Cabot, Pennsylvania DEP reach new accord for 19 Dimock households

Cabot Oil & Gas Corp. agreed to pay $4.1 million in a settlement with Pennsylvania’s Department of Environmental Protection that will allow the Houston independent producer to resume Susquehanna County well completion operations in early 2011.

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Dec. 21 – Cabot Oil & Gas Corp. agreed to pay $4.1 million in a settlement with Pennsylvania’s Department of Environmental Protection that will allow the Houston independent producer to resume Susquehanna County well completion operations in early 2011.

The Dec. 15 agreement and consent order superseded previous orders and modifications. It set out specific obligations related to claims by 19 households in the area, including the establishment of escrow accounts for the households.

Cabot also agreed to pay the Pennsylvania DEP $500,000 to offset the state’s expense of investigating stray gas migration complaints in the area for 2 years, DEP said.

DEP Secretary John Hanger said each householder will receive twice the value of his or her home, with a minimum $50,000 payment. Cabot also said it would install mitigation devices in each house, he said.

“In addition to the significant monetary component of this settlement, there is a requirement that Cabot continue to work with us to ensure that none of their wells allow gas to migrate,” said Hanger. DEP also is dropping its plan to construct a 5.5-mile pipeline from the Lake Montrose water treatment plant to the residences after the proposed project encountered significant opposition from local governments and from Cabot, which DEP planned to bill for the project.

“This agreement provides a reasonable and pragmatic way forward for all parties,” said Dan O. Dinges, Cabot’s chairman, chief executive, and president. “The common ground we found to settle provides the right balance of regulations, financial payments, timely execution, and operational safeguards that in the end with protect the resources of Pennsylvania.”

Dinges said Cabot’s well completion operations in the Dimock-Carter Road area would resume during the first quarter 2011, and new drilling could begin during the second quarter 2011.

Contact Nick Snow at nicks@pennwell.com

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