Chesapeake fined record $1.1M

BY LAURA LEGERE, Times-Shamrock Writer

The state Department of Environmental Protection has fined natural gas driller Chesapeake Energy a record $1.1 million for a series of water contamination incidents and a well-site fire that injured three workers in the last year.

The company will pay $900,000 for allowing methane to migrate up faulty wells in Bradford County, contaminating 16 families’ drinking water beginning in 2010.

It also will pay $188,000 for a Feb. 23 tank fire at a well site in Avella, Washington County.

DEP Secretary Michael Krancer said the contamination fine is the largest single penalty the agency has ever levied against a driller while the tank fire fine is the highest allowed under the state’s oil and gas law.

“Our message to drillers and to the public is clear,” he said. “It is important to me and to this administration that natural gas drillers are stewards of the environment, take very seriously their responsibilities to comply with our regulations, and that their actions do not risk public health and safety or the environment.”

The water contamination incidents in Bradford County are similar to those experienced in Susquehanna County: improperly cased and cemented natural gas wells allowed methane trapped in the shallow rock between the surface and the Marcellus Shale to escape into drinking water aquifers. It bubbled up in a private pond, a beaver pond and the Susquehanna River from as many as six sets of faulty wells in five towns.

In some cases, the methane became an explosion risk and families had to be evacuated from their homes. In other cases, residents could light their tap water on fire.

As part of the consent order issued by the department, Chesapeake will have to remediate the contaminated water supplies, take steps to fix the faulty gas wells and report any water supply complaints to the DEP.

If methane dissolved in the drinking water wells does not decrease within 60 days to a point far below any risk of explosion or asphyxiation, Chesapeake will have to restore or replace the affected water supplies if it has not done so already. For families who may refuse the company’s fixes, Chesapeake will have to fund escrow accounts with an amount to be determined by DEP to pay to replace the water.

In a statement, Chesapeake said the methane contamination is “possibly caused” by natural gas drilling activities and that the company has worked cooperatively with DEP to address the issues since they emerged last year.

“Even though the results of our joint review remain inconclusive at this time, we believe proceeding with an agreement and taking prompt steps to enhance our casing and cementing practices and procedures was the right thing to do,” spokesman Brian Grove said.

The company has changed its casing and cementing methods to add a third string of nested steel pipe to its wells – a practice that is now required by the state’s updated gas drilling regulations.

The Bradford County contamination incidents addressed in the order are unrelated to a blowout at a Chesapeake well site in April that spilled an estimated 10,000 gallons of wastewater onto a field and into a stream.

The department has issued a violation notice in that case but has not yet assigned a penalty.

In the Avella incident, DEP found that Chesapeake was improperly handling condensate – the highly flammable natural gas liquid produced with so-called “wet gas” from the Marcellus Shale in southwestern Pennsylvania. Three subcontractors were injured on Feb. 23 when three condensate separator tanks caught fire while workers were testing and collecting fluids from the wells.

Chesapeake was using open tanks that allowed the condensate vapor to escape into the air next to several potential ignition sources, including flaring gas wells. The company will now have to get approval for a condensate management plan for each of its well sites, according to a DEP order.