Data driven discussions about gas extraction and related topics.

Historical Production and Waste Data Added to DEP Site

Recently, the Pennsylvania Department of Environmental Protection Bureau of Oil and Gas Management has added historical oil and gas production and waste data for non Marcellus Shale wells. This data is now available as far back as 2000.

I’ve made a couple of charts to illustrate production values for these wells over time.

Gas production per year, in billions of cubic feet (Bcf)
Read more

Five Month Oil and Gas Inspection Data

Between January and May 2011, the Pennsylvania DEP conducted 977 inspections on oil and gas operations, issuing 1,751 violations to drilling and pipeline operators, and 311 enforcement actions. These totals are for all oil and gas operations, including the Marcellus Shale.

Most inspections by operator, January – May 2011

Two of these entries are similar:  “Incomplete Data” and “Unknown Operator”.  All but one entry listed as having an unknown operator involved failing to plug and abandoned well, and was issued either on the 17th or 18th of February.  Everything else where the operator is unknown is listed as “Incomplete Data”.

Most violations by operator, January – May 2011

Although this particular analysis does not include details about the wells which were flagged for violations, many of the operators on this list are focused on Marcellus Shale operations in Pennsylvania, including Cabot, Chief, Chesapeake, Anadarko, Range, and XTO.  In May, I discussed how there was little overlap between Marcellus and non Marcellus drillers. At that point, the distribution of the only seven companies that drilled one or more of each kind of well in Pennsylvania was as follows:

Operators with at least one Marcellus Shale and non Marcellus Shale well between January 1 and May 18, 2011.

Most enforcement actions by operator, January – May 2011

I’m not sure what the point of issuing an enforcement action is when the well operator is not known.  There are 187 rows of incomplete data, detailing 178 violations, and 55 enforcement actions.  The following columns are missing data for every single row:  operator, permit number, county, municipality.  It does, however, include penalty amounts issued and total amounts collected, which means that the DEP does have information about at least some of these wells, they just neglected to share it with the rest of us.

Most violations per inspection by operator, January – May 2011

The list of most violations per inspection is dominated by small, non Marcellus Shale operators, with relatively few inspections.

Most enforcement actions per violation by operator, January – May 2011

Similarly, the companies with the most enforcement actions per violation involve those with relatively low sample sizes.

It isn’t clear to me though, what constitutes an enforcement action, and when such an action is deemed appropriate.

Land of Confusion

The last time I checked on Consol, for example, they had no violations.  This time, not only is there a violation, but an enforcement action as well.  That doesn’t mean that they were given a fine, however–their enforcement description reads, “Notice of violation”.  And yet, according to the report, there are 1,751 violations issued but only 311 enforcements, or roughly 18 percent.  So when do they get the enforcement of “Notice of violation”?

Curious.  But it gets more confusing than that.  Although there are only 311 enforcements, there are 729 instances of “notice of violation”, 43 counts of “administrative orders”, 48 instances of “consent assessment of a civil penalty”, and “consent order and agreement” came up four times.  That totals 824 enforcement descriptions for only 311 enforcements.

How can this be?

This is an example of what the violations report looks like.  The report is set up so that a particular inspection is listed just once, even thought there might be multiple violations that occurred as a result, as is the case for rows 1048-1050.  Additionally, multiple violations from different inspections might be covered by the same enforcement ID, as is the case for rows 1058-1065.  Although not shown here, there are also instances where the same Violation ID is used more than once, non consecutively.

PA Oil and Gas Violations:  Jan-May 2011 (large)
Location of oil and gas violations in PA, January to May, 2011. Click the “i” icon then any map feature for more information.

From my perspective, each row of data should be complete, not only because it is needed for our DataTool to associate all of the information with each map feature, but it also allows for looking deeper into the patterns of where the problems are.

