Pa. regulators trying to decide how involved to be in the Marcellus Shale 

BY ERIC LIDJI FOR GREENING OF OIL  

The Pennsylvania Public Utility Commission regulates five industries, and development of the Marcellus Shale promises to radically impact all but one: telecommunications.

When drilling companies can’t recycle or inject wastewater, regulated water treatment plants are the only other option for disposal. Getting materials to and from drill sites requires hundreds of regulated trucks traveling on local roads. With increased local supplies, which could soon make Pennsylvania a net exporter, natural gas distribution companies and natural gas fired p

That’s forcing the PUC to decide how much it should indirectly regulate natural gas development, an industry it doesn’t regulate directly. So far, its answer is: as little as possible. When they speak in public, PUC commissioners are quick to note they don’t want an “empire.” Since taking on the issue in March, the PUC has held two hearings to gather testimony from dozens of stakeholders, but asked state lawmakers for only a small increase in authority: the right to enforce federal safety standards on natural gas pipelines. 

The current drilling boom guarantees a pipeline boom. By one count, more than 550 Marcellus Shale wells in Pennsylvania are currently capped, waiting for gathering lines to connect to the pipeline grid covering the continent. These new gathering lines will be different than existing lines, larger and higher pressure, but from a regulatory standpoint the state isn’t prepared to handle the increase. Of the 31 gas-producing states, Pennsylvania is the only one besides Alaska that doesn’t regulate gathering lines, letting the U.S. Pipeline and Hazardous Material Safety Administration handle them. 

At the behest of PHMSA, the PUC wants to become the “state agent” for federal pipeline oversight, but that distinction isn’t all encompassing. For instance, PHMSA doesn’t inspect gathering lines in extremely rural areas and the PUC doesn’t plan on inspecting them either, even though many Marcellus Shale pipelines will pass through these sparsely populated areas. Concerned about leaks and explosions, Texas and Colorado, two of the largest natural gas producing states, added regulations on top of the federal guidelines. 

“No gap”

The natural gas industry is largely in favor of the PUC taking over inspection duties, even though it means additional fees to help pay for more inspectors, but doesn’t think Pennsylvania needs to add to the existing level of oversight because existing laws are working.
“Today, there is no gap in safety regulation,” Lindsay Sander, a consultant for the Marcellus Shale Coalition, an industry group, said at a PUC hearing in April.  

The industry says it’s not self-regulated in extremely rural areas, but is very self-interested: because inspections kick in with population density and resource development can turn a rural area into a boomtown, pipeline operators often build gathering lines to higher standards to avoid having to replace them in the future at great cost. For instance, MarkWest Energy Partners said it X-rays every pipeline weld for integrity. Industry claims that the past decade has seen an increase in damage prevention programs. 

At issue is whether Marcellus Shale pipelines will be radically different.

The industry doesn’t want the PUC to suddenly regulate where pipelines go, saying the high cost of construction — combined with existing permitting and negotiation with landowners — guarantees pipelines will be direct, environmentally sound and not duplicative, pointing out that existing pipelines, with routes chosen by industry, have been unproblematic. The industry, however, does want the PUC to increase awareness by requiring all pipelines to be included in the Pennsylvania One Call system, a hotline where people can find out the location of buried lines before excavation projects. Nearly 35 percent of all major pipeline accidents come from people digging blindly, according to PHMSA.  

“Sheer mileage”

While natural gas pipelines generally have a good safety record, at a June hearing Commissioner William Gardner framed his concern as statistical, rather than historical.  

“It’s the sheer mileage that’s being constructed in Pennsylvania at this time,” he said.

Witnesses raised more specific environmental and safety concerns. 

While excavation is the most common safety problem, it’s not the only one. Internal issues like pipeline corrosion, operational failures and equipment malfunctions such as bad welds account for 23 percent of all significant safety incidents. Wyoming County Landowners Inc. wants companies to add odor to all gas to make it easier to detect leaks, make incident reports public and standardize safety training for pipeline personnel. 

With dozens of drillers considering only how to get their gas to market, “failure to oversee siting virtually guarantees that pipelines will proliferate dangerously,” Deborah Goldberg, a managing attorney for Earthjustice, told the PUC at a June hearing. The environmental law firm wants Pennsylvania to coordinate pipeline management by bringing together every relevant state agency, from the obvious, like the Department of Environmental Protection, to the not so obvious, like the Department of Health. That would limit the damage to streams and wildlife habitats being crossed, she said.

The Pennsylvania State Association of Township Supervisors, representing 1,455 townships across the state, and the Pennsylvania State Police don’t want local municipalities getting stuck paying for road repairs after hundreds of heavy trucks, some over weight limits, make thousands of trips to and from well sites using local roads.  

The hearings brought out nonenvironmental concerns, too. If pipeline companies become utilities, would they have the right to eminent domain? Would they become rate regulated? While commissioners insist they don’t want an “empire,” they said they won’t sit idly by if problems arise, and noted that with commissioners sitting for five year terms a future commission may want as much authority over shale development as it can get. 

Shale news in brief 

The U.S. Environmental Protection Agency is holding hearings in Texas, Colorado, Pennsylvania and New York this summer to gather public input on hydraulic fracturing. The EPA is studying whether the drilling technique, which is widely used in shale development, could have potentially negative impacts on water and public health.

The Pennsylvania Department of Agriculture quarantined 28 head of cattle in Tioga County as a precautionary measure after the animals came into contact with drilling wastewater from a nearby natural gas operation that leaked into an adjacent field.

The Pennsylvania Department of Environmental Protection created some confusion when it released a list of the chemicals used in the hydraulic fracturing process that also included chemicals not pumped underground, like vehicle fuel and brake fluid. 

The issue of disclosing hydraulic fracturing chemicals is a major point of debate.

The Oil Drum publishes a photographic tour of a Marcellus Shale well site in Troy, Pa.

The Powell Barnett Shale Newsletter has created a map of every producing and non-producing well inside the city limits of Fort Worth through October 2009. 

Contact Eric Lidji at ericlidji@mac.com