PA Legislature Deals with Bonding to Decommission Gas Wells

The Pennsylvania legislature has been working on new laws to tighten regulation of the Marcellus Shale drilling industry. Since January 2011, both the PA Senate and House are now controlled by Republicans, as well as the governorship, giving new Marcellus legislation a good chance of passing. The new laws are a result of, and based on, the findings of an advisory committee appointed by Gov. Tom Corbett earlier this year (see this MDN story).

Both the PA Senate and House have passed slightly different versions of legislation and those versions are now being reconciled in committee to work out the differences so a bill can be sent to Gov. Corbett for signing. One of the outstanding issues to be reconciled is how much of a bond should drillers pay to decommission a well.

The Senate measure sets various bond amounts based on the number of wells a driller operates. For example, it proposes a $10,000-per-well bond and a $140,000 maximum blanket bond if a driller has up to 25 wells deeper than 6,000 feet.

The House measure offers a similar tiered approach with a $10,000-per-well bond and $60,000 maximum blanket bond for up to 25 wells deeper than 6,000 feet.

"We believe the amounts for bonding (in the bills) are clearly inadequate to cover future problems that may arise," said Thomas Au, a Pennsylvania Sierra Club official Monday.

He expressed concern that a loophole will be created for vertical Marcellus Shale wells drilled between 5,000 to 6,000 feet deep.

A bill sponsored by Rep. Camille George, R-74, Houtzdale, sets a $12,500-per-well bond and a $220,000 maximum blanket bond for operators of up to 25 wells more than 5,000 feet in depth. Mr. George’s bill is supported by the Sierra Club, added Mr. Au.*

A recent study by Carnegie Mellon University estimates the cost of plugging a Marcellus well and restoring a site can run as high as $100,000 per well, a number that is disputed by the drilling industry.

*The Scranton Times Tribune (Dec 6, 2011) – Marcellus well bonds differ in rival bills