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Provisions of new Marcellus Shale law explained

April 12, 2012

Photo by Victoria Stanish – Elk County Planning Department Community and Economic Development Coordinator Jodi Foster, left, and DEP Local Government Liaison Erin Wells review information at Tuesday's meeting of the Elk County Gas Task Force,

Representatives from the state Department of Environmental Protection (DEP) presented some more in-depth information about the state's newly enacted legislation dealing with Marcellus Shale drilling at a Tuesday meeting of the Elk County Gas Task Force.
Act 13 of 2012 amends the state's oil and gas regulations and was signed into law by Governor Tom Corbett on Feb. 14, 2012. The law implements an unconventional gas well fee, or a drilling impact fee, and directs funds generated by the impact fee to local and state governments. Counties may impose the fee if they pass an ordinance within 60 days of the law's implementation, with the deadline April 16-- the first weekday after April 14. Counties that do not pass an ordinance will not be able to receive the impact fee funds, which are designed to help offset the impact of drilling on local communities. Elk County has approved an ordinance.
The law strengthens regulations for drilling, increases penalties for violators and fees for well permits, extends well setbacks and requires that information about well production and completion, violations, penalties and remedial action be made public and accessible. It also distinguishes between conventional and unconventional oil and gas wells.
"I think the department (DEP) looks at this act as very favorable. It provided a lot of tighter restrictions that are something the department wanted or thought that we needed in place, and quite frankly, some of the industry was already doing it," said DEP Local Government Liaison Erin Wells.
Under Act 13, drilling permit fees have increased. DEP Oil and Gas Manager Craig Lobins said Pa. issued 4,600 drilling permits statewide last year, with about $9.6 million in fees collected. He said the average permit fee will now be $3,500. Fees are assessed during the year the well is “spud,” which is the year actual drilling of the unconventional well commences.
"Since we worked out Marcellus, we increased our well permit fee. It used to be just a few hundred dollars-- now it's related to the length, or the depth, the length essentially, of your (well) shaft," Wells said.
Wells said the well bonding amount has also increased significantly.
"The well bonding has also been adjusted in Act 13, which is really important because that’s what's protecting if something goes wrong, [it goes] back on the bond to get the money to either plug up the well or clean up the spill, that sort of thing," Wells said.
She said amounts vary depending on the depth of the well, with two different bond schedules for wells less than 6,000 feet deep and those over 6,000 feet deep. The bond is also based on the number of operating wells, and the maximum blanket bond has also been increased from $25,000 to $600,000.
"If an operator has combined, traditional and nonconventional wells, it (the bond) can be as great as $850,000," Wells said. "That’s a considerable increase in that, and no existing operators can be grandfathered in-- everybody will have to come up to speed on that."
Other provisions in the new law increase the well setback distance from streams, ponds, and other bodies of water from 100 to 300 feet; increase setback distance from buildings and private water wells from 200 to 500 feet and to 1,000 feet for public water systems; expand an operator’s presumed liability for impairing water quality from 1,000 feet to 2,500 feet from a well; and extend an operator’s presumed liability from six months to 12 months.
"These (setbacks) are all for unconventional [wells]; the setbacks are still the same for conventional drilling," Wells said. "Chapter 32 (of Act 13)-- basically it breaks down and defines conventional and unconventional [wells]."
Penalties for civil violations have increased from $25,000 to $75,000 per violation, and daily penalties from $1,000 to $2,000 a day.
"The presumed liability now went from 1,000 feet to 2,500 feet, and from six months to 12 months, so if there is an issue with a water well supply or a complaint now, and you are within 2,500 feet, now you have a little more protection than you did before and a little bit longer period than you did before," Wells said.
For more information, area residents may contact Service Representative Kim Yeakle at 814-332-6839; Wells at 814-332-6876; or Lobins at 814-332-6860.

Pick up a copy of the Thursday, April 12, 2012 edition of The Ridgway Record for more.

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