Proposed regs hit by local drillers

Conventional oil producers from northwestern Pennsylvania made one thing clear to state Department of Environmental Protection officials Wednesday evening at the Warren County Courthouse: Go back to the drawing board.

It was the last of nine public meetings held across the state to solicit comment on proposed oil and gas surface activity regulations.

Multi-generational shallow well producers and ancillary businesses from Warren County and the surrounding area testified the proposed regulations are suited for large multinational corporations drilling for natural gas in the Marcellus shale, not for conventional well producers who have been operating in the Pennsylvania oil patch for over 150 years.

Asking small conventional oil producers, most of whom produce Pennsylvania Parafin-based crude oil, to follow the same regulations as large natural gas drilling companies will result in decreased production, unemployment and loss of tax revenues for northwestern Pennsylvania, they said.

Conventional wells are smaller compared to unconventional wells in the waste they produce, the time it takes to complete, the size of pits used to collect waste water, the drill cuttings produced, the trucks used in the process and the time it takes to complete a well, Ray Stiglitz of Franklin said.

“We’re comparing apples to oranges here and one size does not fit all. Common sense must prevail,” he said.

Jay Curtis of Sugar Grove, owner of Curtis and Son Oil Inc. and Curtis Well Service Co., said he continues the work his grandfather started in 1939 with his four sons and employs 20 more people.

“The new regs will impose huge compliance costs,” he said. “The cost will harm everyone in the industry and the results will be fewer new wells and retirement of existing wells. For my company that will mean a lot of layoffs.”

Conventional well producers have been lumped together with larger unconventional well producers, and that is a mistake, he said, because producers in northwestern Pennsylvania have been operate on shoe-string budgets and “have been consistently regulated for over 30 years” under rules and regulations established by the Commonwealth in 1984.

“I am the third generation, my four boys are the fourth generation, and if these rules and regulations are imposed there will not be a fifth generation,” Curtis said.

Alex Grubbs, a service rig operator for five years for Cameron Energy Co. of Sheffield, testified he and 22 other employees of the company produce natural gas that “serves all of us in this room in a meaningful way.

“I’m sure none of us came here tonight by horse and buggy and the natural gas our company produces is fed into the very system that is heating this room tonight and that heats this room reliably day in and day out,” he said.

Grubbs said he grew up in Warren County and emphasized, “A good job is something to be appreciated.”

Many testified that the DEP’s cost estimate for implementing the new regulations between $5,389,360 and $12,006,000 for conventional producers throughout the Commonwealth was improperly calculated and will be substantially higher.

Jim Decker, president of the Warren County Chamber of Business and Industry, said that based on meetings with members of the conventional oil and gas community, the cost of the regulations have “been understated by hundreds of millions of dollars” and described the DEP’s cost projections as “remarkably inadequate.”

State Rep. Kathy Rapp, R-Warren, testified, “The conventional oil and gas industry is not just part of our heritage but continues to have significant direct and indirect impacts on our local and regional economies…I and other legislators were given assurances from the governor’s office and the leaders in the House that the regulations following the legislation would not affect our conventional wells. My intent was never to see legislation that treated both conventional and unconventional wells alike in the regulations. Never. That was never my intent as a legislator and I had assurances from the governor’s office and legislative leaders these regulations would not affect conventional wells.”

The proposed regulations address containment of regulated substances, waste disposal, site restoration, and reporting leases.

“These proposed regulations also establish new provisions for borrow pits, oil and gas gathering pipelines, identification of abandoned wells and the road-spreading of brine. Additionally, these proposed regulations add new requirements associated with the identification of the impacts to public resources from the construction of oil and gas well sites, standards for freshwater and wastewater impoundments, wastewater processing and water management plans,” according to DEP documents.

Gov. Tom Corbett signed the 2012 Oil and Gas Act, which revised Pennsylvania’s oil and gas laws, to address the growing unconventional well development of natural gas from the Marcellus and Utica shale formations.

The law, known as Act 13, was meant to ensure the “safe and responsible development oil and gas resources, and it included many new environmental safeguards,” said a DEP spokesperson.