For example, how many of the violations were for non Marcellus Shale wells? The report itself doesn’t say, although there is a separate Marcellus-only report, so you could subtract the total of that from the overall list. But what about horizontal wells? What if you want to know which companies have the worst record at certain types of violations? What if you want to compare the number of violations issued on a monthly basis?

Violations issued by month, January – May, 2011. Values are between 4 and 6 percent overstated on average.

If you want to dig deeper, there is no choice but to fill in the blanks. When I did that for this five month period, however, the values for violations were increase by between four and six percent over the totals that the DEP provided, due to the factors stated above.  While that may be a tolerable difference, the same process increases the number of enforcements by 165 percent.  Both of these inflated numbers represent actual events.  The differences arise more from the standpoint of how violations and enforcement actions are applied.

I applaud the DEP for releasing its oil and gas violation and inspection data so willingly and so thoroughly.  At the same time, it could certainly stand to be simplified.  As it stands, it isn’t enough to proclaim that “Operator A has seven violations” without answering whether there are any blanks in the data to be filled in, or whether any of the violations included multiple enforcement actions.

Well Permit Workload Reports

I am often asked how many Marcellus Shale wells or permits there are in Pennsylvania at the moment. The answers to these queries are growing all the time, and while I try to keep these datasets current on our DataTool to allow for mapping, the quickest way to find these answers is to look on the Well Permit Workload Report at the DEP website.  The workload report is updated weekly, and has a variety of information about drilling and inspection activities over a variety of time frames.  Many of the basic figures that people want to know about the industry in Pennsylvania are readily available:

Data Available on Weekly Workload Report for week ending 6-17-2011

Marcellus Shale Permit Applications

Another feature of the workload report is that it breaks down the status of Marcellus Shale permit applications from 2005 through the present.

Status of Marcellus Shale Applications in Pennsylvania, as of June 17, 2011

How selective is the process? Of the permit applications received so far, 94 percent have been approved, and four percent are still in the process of being evaluated. Only 31 applications (0.4 percent) were actually denied.

Between the Marcellus Shale and other formations, the DEP has issued over 16 permits for new wells every calendar day so far in 2011.

Violations per Inspection

2011 year to date inspection and violation data for Pennsylvania

So far this year, non Marcellus Shale wells are slightly more likely to be issued a violation upon inspection than their Marcellus Shale counterparts. This is actually a fairly dramatic change from 2010 data, which is summarized below:

2010 inspection and violation data for Pennsylvania

Last year, there were more than twice as many violations per inspection from the Marcellus Shale than from other formations, while this year the non Marcellus wells are being flagged more often. This is both because the rate of violations per inspection for non Marcellus Shale wells has risen by 35 percent over last year’s figure, and because Marcellus Shale wells are being flagged 41 percent less often this year than last year.

Movement of Pennsylvania’s non Marcellus Waste 2010

One of the biggest concerns about the Marcellus Shale industry in Pennsylvania is how to deal with all of the waste products that are created in the drilling, stimulation, and production of the wells. There are also more than 40,000 oil and gas wells from other formations in the Commonwealth that reported waste production to the Pennsylvania Department of Environmental Protection (DEP) last year. Whether this waste ultimately found itself into publicly owned treatment works, industrial waste treatment facilities, injection wells, or spread on roadways, it almost always has to be shipped to a different location, sometimes hundreds of miles away.

For more information on specific facilities that accepted non Marcellus waste in 2010, click on one of the maps below, then use our information tool (“i” icon) and click on any map icon.


Movement of non MS Brine Waste in PA for 2010 (large)

Yellow dots indicate wells that reported brine production, and red squares are receiving facilities. The green lines are the paths that the waste takes, as the crow flies. Darker lines indicate larger quantities of brine, which are measured in barrels. For more information on specific features, please click the map for a zoomable, dynamic view.

Statewide, almost 4.5 million barrels of brine was produced by non Marcellus Shale wells in 2010, which was transported over 900,000 miles as the crow flies(1) from the various wells to the facility locations, with an average one way trip of about 30 miles.

