New initiative sets standards for Marcellus Shale drilling in Pa. and Appalachian basin

Unlikely gathering of interests reaches drilling standards

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It was a strange blend.

Royal Dutch Shell, a multinational firm scouting Pennsylvania locations for a petrochemical facility, sat across from PennFuture, the environmental organization that condemned $1 billion in tax breaks that Shell would receive to build that facility.

And there was Chevron, a driller that paid $4.3 billion to gain an instant foothold in the Marcellus Shale, three seats down from the Environmental Defense Fund, a nonprofit that called New York's fracking moratorium "a wise move."

They were four of the 11 odd bedfellows brought together from industry and environmental and philanthropic organizations to create the Center for Sustainable Shale Development, an initiative announced Wednesday that is meant to provide new stamps of approval for operators extracting natural gas from shale formations in Pennsylvania and across the Appalachian basin.

The center, or CSSD, premiered by setting 15 performance standards across air, water and climate concerns. Organizers characterized them as commensurate to existing state rules and compared the program to the LEED certifications awarded to energy-efficient buildings.

"None of these came out of left field. Kernels can be found throughout the industry, so this isn't anything foreign," said Andrew Place, corporate director of energy and environmental policy at EQT Corp. and interim director of the CSSD on a part-time basis.

"But this sets a high bar for industry to meet with the independent third-party certification."

Wednesday's news conference came after two years of heated meetings and debates to hash out the standards. Heinz Endowments president Robert Vagt said the discussions became so tense at times that he twice thought the initiative might collapse.

The idea grew out of recommendations from a shale gas committee organized in 2011 by U.S. Energy Secretary Steven Chu, who had called for regional centers of standards and excellence. The center's initial budget of about $1 million will be split evenly between the industry and nonprofit members, though organizers said the Heinz Endowments and William Penn Foundation will be picking up most of the nonprofit share.

The new standards include limitations on gas well flaring; use of "green completion," including no-leak valves and piping; storage tank emission controls; development of groundwater protection plans; reduced toxicity of fracking fluids; and improving water recycling to at least 90 percent.

Applications for the certification should cost about $30,000 and will be available around the third quarter of this year, Mr. Place said.

Once awarded, the certification will apply to all new and existing company operations in the Appalachian basin, which would primarily include Marcellus and Utica shale development in Pennsylvania, Ohio and West Virginia.

Industry representatives on the consortium characterized the standards as a new blessing on practices already in place.

Royal Dutch Shell plans to get all of its Appalachian operations certified, but Paul Goodfellow, vice president of U.S. Unconventionals, said he didn't know yet what costs that might include beyond the organization's certification fee.

Mr. Goodfellow said one standard that requires operators to employ contractors with certain road truck emission standards may force Shell to find new vendors.

Three of the region's major drillers -- Chevron, EQT Corp. and Consol Energy -- are part of the consortium. The region's most active driller, Range Resources, is not. The company did not return requests for comment.

Philanthropic organizations in the group include the Heinz Endowments and the William Penn Foundation. Environmental organizations participating include the Clean Air Task Force, Environmental Defense Fund, Citizens for Pennsylvania's Future (PennFuture), Pennsylvania Environmental Council and the Group Against Smog and Pollution.

The CSSD is the latest in a string of industry and nonprofit initiatives designed to complement state and federal regulations. The Marcellus Shale Coalition industry group releases recommended practices for drillers, and the American Petroleum Institute also gives its own certifications to energy vendors and contractors.

Fairfax-based consulting firm ICF International and Oslo-based consulting firm DNV have been hired to complete the CSSD certification audits.

A permanent executive director should be on the job by the end of June, when Mr. Place's contract with the CSSD expires. The director and staff will have offices on the third floor of Downtown's EQT Plaza -- 11 floors from the EQT headquarters and 27 floors from the Heinz Endowments offices.

The center's board of directors includes former U.S. Environmental Protection Agency Administrator Christine Todd Whitman and former Secretary of the Treasury Paul O'Neill.

Mr. O'Neill said Wednesday he's long been a champion of better environmental standards, telling the crowd that he raised eyebrows at the first meeting of George W. Bush's Cabinet when he handed his colleagues copies of a speech he'd given on climate change in 1998.

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Erich Schwartzel: or 412-263-1455. Don Hopey: or 412-263-1983.


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