Pennsylvania Gov. Edward G. Rendell gets it. His state is on the verge of a natural gas development boom, so he has ordered the Department of Environmental Protection (DEP) to hire 68 new inspectors and other employees. He also plans to ask the Keystone State's general assembly to enact a severance tax.
"Interest in Pennsylvania's Marcellus shale formation is greater than ever before and as natural gas prices continue to rise, that interest will only increase," Rendell said. "In fact, the industry has told us that they expect to apply for 5,200 permits to drill in the Marcellus shale this year—nearly three times the number of permits we issued in all of 2009."
Rendell said, "Given these conditions, an extraction tax is gaining widespread support across our state and I will again ask the general assembly to enact such a levy. It is fair and affordable to drillers. They know it, and so do members of the House of Representatives who voted for it last year."
Stephen Rhoads, president of the Pennsylvania Oil & Gas Association, indicated that the group opposes the proposal, which state lawmakers rejected in 2009. The Marcellus shale gas industry's maturity is at least a decade away, he told the Harrisburg Patriot News.
Exempt from freeze
DEP's new employees will be exempt from a hiring freeze instituted last year, Rendell said. Their salaries would come from higher well permitting fees which the general assembly put in place in 2009 with industry and environmental groups' support. It was the first such increase since 1984, he said.
"We were able to hire 37 additional inspectors and permitting staff in 2009, but the industry's projected growth in 2010 means that we need additional inspectors to ensure oil and gas companies follow environmental laws and regulations," the governor added. DEP inspected 14,544 wells and took 678 enforcement actions in 2009, he said.
Rendell said the state also will amend its regulations to strengthen well construction standards and define an operator's responsibility to respond to gas migration issues.
Specific provisions
Specifically, the new standards will require well casings of Marcellus shale and other high-pressure wells to be tested and constructed of specific oilfield grade cement. They will clarify a producer's responsibility to restore or replace water supplies which are used.
They also will establish procedures for operators to identify and correct gas migration problems without waiting for DEP's direction, and require them to notify the agency immediately in such cases. Operators also will be required to inspect each well quarterly, report the results to DEP annually, and notify the agency promptly if problems such as overpressured wells and defective casings are found.
The new regulations were offered for public comment on Jan. 29. Rendell said that they would make Pennsylvania's standards comparable with other gas-producing states' or, for well casings, more rigorous.
More Oil & Gas Journal Current Issue Articles
More Oil & Gas Journal Archives Issue Articles
View Oil and Gas Articles on PennEnergy.com