Facilities accepting the most brine from non Marcellus wells in PA in 2010

Drill Cuttings

Only one operator reported drill cutting waste from a total of three wells. All of this type of waste went to the same facility. Geographic coordinates were not included for the receiving facility in the data, so mapping and distance measurements were not performed for this analysis. Suffice it to say, however, that the amounts discussed are relatively small compared to brine and other types of waste.

Facility accepting drill cutting waste from non Marcellus wells in PA in 2010

Drilling Fluid

Movement of Drilling Fluid Waste for non MS Wells in PA In 2010 (large)
The color scheme for this map similar to that of brine, above, but in this view, yellow dots indicate wells producing drilling fluid waste.

More than 300,000 barrels of drilling fluid was produced last year from non Marcellus Shale wells in Pennsylvania. That waste traveled over 18,500 miles as the crow flies en route to its receiving facilities.

Facilities accepting the most drilling fluid from non Marcellus wells in PA in 2010

Frac Fluid

Movement of Frac Fluid Wate for non MS Wells in PA for 2010 (large)
The color scheme for this map similar to that of brine, above, but in this view, yellow dots indicate wells producing frac fluid waste.

While the term “frac fluid” is often used to refer to the chemical additives that are used along with water and sand to hydraulically fracture a well, in terms of the waste report, it refers to the flowback water. This type of waste contains the other type of frac fluid, but at significantly reduced quantities.

Last year, non Marcellus Shale wells reported producing over 499,000 barrels of frac fluid waste, which traveled almost 82,000 linear miles to receiving facilities, with the average one way trip being about 40 miles in length.

Facilities accepting the most frac fluid waste from non Marcellus wells ion PA in 2010

  1. Please note, for each distance analysis, only wells from the waste production report which included decimal degree data for both the wells and receiving facilities were included. Therefore, the distances are being understated. For example, only about 29,500 of the more than 40,500 non Marcellus wells that produced brine last year are included in this figure, or about 73 percent.

What if Pennsylvania Had the Same Severance Tax as Texas?


This page has been archived. It is provided for historical reference only.

The prolific oil and gas producing state of Texas imposes a 7.5 percent severance tax on natural gas produced within the state, and 4.6 percent levies on both oil and condensate. In a recent post, I mentioned that if Pennsylvania had the same severance tax as Texas, the Commonwealth would have raised about $72.5 million last year–just from non Marcellus Shale oil and gas wells.

Estimated market value and hypothetical severance tax of non Marcellus Shale well production in 2010.

In the table above, the market values were determined by multiplying the total production with the average price for the wellhead price of gas and petroleum and other liquids, respectively.

That may not be enough to plug the gaping hole in Pennsylvania’s budget, but it would at least be enough to fill a few potholes. But what if we took Marcellus Shale production into consideration as well?

Unlike wells from other formations where the production report coincides with the calendar year, Marcellus Shale production is available for the period from July 2009 through June 2010, and from July to December 2010. While there were certainly more Marcellus wells toward the end of the year than the beginning, this is more than made up for by the likelihood that the self-reported Marcellus production data is dramatically understated. I say this because there are only 1,255 wells reporting any production in the last half of the year, and yet there were 2,498 Marcellus wells by year’s end. So while I will multiply the six month totals by two to represent the whole year, multiplying by four might be more accurate still.

Estimated market value and hypothetical severance tax of Marcellus Shale well production in 2010.

Taking the self reported data at face value, we are now looking at a hypothetical severance tax of $246 million for all formations. While that won’t solve the budget problems either, it would be enough to preserve the jobs of thousands of teachers throughout the Commonwealth.

Former Governor Rendell did little to promote a severance tax in his tenure until the very end, and Governor Corbett has stated his opposition repeatedly. However, in the interest of paying our bills without jeopardizing our fragile economic recovery, the idea of the severance tax is clearly worth another look.

