Gov. Wolf Signs Bill Creating Well Plugging Grant Program; Again Fails To Address Woefully Inadequate Conventional Well Plugging Bonding; Fails To Report On Bonding Petitions; Or Issue Conventional Drilling Compliance Report

On November 3, Gov. Wolf signed House Bill 2528 (Struzzi-R-Indiana) into law that would set aside 20 percent of the new federal funding to plug conventional oil and gas wells for a new Orphan Well Plugging Grant Program.

The bill amends language allowed to become law in July in House Bill 2644-- Act 96 to fix significant problems with the grant program that conflicted with the federal Bipartisan Infrastructure Law well plugging program making it totally unworkable.

The new changes also include provisions prohibiting grants going to conventional oil and gas companies that have any unresolved violations of environmental laws and regulations, something missing entirely from the July statute.

Ban On Increasing Bond Amounts Remains

In spite of the fact House Bill 2528 amends the same section of law, no changes were made in the provisions of Act 96 from July that prohibits DEP from increasing well plugging bond amounts for conventional oil and gas operators for 10 years.

That law also makes clear only the General Assembly can increase that amount, not DEP by regulation.

The current $2,500 per well or $25,000 blanket bond for an unlimited number of conventional oil and gas wells is nowhere near the up to $70,000 or more it may cost taxpayers to plug wells.  [Note: The $70,000 figure comes from House Bill 2528.]

DEP records show the agency has less than $15 per well available to plug the over 100,500 active conventional oil and gas wells that now have permits because of woefully inadequate well plugging bonding requirements.  Read more here.

Conventional oil and gas wells drilled before April 18, 1985, which is most of them, cannot be required to have any well plugging bond by law.

This is all especially troubling because oil and gas well abandonment is pervasive in the conventional oil and gas industry and accelerated during 2022.  Read more here.

The bottomline is state taxpayers are on the hook to pay for over $5.1 billion in well plugging and cleanup costs, but even that estimate is low.

No Report On Bonding Petitions From DEP

House Bill 2528 and House Bill 2644 that Gov. Wolf allowed to become law were introduced to head off a proposal accepted for study by the Environmental Quality Board in November 2021 to increase the well plugging bonding amounts for both conventional oil and gas and unconventional shale gas drillers to what it now costs taxpayers to plug a well when operators walk away from their obligations.  Read more here.

DEP has yet to report back to the EQB on its evaluation of the petitions more than a year later and the issue is not on the agenda for the November 15 Board meeting.

Report On Conventional Oil & Gas Compliance Not Released

On July 30, Gov. Wolf directed the Department of Environmental Protection to conduct an evaluation of how it regulates conventional oil and gas wells to prevent new abandoned wells, tighten review of permit transfers, review compliance with environmental safeguards and make recommendations for changes and actions, including criminal sanctions. Read more here.

The evaluation was outlined by Gov. Wolf in a formal statement published in the July 30 PA Bulletin and came in the wake of the Governor allowing House Bill 2644 to become law without his signature.  Read more here.

As of November 3, that report has not been released.

In July, Gov. Wolf said, “The legislature's action to withdraw the Environmental Quality Board's authority to establish bonding amounts for the conventional industry provides an appropriate occasion to revisit whether the Commonwealth is doing enough to ensure that this industry is being a good environmental steward by preventing the abandonment of wells and meeting its obligations as a prudent trustee of Pennsylvania's public natural resources for current and future generations.

“Evidence on this count is discouraging.

“Over the past five years, DEP has identified more than 17,000 violations at conventional oil and gas wells, and DEP has issued over 3,300 Notices of Violations to the conventional industry specifically due to attempts to abandon wells since July 1, 2017.

“In addition, over the past five years, operators of conventional oil and gas wells have failed to report production for an average of around 36,000 conventional oil and gas wells per year.”

Gov. Wolf said as a result of these concerns, DEP is reviewing existing processes and procedures and will be providing the following evaluations and recommendations to him by September 1:

-- Evaluation of the conventional industry's recent record of compliance with reporting requirements and performance requirements under existing law.

-- Evaluation of using existing authority, including increased exercise of civil penalty authority and forfeiting conventional oil and gas well bonds and requiring submission of replacement bonds, as methods to deter and motivate conventional operators to address abandoned wells and violations of the applicable law.

-- Recommendations for increased scrutiny of conventional oil and gas operators' requests for regulatory inactive status approval and permit transfers, because these steps are often precursors to improper abandonment of wells.

