Oil and gas drillers in Pa. to begin well inspections

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Oil and gas drillers are beginning state-mandated inspections of all of their working wells this fall, more than two and a half years after the requirement was adopted but not implemented.

The rule added to Pennsylvania's oil and gas regulations in February 2011 requires companies to inspect all of their operating wells for signs of leaks and corrosion four times a year and submit the results to the state annually. When the regulations were published, the state touted the quarterly inspections as a vital tool for detecting potential safety or environmental impacts.

But the inspections were postponed while the Department of Environmental Protection addressed what its oil and gas program chief called "paperwork issues," as well as logistical concerns about how to gather and use the mountain of data to be reported about more than 90,000 operating wells in the commonwealth. Progress was also delayed by an associated project intended to assess the severity of defects that drillers might find.

"Candidly, this process should have been completed before now," Scott Perry, DEP's deputy secretary for oil and gas management, said during an interview at his Harrisburg office.

The so-called mechanical integrity inspections are meant to alert operators to creeping problems before they become hazards and offer DEP a way to measure changes without assigning inspectors to canvas every well.

Companies have to monitor and report the pressure in their wells, as well as check for escaping or flowing gas, brine or liquid hydrocarbons and signs of severe corrosion. The state is not requiring companies to retrofit their wells with gauges or meters or dig out buried parts in order to report this information, although it suggests companies should renovate wells to make monitoring easier if they have the chance. According to one DEP tip sheet, "Only those components of the inspection that can be completed must be completed."

The Department of Environmental Protection and industry organizations have held training sessions this fall to prepare companies to conduct the first round of inspections before the year is over.

"Obviously there are a number of folks that feel that the DEP does not do a good enough job inspecting existing wells," Mr. Perry said.

While the department does not think it is necessary to assign inspectors to look at all wells each year, regulators "do nonetheless believe it is important that somebody put a serious eyeball on it and document the results," he said, "which is why we developed that rule."

In the years it took to clarify the inspection requirements, DEP developed a smarter way to collect the information: an electronic form -- as opposed to the paper document first proposed -- that companies will use to report their results to regulators annually.

The first data reported will actually be from the companies' second round of inspections, which will take place between January and March 2014. That allows them more time to gather construction details for every well. The first annual reports are due in February 2015.

The inspection program specifically requires companies to alert the Department of Environmental Protection immediately and take steps to fix excessive pressure or severe corrosion at a well.

Companies are also bound by laws and rules that require them to report and remedy other problems, including spills and defective cement. But during its development, the inspection program was stalled by an ambitious and, in some quarters, unpopular state effort to give drillers more meticulous instructions for what to do if their inspections turn up something awry.

The Department of Environmental Protection particularly wanted to address cases where gas channels up the cemented strings of steel casing that serve as a barrier between wells and aquifers -- a defect, according to state rules, and a documented problem in some wells. If the problems are severe, they can open pathways for gas to escape into water supplies, bubble up in streams or create an explosion risk in confined spaces.

DEP designed a series of tests to distinguish between wells that pose an environmental or safety risk and those that are flawed but fundamentally safe. Depending on the well's performance on each test, the plan might prescribe more tests, monitoring or immediate action.

For a time, the standard quarterly inspection program merged with this more comprehensive testing procedure. The result -- a mazy flow chart and 23-page guidance document -- was panned by the industry as too onerous for routine inspections and an overreach of the department's authority.

"Rather than responding to a problem, this proposal assumes that wells are causing a problem and then makes the operator prove, over and over again, that no problem exists," the Pennsylvania division of the American Petroleum Institute wrote in its comments on a draft of the flow chart last summer.

The Department of Environmental Protection eventually revised, redrew and split the chart into a separate regulatory tool that can be used to deal with wells with recognized flaws, especially new and high-pressure wells that tap shale formations. Some operators are following it to test and correct wells, Mr. Perry said.

Despite the industry's criticism of the evaluation process, every well with defective cement will be scrutinized, either through the proposed procedure or another that is scientifically sound, he said.

"It is the most important thing we deal with. Folks need to understand that DEP is taking this very, very seriously, but we owe it to everybody to be right."

Separating the standard quarterly inspections from the more comprehensive testing procedure did not ease all of the industry's concerns.

In recent comments, the Pennsylvania Independent Oil and Gas Association acknowledged DEP's work to simplify the reporting forms, but said it remains concerned the inspection obligations are putting "excessive technical, administrative and financial burdens" on small operators especially without justifiable safety or environmental benefits.

"While killing the oil and gas industry may be a goal of the environmental groups pushing these excessive regulatory burdens, that is not a goal of this administration and, we would hope, not a goal of the Pa. DEP," the oil and gas association wrote in August.

The Marcellus Shale Coalition, another industry group, does not object to the quarterly inspections now that the information companies have to gather and report has been trimmed to the core requirements in the regulations, said Andrew Paterson, vice president for technical and regulatory affairs. Many companies already inspect their shale or unconventional wells more often than four times a year, so the frequency was less of a concern than the process for reporting the findings.

"We always wanted to make sure that it was going to be easy to submit it to them," Mr. Paterson said.

Mr. Perry said the department will not back down from mandating quarterly inspections -- "It is in the rule," he said, "so it's going to be done" -- but the agency is open to reviewing the inspections' frequency after enough data have been collected to measure their value.

He also said DEP has taken a lesson from the long debate: As a new round of drilling rules aimed at above-ground operations moves closer to approval, none of the regulations will be finalized, he said, until the forms that go with them have been "thoroughly thought out."

Laura Legere: laura.s.legere@gmail.com.

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