It can’t be that bad for the industry.  After all, they’re still drilling wells in Texas.

PA Non Marcellus Oil and Gas Well Data Available for 2010


This page has been archived. It is provided for historical reference only.

Oil and gas service roads in the Allegheny National Forest. Photo from the Allegheny Defense Project

The Pennsylvania Department of Environmental Protection (DEP) has recently released 2010 production and waste data for non Marcellus Shale wells. The following datasets have been added to FracTracker’s DataTool (links removed – no longer active):

  • PA Non Marcellus Production by Well, 2010
  • PA Non Marcellus Brine Production by Well, 2010
  • PA Non Marcellus Drill Cuttings Production by Well, 2010
  • PA Non Marcellus Drilling Fluid Production by Well, 2010
  • PA Non Marcellus Frac Fluid Production by Well, 2010

All data is self-reported by the drilling operators to the DEP.

Gas, Oil, and Condensate Production

Non-Marcellus Shale wells in Pennsylvania reported production of gas, oil, and condensate in 2010. Gas is reported in thousands of cubic feet (Mcf), while production values for oil and condensate are reported in barrels.

Natural Gas

Natural gas production in the state is significant, even without the prodigious Marcellus Shale formation that dominates current drilling activity.

2010 gas production summary in Pennsylvania for non Marcellus Shale wells

Production values vary widely throughout Pennsylvania, which of course feeds into how much royalty a landowner could make off a well on his or her property. Based on the $4.16 average wellhead price of gas for 2010, a well would have needed to produce about 1,924 Mcf of gas in order to collect $1,000, assuming the minimum one eighth share required by Pennsylvania. 36,062 of the producing wells in Pennsylvania produced that amount or less, and 28,616 earned more than that figure. The most productive non Marcellus Shale well produced 1,049,000 Mcf, which would produed a royalty check of over $540,000. The least productive wells would not qualify for any royalty check.

Vertical and horizontal non Marcellus gas well summaries and market estimates

There are some non Marcellus gas wells that are drilled horizontally now, and they are on average five times more productive than their vertical counterparts, although the sample size is fairly small. The last column, “TX Severance” calculates the estimated severance tax that would have been collected on the gas produced from Pennsylvania’s non Marcellus Shale wells, if the Commonwealth had the same 7.5 percent severance tax as Texas.

135 of 256 operators with just one well reported exactly 100 Mcf produced in 2010.

Since there is no severance tax in Pennsylvania, the most important reason to get production values correct is to make sure the landowner gets the proper royalty check. However, there are a 2,617 wells that are identified as home wells, and for these wells, royalty payments wouldn’t apply either, since the operator and the resident are the same person. Many of these wells are unmetered, according to the notes in the dataset. This probably explains why a large number of operators with just one well reported exactly 100 Mcf.

Oil and Condensate

Non Marcellus Shale wells in Pennsylvania also produced oil and condensate. Condensate is a hydrocarbon liquid or gas (depending on conditions) that is often associated with “wet gas” wells. Through the control of temperature and pressure, this is turned into liquid, removed from the natural gas stream, and sold to oil refineries. Although counted separately, condensate is fundamentally similar to light crude oil, and it is relatively easy to process into gasoline and other fuels. The average price per barrel for petroleum and other liquids in 2010 was $79.61.

Production summaries and market estimates for oil and condensate from non Marcellus Shale wells in Pennsylvania in 2010.

If Pennsylvania had the same 4.6 percent severance tax as Texas, we would have collected about $9.5 million in revenues. Combined with hypothetical gas revenues discussed above, Pennsylvania would have a handy $72.5 million to help fill in the budget gaps, just from the non Marcellus Shale wells.

Waste Production

There are five categories of waste production in the 2010 report:

  • Basic Sediment
  • Brine
  • Drill Cuttings
  • Drilling (Fluid)
  • Frac Fluid

Basic Sediment. This is composed of salt and other impurities that often settle at the bottom of the tank. No basic sediment was reported in Pennsylvania for non Marcellus Shale wells in 2010.

