Chesapeake Pays 3 PA Families $1.6M for Methane Contamination

The Real NewsChesapeake Energy settled a case with several landowners in the small community of Wyalusing (Bradford County), PA who say their well water was contaminated by Chesapeake’s nearby drilling activity. Three families will receive $1.6 million from Chesapeake which includes buying out their homes so they can move. Some 30 other area families are in various stages of litigation with Chesapeake over the same issue.

For MDN, the fascinating aspect of this story is how the news has been covered by mainstream media. First, the news itself, then “the real news”:

Three northeastern Pennsylvania families have reached a $1.6 million settlement with a gas drilling company over contaminated water wells.

But Jared McMicken of Wyalusing said the agreement reached Thursday provides little comfort since his drinking water was ruined by nearby drilling, and his family must move.

"We’ve lost our house, and we’re not going to get out of it what we got into it," he said. "We have a bunch of people who have to leave their homes."

McMicken said he and the other families in the case insisted that any settlement be made public. The arbitration trial began this week and was settled on the fourth day.

Attorney Todd O’Malley said he believes this is the first case involving pollution in the Marcellus Shale region where settlement terms were publicly disclosed. Past disputes have been sealed.

Chesapeake said in a statement that it believes there is no permanent damage to the properties and that other water wells in the area showed natural contamination before drilling began. McMicken disputed that, saying his water and that of his neighbors was fine before the drilling.

Last year the Pennsylvania Department of Environmental Protection fined Chesapeake just over $1 million for contaminating the water supplies of 16 families in the area, including McMicken’s. A transcript of expert testimony in the settlement showed that experts from DEP agreed that faulty cement casings on the wells allowed gas and other substances to migrate from deep underground and pollute the water wells.(1)

The above is from an Associated Press story. The AP story ran in the Wall Street Journal, Bloomberg Businessweek, and dozens of other major media outlets. When you read it, it appears that oh oh, maybe here’s a smoking gun. Maybe “what the anti-drillers have been saying all along is really true, chemicals have contaminated these poor people’s water supplies.” There is that phrase in the AP story that faulty cement casings allowed “gas and other substances” to migrate and “pollute the water wells.”

Problem is, it was only methane—or natural gas—that escaped the faulty casings. Nothing else. No chemicals. Just methane. If you search for what substance leaked into the water supplies in any of the mainstream media stories, since almost all of them are based on this biased AP story, you won’t find the true/real story.

StateImpact, an NPR media outlet in PA (of all places!), provides more of the honest details:

The families, living along Paradise Road, all signed leases with Chesapeake Appalachia to drill beneath their land. But in July, 2010, the residents began to notice muddy water coming from their water wells. Chesapeake supplied a filtration system, which residents say did not work. O’Malley says his investigators concluded that a poor cement job resulted in methane migrating from the Marcellus Shale formation into the water supply of nearby residents.

Scott and Cassie Spencer, Heather and Jared McMicken, and Michael and Jonna Phillips filed suit in the Middle U.S. District Court of Pennsylvania, which was sent to arbitration. Three days of testimony took place before an arbitration panel in Philadelphia this week, precipitating the two parties reaching an agreement on Thursday.(2)

A lone local newspaper ran much of Chesapeake’s statement (which MDN can’t even find on Chesapeake’s own website) about the settlement. Their statement points out lack of pre-drill testing makes this a difficult situation. All of the homes in question were more than a half mile from any drilling activity:

"The terms of the settlement include a total payment of $1.6 Million with the plaintiffs to convey their property to Chesapeake or its designees on or before December 31, 2012," the statement continued. "Chesapeake has agreed to pay fair market value plus other compensation as part of the total payment. The company believes there is no permanent damage that would prevent a future sale, enabling Chesapeake Appalachia, LLC to recoup a significant portion of the settlement.

"While Chesapeake remains confident that the water supply is consistent with area water quality standards, it has entered into the settlement so the families and the company could bring closure to the matter."

The statement went on to note that testing data was not obtained from these homes prior to drilling because the homes were not near enough to the well site.

"A difficult aspect of this investigation has been the lack of pre-drill water testing on some of the water sources," the statement read. "The PA Department of Environmental Protection currently recommends pre-drill testing within a 2,500-foot radius of any oil or gas drilling operation, and Chesapeake meets or exceeds that recommendation with its testing.

"All of these water sources are beyond that testing radius, and thus Chesapeake had not collected pre-drill data for the water sources."

According to the company’s statement, test data that was obtained from nearby homes within the 2,500 foot radius show methane levels before Chesapeake had begun operations on the well pad.

"The pre-drill testing that we do have in the area shows that a significant percentage of the residential wells had measurable methane levels prior to any Chesapeake drilling activity in the area," the statement continued. "Furthermore, many wells exceeded at least one of the drinking water standards set by the U.S. Environmental Protection Agency with arsenic, iron and manganese being common findings.

"While efforts over the past two years have been made to restore the residents’ confidence in their water wells, it increasingly became clear – through the actions of the residents and their legal counsel – that reasonable solutions, including treatment systems, would not satisfy their concerns."(3)

MDN’s view: If our home’s water went muddy after drilling started and was found to be contaminated with methane, we’d be hopping mad too. And we’d sue too. And we’d expect more than mere “fair market value” for having to uproot and find a new home. No argument there. But methane migration is treatable and is not a permanent situation. It can be mitigated, and it won’t kill you or make you sick (unless it explodes!).

The really disappointing (but unsurprising) aspect of this news is that the AP intentionally chose to slant the news to imply there was chemical contamination when there was not. We’d call that journalistic malpractice.

(1) Wall Street Journal/AP (Jun 22, 2012) – $1.6M settlement in Pa. gas drilling lawsuit

(2) Harrisburg (PA) StateImpact/WITF (Jun 21, 2012) – Chesapeake to Pay $1.6 Million for Contaminating Water Wells in Bradford County

(3) Towanda (PA) The Daily ReviewSettlement reached between Chesapeake Energy, Terry Twp. residents