Thursday, July 15, 2010

$400,000 fine for Marcellus Shale blowout

By Andrew Maykuth, Staff Writer
The Philadelphia Inquirer
July 14, 2010

HARRISBURG - In the heftiest fine levied thus far against a Marcellus Shale natural-gas driller, state environmental officials socked a Texas company Tuesday with a $400,000 penalty for failures that caused last month's well blowout in central Pennsylvania.

John Hanger, secretary of the Pennsylvania Department of Environmental Protection (DEP), sharply rebuked EOG Resources Inc. for failing to maintain control of the Clearfield County well, which erupted June 3 and spewed natural gas and toxic wastewater for 16 hours before it could be capped.

Hanger said that EOG had employed only one mechanism to keep the high-pressure gas well under control and that that measure had failed at the hands of employees who were not certified in well-control techniques.

He also said EOG, which is based in Houston, wasted valuable hours by failing to promptly notify officials about the blowout.

Rather than calling DEP's 24-hour emergency line, the driller left three phone messages at night with a DEP employee who was on vacation. Then, the Texans twice tried calling the county sheriff, who in Pennsylvania is not responsible for emergency response. Finally, three hours after the blowout, EOG called 911.

"This incident was preventable and should have never occurred," Hanger said at a news conference Tuesday at which he presented the findings of an independent oil-industry consultant.

John G. Vittitow Sr., a Fort Worth, Texas, petroleum engineer hired by the DEP to investigate the accident, blamed it on human error and procedures that fell short of the industry's best practices.

"I don't know any company that would cut corners like this, on this kind of well," Vittitow said.

The DEP, in addition to the penalties aimed at EOG and a contractor, C.C. Forbes L.L.C., also issued an industry-wide edict Tuesday setting stricter well-closure procedures aimed at preventing similar accidents.

Gary L. Smith, EOG's regional vice president, said in a statement that the company regretted the accident.

"EOG has worked cooperatively with the PADEP to resolve all issues," he said. "We will be implementing the new operational procedures as defined in the letter to all gas well operators and look forward to resuming our activities in the Commonwealth."
The DEP, after being criticized for accommodating the natural-gas industry as the Marcellus Shale frenzy took hold, has adopted a more stern tone this year as criticism has mounted about the industry's practices. About 1,600 Marcellus Shale wells are expected to be drilled this year.
The EOG fine surpassed the $240,000 penalty that the DEP levied in April against Cabot Oil & Gas Co., a Texas driller whose wells in Susquehanna County were blamed last year for polluting an aquifer supplying drinking water to at least 14 households in Dimock Township.

By contrast, the EOG blowout at a rural Clearfield County hunting club resulted in modest damage: There were no injuries; the well did not ignite; and the site has been cleaned up. Though some of the 35,000 gallons of wastewater that the DEP says gushed from the well contaminated a nearby spring, Hanger said that the pollution appeared to be dissipating and that he expected no permanent damage.

But Hanger, who repeatedly has called on the industry to adopt "world-class" standards to match the magnitude of the Marcellus resource, said he intended to send a strong signal to the industry with Tuesday's announcement.

"It's vital, in my mind, that this industry has strong oversight for its own good and for the good of the people of Pennsylvania," he said.

Vittitow, DEP's consultant, said the accident occurred during a well-completion phase, when a contractor - C.C. Forbes - took over the site to clean out obstructions left in the well after the drilling process was finished.

Rather than having multiple barriers to prevent high-pressure gas from escaping from the well, Vittitow said, EOG employed a blowout preventer that had only one fail-safe mechanism. That device, a pipe ram, is designed to clamp around the drilling pipe, sealing off the well bore.

As gas began to leak, the pipe ram was closed. But EOG's on-site supervisor ordered the drill pipe to be pulled up through the clamped closure, damaging the pipe ram's rubber seal. Over the next 90 minutes, the drillers lost control of the well. With no other backup, gas and wastewater shot as high as 75 feet into the air.

"This was just a bad decision, and it caught up with them," said Vittitow. "They were just doing what they've done in other places."

The DEP's order to the industry Tuesday includes a directive requiring operators to have at least two functioning barriers in place during completion operations.

The Marcellus Shale Coalition, an industry trade group, said that most operators have already incorporated the new practices. "Our industry is committed to continuously enhancing and improving our operations, and leveraging the opportunities of the Marcellus in a manner that's safe, efficient, and beneficial to all Pennsylvanians," said Kathryn Z. Klaber, the coalition's executive director.

State Rep. Camille "Bud" George (D., Clearfield), chair of the House Environmental Resources and Energy Committee, who has called for more rigorous oversight of the industry, said he was troubled by EOG's "apparent disregard" of best industry practices.

"No human endeavor is going to be mistake-free," he said, "but the report suggests disregard for basic safeguards, which should trouble everyone."

Coincidentally, the DEP's announcement occurred the same day as the Pennsylvania Environmental Council released a 47-page report calling for a severance tax on gas production and greater regulation of the industry to avoid the state's experiences from unregulated extraction of coal and timber.

"We have to get this right," said Don Welsh, the council's president. "Pennsylvania has been through a whole lot of resource extraction in the past, and we were left a big bill to clean it up."


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