Brine. I contacted the DEP in February to clear up a point about brine for Marcellus wells. The amount of brine and frac fluid were nearly the same. Usually, “frac fluid” refers to the 1% or so of chemical fluids that are added to the sand and millions of gallons of water in order to hydraulically fracture oil and gas wells. Brine is usually one of several terms that describe this mixture once it flows back up to the surface after fracturing, having acquired significant salinity along the way. I was told that in this case, brine referred to natural underground salty waters that were encountered in the drilling process, and that frac fluid was the flow back water after fracturing operations had begun. On the other hand, I have spoken with reporters who have learned from industry sources that they treat the distinction differently: flow back water in the first 30 days are so are considered “frac fluid”, and anything thereafter is “brine”.

Regardless of how the distinction is used in practice, both are wastewater types that are difficult to dispose of. There is a movement in the industry to recycle as much as possible of these fluids for future wells. In April, the DEP asked drillers to stop disposing of these fluids in treatment plants that ultimately put the diluted fluid back into our rivers and streams. Recently, some progress has been made in those regards. Another common disposal method is the use of underground injection wells.

40,731 non Marcellus wells reported brine wastewater production in Pennsylvania in 2010, with amounts ranging from 0 to 105,000 barrels. 33,153 wells (81 percent) reported amounts of 100 barrels or less. Statewide, 4,452,905 barrels of brine were reported in 2010 for non Marcellus Shale wells, or about 187 million gallons.

Drill Cutting. Of the thousands of non Marcellus Shale wells drilled last year, apparently only one company encountered drill cuttings. Newfield Appalachia PA, LLC reported three Wayne County wells that created this type of waste that is created when the drill bit chews up thousands of feet of subterranean rock and sediment en route to the target formation. There is no word on how the other companies avoided creating drill cuttings, but in my opinion, Newfield deserves some praise for taking their reporting obligations seriously. Drill cutting waste ranged from 25 tons to 506 tons, with two wells (67 percent) reporting less than 100 tons.

Drilling Fluid. According to OSHA, there are several functions for drilling fluid, including maintaining a proper well pressure, keeping the drill bit cool, removing the drill cuttings, and preventing a collapse of the well before it has been cased.  836 wells reported drilling fluid waste, 580 of which (69 percent)reported values of under 100 barrels.  The largest quantity was 45,360 barrels, an amount large enough to possibly include drill cuttings as well.

Frac Fluid For more information, see the comments for brine, above. 2,805 wells reported frac fluid waste produciton, with quantities ranging from 0 to 54,600 barrels. 2,330 wells (83 percent) reported production of less than 100 barrels of frac fluid. Statewide, there were 499,351 barrels reported, or about 22.9 million gallons.

Problems with Abandoned and Orphaned Wells

Left: Cabin Run orphaned oil well, Morgan County, Ohio. Many of the older oil and gas wells were either perfunctorily plugged, or else not at all. Right: The Pennsylvania DEP thinks this Bradford Township explosion in McKean County, PA might have been due to a nearby abandoned gas well that was drilled in 1881.

In April of 2000, the Pennsylvania Department of Environmental Protection (DEP) released a plan for dealing with the approximately 8,000 abandoned and orphaned oil and gas wells throughout the Commonwealth. This report singled out 550 wells that were especially problematic, and of those, 129 were flagged as the highest priority, with a point score of 30 or greater on their internal scale.

Eleven years later, there are over 8,500 abandoned and orphaned wells, and 186 with a point score of 30 or greater. Most likely, this increase doesn’t suggest newly abandoned wells so much as the discovery of additional old ones. After all, according to Independant Petroleum Association of America estimates, over 325,000 oil and gas wells were drilled statewide between 1859 and 2000. The DEP has no information on more than half of those wells–about 184,000.  Therefore, the actual number of abandoned and orphaned wells in Pennsylvania could be much higher than the estimates provided above.

