PA Gas Driller Bonds Will Skyrocket from $2,500 to $150,000 per Marcellus Gas Well Under Proposed Legislation

Pennsylvania lawmakers, both Democrat and Republican, agree that bonds posted by drillers need to increase—dramatically. The bonds are used to cover the costs of plugging or closing natural gas wells. The current bond requirements date back to 1984.

Drillers are required to post a $2,500 bond for a single well and $25,000 blanket bond to cover any number of wells under current law. A measure sponsored by Rep. Camille George, D-74, Houtzdale, would require a $150,000-per-well bond for any well in the Marcellus Shale formation and $12,000 bond on other oil and gas wells. George, chairman of the House Environmental Resources and Energy Committee, also proposes setting a $240,000 blanket bond, while prohibiting blanket bonds for wells in the Marcellus Shale formation. He suggested those amounts would cover the actual costs of decommissioning.

*Hazelton Standard Speaker (May 23) – Marcellus drilling spurs calls for higher bonds

The “Father of the Marcellus Shale” Predicts Marcellus is Only the Beginning – Other Layers Rich with Shale Gas Too

William Zagorski, Range Resources Vice President of geology in Appalachia and the man known as “the father of the Marcellus Shale” is making some new predictions about the potential for natural gas in the Appalachian (eastern) region of the U.S.

Zagorski said two new shale formations – the Utica Shale deeper below the surface and the shallower Upper Devonian Shale – were “in the same ballpark” as the [production potential of the] Marcellus.*

Zagorski is not the only one looking beyond the Marcellus Shale:

Cabot Oil & Gas Corp., a Houston company, disclosed to analysts last year that it had drilled a successful horizontal well through the Purcell Limestone in its Marcellus acreage in Susquehanna County north of Scranton. The Purcell Limestone is an intermediate stratum sandwiched between two layers of the Marcellus Shale.*

Cabot is thinking they may be able to run pairs of horizontal wells at different depths from the same bore hole. And all of the infrastructure being built for Marcellus Shale gas can also be used for shale gas from other layers.

A few months ago at a meeting in Binghamton, NY, James Ladlee from Penn State Cooperative Extension made the prediction that we are only at the beginning of the natural gas boom in the northeast, and it will last for the next 80-100 years. With shale gas being discovered in other layers, it’s easy to see why Mr. Ladlee and others are bullish on the prospects for natural gas in the Marcellus and beyond.

*Philadelphia Inquirer (May 23) – Firms find more gas beyond the Marcellus field

Is Methane Migration from Marcellus Gas Drilling Causing Deaths?

The May 23 Sunday edition of the Binghamton Press & Sun-Bulletin (PSB) ran an article titled, “Pa. seeks stronger drilling rules to combat methane migration.” At least the headline is accurate. Pennsylvania is indeed attempting to prevent a recurrence of the situation at Dimock, PA which was a failure to properly case a well that led to methane (natural gas) migration into local groundwater supplies. Nothing wrong with good oversight and slapping the offending driller with fines to make sure it doesn’t happen again. But the PSB started their latest anti-drilling narrative with this opening paragraph:

Methane migration related to natural gas drilling has caused death, injuries and property damage in Pennsylvania, leading to plans for stronger regulations and enforcement efforts.*

There you have it—methane migration is causing death. The proof that drilling causes death offered by the PSB? They cite the case of a house explosion in Jefferson County, PA in 2004 due to methane migration that killed three people. That case is a tragedy to be sure and not to be trivialized. But the problem is, it wasn’t due to a horizontally drilled Marcellus Shale gas well like we have today. Horizontally drilled wells did not start to happen until 2006 (with Range Resources). So while it may have been a gas well in Jefferson County that led to an explosion in a nearby house, it was not a horizontally drilled Marcellus gas well. The implied meaning is that the drilling happening today is unsafe and leads to deaths—which is untrue.

The latest apples and oranges comparison is to equate the tragedy of the oil platform in the Gulf of Mexico and BP’s response with drilling on land for a different fuel—natural gas—and try to infer that all energy companies are greedy and all drilling of any kind is unsafe. “Better to wait until we know more. Better to wait until it’s 100 percent safe. The gas has been there for jillions of years and isn’t going anywhere.” Bunkum.

Let’s talk about risk

If you’re alive, you are at risk. Every day you live you experience risk of some type. Risk of getting in a car accident. Risk that lightning will strike you. Risk of a heart attack. How do you deal with it? Minimize the risk if you can, and if you can’t, don’t stress over it. Life is a risk. Here’s the reality: If you drill 10,000 gas wells, one of them will have a problem of some kind. Methane migration, flowback spillage, a truck with chemicals runs off the road and spills something, a worker gets killed. Of all the Marcellus wells drilled, accidents have been very few in number—but they do happen. It’s life. We can ban all drilling, but how would you like to pay double or triple for your energy? How would you like to be cold in the winter? How would you like the government to tell you how many miles you can drive in a day because there isn’t enough energy (oil, gas, natural gas) to meet demand? Or what if the Middle Eastern countries suddenly stopped sending us oil? If that were to happen, there would be far more deaths due to severe energy shortages than you’ll ever have from Marcellus gas drilling. It’s a tradeoff. You don’t simply ban drilling because there will be an accident somewhere, someday.

A second example: One in every 10,000 bridges will fail. No idea if that’s the real number…again, this is an example. So because one in 10,000 (or 5,000, or 15,000) fails, does that mean we should stop building bridges? Because someone dies, tragically, from a bridge failure, or because there is property damage from a bridge failure, should we immediately cease and perhaps even ban traffic over bridges? Try going one mile from your own home without crossing a bridge—you can’t do it! It’s nonsense. But it’s no more nonsense than what is being peddled by anti-drillers whose aim to ban all drilling.

No industry, including natural gas drilling, oil drilling and bridge building, can be subjected to a standard of perfection, no matter how much we strive for it and want it. Don’t fall for Chicken Little arguments that the sky is falling.

*Binghamton Press & Sun-Bulletin (May 23) – Pa. seeks stronger drilling rules to combat methane migration