-- Evaluation of using existing criminal provisions related to conventional oil and gas operations as a means of deterring and motivating conventional operators to address abandoned wells and violations of the applicable law.

-- Recommendations for regulatory reform to comprehensively regulate conventional drilling according to modern best practices and industry standards.”

Updating Regulations

DEP is now in the process of updating conventional oil and gas environmental protection and waste disposal and handling standards, after the last comprehensive update was killed by the General Assembly in 2016.  Read more here.

The first of two regulatory packages was expected to come before the Environmental Quality Board for action in the next few months, according to comments by Kurt Klapkowski, Acting DEP Deputy Secretary for Oil and Gas Management, at the July 25 meeting of DEP’s Oil and Gas Technical Advisory Board.

The second package-- dealing primarily with waste disposal, handling and similar  requirements-- may not be ready to go back before oil and gas advisory committees until December 18 when DCED’s PA Grade Crude [Oil] Development Advisory Council meets.

The last draft of the waste handling regulation update was posted by DEP in September, 2021.

However, that draft did not address many key issues, like continuing to allow the road dumping of conventional oil and gas wastewater on dirt and gravel roads.

A comprehensive study released by Penn State in May found runoff from spreading conventional oil and gas wastewater on unpaved roads contains concentrations of barium, strontium, lithium, iron, manganese that exceed human-health based criteria and levels of radioactive radium that exceed industrial discharge standards.  Read more here.

Unconventional shale gas operators are already banned from dumping their wastewater on roads.

It also did not address the issue of conventional oil and gas operators creating thousands of dumpsites across the state through practices allowing on-site disposal of drill cuttings and drilling wastewater.  Read more here.

Related Articles:

-- U.S. Dept. Of Interior Notified DEP A Republican Bill Allowed To Become Law In July May Block Funding For New Federal Conventional Oil & Gas Well Plugging Program  [PaEN]

-- DEP Concerned About Impact Of New Law Blocking Conventional Oil & Gas Well Bonding On New Federal Well Plugging Funds, Regulating Waste Injection Wells [PaEN]

-- New Abandoned Wells: DEP Records Show Abandoning Oil & Gas Wells Without Plugging Them Is Pervasive In Conventional Drilling Industry; Who Is Protecting Taxpayers?  [PaEN]

-- DEP Issued NOVs To Conventional Oil & Gas Companies For Abandoning 55 Wells Without Plugging Them During September Alone, A Dramatic Increase In New Well Abandonments     [PaEN]

-- Only 15 Out Of 256 Conventional Oil & Gas Operators Who Abandoned Wells Without Plugging Them Were Fined By DEP; Small Penalties No Deterrent To Future Abandonments   [PaEN]

Related Articles This Week:

-- DEP Permit Notices -- Oil & Gas Industrial Facilities [PaEN]  

-- Protect PT Hosts 4-Part Online Living Near Shale Gas Community Training Workshops Starting Nov. 10 - Documenting Complaints  [PaEN]

-- On-Demand Webinar: Creating A Healthy Home And Community With Shale Gas Development In Your Neighborhood  [PaEN]

-- Gov. Wolf Signs Massive, 20-Year Taxpayer Subsidies Into Law For Natural Gas, Hydrogen And Petrochemical Industries With No Public Accountability Or Environmental Safeguards  [PaEN]

-- York Dispatch Editorial: Energy Companies Are Reporting Record Profits, PA Lawmakers Don’t Need To Give Them More Tax Breaks  [PaEN]

-- Gov. Wolf Signs Bill Creating Well Plugging Grant Program; Again Fails To Address Woefully Inadequate Conventional Well Plugging Bonding; Fails To Report On Bonding Petitions; Or Issue Conventional Drilling Compliance Report  [PaEN]

-- DEP: PA General Energy Cited For More Water Pollution Violations, Blocking The Whole Width Of Loyalsock Creek At Gas Pipeline/Water Withdrawal Construction Site In Lycoming County [PaEN]

-- Independent Fiscal Office Estimates CY 2022 Drilling Impact Fee Will Generate Record $274.8 Million In Revenue At Lowest Tax Rate On Record  [PaEN]

-- PA Low-Income Home Energy Assistance Program (LIHEAP) Will Accept Applications Starting Nov. 1 [PaEN]

-- A Study Finding Microplastics In 100% Of Exceptional Value, High Quality, Class A Trout Streams Sampled In PA Is Disturbing To Wildlife Advocates  [PaEN]

-- Scranton Times/Republican Herald Editorial: Legislators Like Plastics, Expect More  [PaEN]

[Posted: November 3, 2022]


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