Abandoned wells are those that have been out of production for a year or more, and orphaned wells are wells that were abandoned prior to 1985, and from which the current landholder or operator didn’t receive any economic benefits.  When wells are designated as orphaned, the DEP is responsible for plugging them.  As of February, there are 6,251 wells classified as orphaned and 2,272 abandoned wells.

Reasons for Concern

Obviously, the prospects of houses suddenly exploding, as in the picture above, is reason enough to be concerned, and yet there are a variety of ways in which abandoned oil and gas wells can impact Pennsylvania’s environment and the health and well being of our residents. Most unplugged wells release some amount of oil, gas, condensate, or brine, which can kill vegetation, damage fragile riparian ecosystems, and contaminate aquifers. There is also the possibility of injury due to the sudden release of pressure. Some abandoned wells are 30 inch diameter open holes that are obviously a danger for children to fall into.

May 30, 2011 sinkhole in Allentown, PA
There is also the possibility that the presence of wells, whether active or or not, will aggravate unstable geologic formations, which are fairly common in Pennsylvania, due to mining activities in the west and soluble limestone formations in the east. This recent Allentown sinkhole was reportedly caused by a water leak, and caused significant property damage.

To give an example of the potential impact of abandoned oil and gas wells, here are some of the comments from the Abandoned and Orphaned Wells Program, with corresponding point scores:

Comments on abandoned wells and their corresponding point scores.

It is not always clear why a well was given a particular priority rating.  Indeed, there are many instances where ratings are zero, but the comments give reason for concern, such as “Oil in water supply” and “Well intact, near implement dealer facility, is a fire hazard.” Additionally, less than 15 percent of the abandoned wells listed give any comment at all.

Incidents in McKean County

Recent explosion incidents in McKean County, PA. Please click on the gray compass rose and double chevron to hide those menus.

The Bradford Township fire mentioned above (the more southern of the two), is about half a mile from the nearest abandoned well on the list.  However, the suspected well, Rogers 9, was apparently only 300 feet away. Presumably, this well was not known about until the incident occurred.  Rogers 9 was drilled in 1881.

The other incident, in Foster Township, is at the northern edge of a tight cluster of recent drilling activity.  It is entirely possible that there are abandoned wells in that region too, but again, nothing is on our list in the immediate vicinity.

This information leads one to suspect that one of the fires was probably due to recent activity, while the other was caused by a long-forgotten well. Whether or not that was the case, it is clear that drilling holes in the earth near where people live can have an adverse effect for a very long time.

Well Plugging

While well plugging technology has obviously improved over the years, that doesn’t necessarily mean that it is always done right. A single $25,000 bond currently is the only insurance that an operator will plug all of their wells statewide, once they are no longer in production. In most cases, that is probably adequate, since there are non-monetary incentives for the operator to stay in good graces with the DEP. However, there are numerous smaller operators with wells still in production, including some residents who have their own private wells.

In these cases, the carrot of getting the bond money returned may not match the cost of plugging the well properly, especially if multiple wells are involved. In this 1998 document, the DEP put the average cost of plugging a well between $6,000 and $22,000. Last year, the DEP plugged 11 wells in Erie County for a cost of $137,348, or a cost of about $12,500 each.

According to the Bradford Era, over 2,700 wells have already been plugged statewide under the program. In McKean County, more than 950 wells have been plugged since 1989, at a cost of over $6.5 million.

As mentioned above, the DEP assumes responsibility for plugging the orphaned wells. The money for this comes from $150 fees added to oil permit applications, and $250 fees for gas permits. Money is clearly a limiting factor in how many wells the DEP can to plug. Those 11 Erie County wells required funds from 550 new gas permits. If those wells represent the average current price for plugging a well, then the 6,251 orphaned wells still on the list would cost over $78 million to plug, requiring the permit fees from 312,550 new wells. And that is still not including the approximately 184,000 abandoned wells that the DEP doesn’t even know about.

