conservation committee. That means, should the NY legislature ever pass a budget, the bill might actually get read.

Saturday, May 8, 2010

Radioactive Drilling Waste Coming to a Landfill Near You

Last month the Chemung County Legislature voted to allow the landfill to accept more waste - an extra 60,000 tons a year. The landowners bordering the landfill have already complained about odor, noise, rats and the ever-increasing population of gulls.

And now families living near the landfill have one more thing to worry about: potentially radioactive drill cuttings from wells drilled into Marcellus Shale. "The county landfill is a municipal solid waste disposal facility," one resident pointed out at recent hearing. "It's not adequate for hazardous waste, and disposal of radioactive waste is not allowed in municipal facilities." In fact, he pointed out, if it weren’t for the exemptions the oil and gas industry enjoys, the drill cuttings and other Marcellus waste would be classified as “hazardous”.

Seems that over the past few months the landfill has been accepting drill cuttings from Marcellus wells drilled in Pennsylvania. Aside from filling up the landfill faster, the county executives don't see anything wrong with allowing drill cuttings in the landfill. As one of them said to the press, "It's just wet soil."

The problem is that the Marcellus drilling waste contains radioactive elements: barium, strontium, radon. In fact, that's how drillers know they've found the Marcellus layer when they're drilling, explained one resident: the Geiger counter goes wacky. 

Granted, the landfill has a liner - well, at least the more recent part of the landfill. But what happens if that liner rips? What happens if the heavy metals and radioactive isotopes leach into the surrounding soil or even the aquifer that lies only a few feet below the landfill? The resulting contamination could affect people far beyond Chemung County.

Earlier in the evening Larry Shilling, a district manager for Casella (the company operating the landfill), acknowledged the lack of information about the levels of radioactivity in Marcellus drill cuttings. He passed out copies of a laboratory analysis that Casella had requested.    

"The information we saw indicate radiation would not be an issue,” Shilling said. According to the Casella-commissioned study the level of radiation in the drill cuttings ranged from 2.1 pico Curies/gram (pCi/g) for Radium-226 to 14.2 pCi/g for Potassium-40. Background levels for local soil and rock are 0.9 pCi/g for Radium-226 and 24.1 pCi/g for potassium. Shilling emphasized that these levels fall below the EPA cleanup guidelines for unrestrictive use (5 pCi/g above background).  

 However another study conducted by Radioactive Waste Management Associates (RWMA) recommends against land-filling Marcellus drill cuttings and waste. Their analysis of rock cuttings from NY wells found Radium concentrations of 12 to 24 pCi/g or higher. Dr. Marvin Resnikoff, who authored the analysis, expressed concerns regarding the potential for radioactive isotopes to leach from the landfill, pass through the Elmira wastewater treatment plant and contaminate the Chemung River.

Apparently the NY Department of Environmental Conservation wants to know more. Last week Gary Maslanka, environmental engineer from DEC Region 8 Division of Solid and Hazardous Materials, sent a letter to Casella requesting further information about some of the drilling waste they have accepted. Casella accepted waste from two spills at Marcellus sites in PA, and DEC wants analytical analysis of samples taken from the waste prior to its disposal. DEC also asked for a radiological analysis. Casella has until June 1 to respond.

Saturday, May 1, 2010

Industry Disses DISH Mayor, Then Asks Him to Endorse "Best Drilling Practices"

Dish, TX mayor Calvin Tillman headed to the northeast again to talk with residents living in the Marcellus gas fields. His visit just happened to coincide with Chesapeake's guided tours of their model well site near Towanda, PA.

Over the past few weeks, Chesapeake Energy has been putting extra effort into pitching Marcellus Shale development as a clean   path to energy independence. And one that will put big bucks into community coffers and landowner's bank accounts.

To improve the industry's image, Chesapeake invited elected officials, media and landowners to demonstrations of drilling operations last Wednesday and Thursday. According to press reports, Brian Grove (director of corporate development for Chesapeake) met with several reporters at the company's field office in Towanda. He piled plates of sandwiches in front of them and then used a Power Point slideshow to help explain everything from drilling wells to job prospects. Then everyone piled into company SUV's and headed out to see a drill site.

On Thursday Antoine Thompson, Chair of the NY State Senate's Environmental Conservation Committee, went on the second of these "fact finding" trips. He had invited Calvin Tillman to join the tour. At the last minute Chesapeake called the Senator's office to dis-invite Mayor Tillman. Apparently they were advised by oil and gas attorney Tom West.

Fortunately Michael Lebron, who sits on the board of Damascus Citizens for Sustainability and some other groups, offered Tillman an alternative tour. Lebron took Tillman to locations in Bradford County, PA where water wells had been contaminated as a result of gas drilling activity. In each instance, Lebron says, there was a pattern of contamination: (1) tap water would turn black; (2) then it would acquire a foul odor; (3) and then methane levels increased to the point where homeowners could light the water on fire with a match. 

These wells aren't all next door to the drilling - in one case the contamination occurred after a gas well was drilled one mile away. Tillman and Lebron rejoined the tour group for a visit with Dimock, PA residents who have been severely negatively impacted by gas well drilling. Cabot, the driller in the area, has been found by PA DEP to be responsible for a number of large spills and for contamination of 14 water wells in Dimock.

After apologizing for excluding him from the Chesapeake tour, attorney West tried to get Tillman to endorse a "best practices" statement from the gas industry!

Tillman will return to the northeast late this year, to visit NY state legislators and possibly testify before the Environmental Conservation Committee. Assuming the NY State Legislature can pass a budget so they can move on to other business.....

Thank you to Mike Lebron for sending his report on the field trip.