Maybe it is time for a new strategy.

Marcellus Shale Violations per Inspection and Enforcements per Violation

Please Note

This post is provided for archival purposes only

Marcellus Shale violations issued by the Pennsylvania DEP from January through April, 2011.

Violation information from April was recently posted on the Department of Environmental Protection (DEP) website, and two new violations datasets have been posted on our DataTool as well, including:

As the titles indicate, these datasets contain inspection and enforcement data in addition to violations, which allow us to take a closer look at both violations per inspection and enforcements actions per violation.

Violations per Inspection

Marcellus Shale violations per inspection, 2010. For a dynamic, zoomable view, please click the map.

[map archived]
Marcellus Shale violations per inspection, January through April 2011

In 2010, Marcellus Shale wells in the northeastern portion of the state had a noticeably higher number of violations per inspection than the southwest.  This trend is less pronounced so far in 2011.  I should point out that since each inspection on this report lead to at least one violation, it is more accurate to think of this category as “violations per inspection yielding violations”, a cumbersome but significant distinction.

Enforcements per Violation

Marcellus Shale enforcement actions per violation, 2010

[map archived]

Marcellus Shale enforcement actions per violation, January through April, 2011

While the northeastern portion of Pennsylvania has a higher number of violations issued per inspection, the southwest has a higher number of enforcement actions, a category which includes fines and other restrictions imposed on drilling operators by the DEP.  This trend seems to continue into 2011, with relatively minor changes in distribution.

Year to Date Drilling Activity in Pennsylvania

Year to date drilled wells in Pennsylvania. Click the map for a larger, dynamic view.

I have updated the 2011 drilled wells information on FracTracker’s DataTool. There are several interesting trends to point out, including:

  • Percentage of wells from the Marcellus Shale formation
  • Drilling operator trends
  • Non Marcellus horizontal well data

Marcellus Shale and Other Formations

So far in 2011, 587 Marcellus Shale wells have been drilled in Pennsylvania, compared to only 281 from other formations. This means that for the first time, Marcellus wells account for over two thirds of the drilling activity statewide.

In less than three and a half years, the Marcellus Shale went from representing 5% of all oil and gas wells drilled in Pennsylvania to 68%.

Drilling trends over time in Pennsylvania.

While part of the reason for the Marcellus Shale’s increased prominence in the oil and gas industry in Pennsylvania is that activity in the formation is rapidly increasing, it is also true that activities in other formations are decreasing rather dramatically.

We can also take a look at drilling activity by county for both Marcellus Shale and other oil and gas wells.

Marcellus Shale and other wells drilled to date in 2011 by county.

Much of the above chart has to do with where the hydrocarbon resources are. It is interesting to note though, that the county with the most Marcellus wells (Bradford) has no wells in other formations, and that the county with the most non Marcellus wells (Forest) has no Marcellus wells at all.

Drilling Operators and the Marcellus Shale

Of the 91 operators that have drilled oil and gas wells so far this year in Pennsylvania, 60 had no Marcellus Shale wells, 25 had only Marcellus Shale wells, and seven had wells in both categories.

Most operators drill in either the Marcellus Shale or other formations, but not both.

There is surprisingly little overlap in this chart. But what about the operators with wells in both categories?

Marcellus and non Marcellus wells for operators with both categories in 2011.

Even still, most of the operators specialize in one kind or the other. Taken together, these two charts show that operators which drill in the Marcellus Shale are specialists, with very few wells drilled in other formations.

Non Marcellus Horizontal Wells

It is well known that the combination of hydraulic fracturing and horizontal drilling techniques allowed for the profitable extraction of natural gas from the Marcellus Shale. For that reason, it isn’t surprising that most of the Marcellus wells are drilled horizontally. What is interesting is that the technique is now being used in other formations as well.

Five Non Marcellus Shale wells have been horizontally drilled so far in 2011.

Non Marcellus horizontal wells so far in 2011.

There isn’t much of a trend in which companies drilled these five wells, with two of the companies active in the Marcellus Shale and two of them not. Spatially, all four of the counties are in the western portion of the state, with Clarion County somewhat to the north of the other three.

2010 Fines for Marcellus Shale Violations

In yesterday’s Post-Gazette, Don Hopey discussed an analysis by PennFuture which saw a notable decline in fines in the first quarter of 2011, as compared to the same period last year. The implication is that the DEP is not backing up violations with fines under Governor Corbett’s administration to the same degree that it did under former Governor Rendell. In the former administration, PennFuture calculated an enforcement action was handed out for every 1.7 violations, and now the rate is one per every 8.7 violations.

I think this is a worthwhile trend to keep an eye on, with the caveat that it is still early in Governor Corbett’s tenure, and that violation data varies widely from month to month.

It is also possible that the DEP under the Corbett administration will still issue fines for significant events. In fairness, I came across this article of fines issued over eight months after an incident by the DEP under Rendell. I think we need more time to see if the new administration’s patterns of reduced fines per violation hold.

That said, Marcellus Shale fines and enforcements under the Rendell administration is hardly a sensible target for comparison. The fines issued in 2010 were at once paltry and erratic.

Industry sources indicate that Marcellus Shale wells cost between $5 million to $6.4 million to drill. Last year in Pennsylvania, there were 1,454 Marcellus Wells drilled in the Commonwealth, meaning that the total cost of operations for the year for the industry is somewhere in the mind-boggling range of $7.2 billion to $9.3 billion. How much of that cost was fines issued by the DEP? $775,650.22. Even using the conservative figure of $5 million per well, DEP fines only account for 0.01 percent of operating costs–hardly any impediment at all. In essence, with the change in administration the DEP went from collecting fines in Monopoly money to asking drilling operators to sit down for a while and think about what they’ve done.

Over 45 percent of the fines issued for the Marcellus Shale in 2010 went to EOG Resources, the operator for a major blowout in Clearfield County. That was far from the only major incident in 2010, but the DEP was clearly mad about the incident, posting an entire section about the incident on their website. The $353,400 fined to EOG for this incident went to cover the DEP’s cost of response and investigation.

The two operators with the highest fines issued for Marcellus Shale operation in 2010 are toward the top of companies with the largest number of violations per year. That said, those companies at the very top were fined a significantly lower amount.

When we look at fines per violation, in addition to the same two operators that stood out in the last graph, we see several companies with relatively few violations having a significant number of fines per violation.

From an outside perspective, it is difficult to determine what sorts of factors go into whether or not a fine is issued, and if so, for how much. If the goal is simply to recoup costs of the DEP response and investigation, one wonders why there isn’t a fine more often, since every violation issued costs the DEP some resources to evaluate, process, and issue. And if fines are to act as a deterrent, they should include punitive damages, not just actual costs.

Keep in mind that the $7.2 billion to $9.3 billion range is just for Marcellus Shale wells, which last year represented about half of all oil and gas wells drilled in Pennsylvania. The industry is huge. One way we could have the oil and gas industry benefit all Pennsylvanians is by paying for the expenses of their DEP oversight, through permit fees and fines. That taxpayer savings could then be applied to other programs to help address the overall budget issue. Such an arrangement would be a huge boon to Pennsylvania, and while they might complain, the industry would barely notice if their cost per well went up by a few thousand dollars. Such an arrangement would also allow for the DEP to keep up with a rapidly expanding industry in a time of fiscal austerity that is sweeping the Commonwealth, and the nation as a whole.

  1. Other sources, such as the Marcellus Drilling News report higher fine totals, but that includes a broader time frame. See Sean Hamill’s Post-Gazette article.