Has the DEP Complied with Act 15 of 2010?

In March 2010, then Pennsylvania Governor Ed Rendell signed Act 15 of 2010 into law, amending Section 212 of the Oil and Gas Act of 1984, in part, as follows:

(a.1) Every operator of a well which produces gas from the Marcellus Shale formation shall file with the department, on a form provided by the department, a semi-annual report specifying the amount of production on the most well-specific basis available. The initial report required under this subsection shall be filed with the department on or before August 15, 2010, and shall include production data from the preceding calendar year. Initial reports shall also specify the status of each well; however, in subsequent reports, only changes in the status must be reported. Subsequent semi-annual reports shall be filed with the department on or before February 15 and August 15 of each year and shall include production data from the preceding reporting period. The Commonwealth shall have the right to utilize such information in enforcement proceedings, in making designations or determinations under section 1927-A of the act of April 9, 1929 (P.L.177, No.175), known as The Administrative Code of 1929, or in aggregate form for statistical purposes. Beginning November 1, 2010, the department shall make the reports available on its publicly accessible Internet website. Any costs incurred by the department to comply with the requirements of this subsection shall be paid out of the fees collected under section 201(d).

In response to Act 15 of 2010, the Pennsylvania Department of Environmental Protection (DEP) created the DEP Oil and Gas Electronic Reporting website. As of today, the website makes available a total of 16 production and 16 waste reports, as shown below.

2011 Jan – Dec 2011 (Annual O&G, without Marcellus) 12
2011 Jan – Jun 2011 (Marcellus Only, 6 months) 6
2011 Jul – Dec 2011 (Marcellus Only, 6 months) 6
2010 Jan – Dec 2010 (Annual O&G, without Marcellus) 12
2010 Jul – Dec 2010 (Marcellus Only, 6 months) 6
2010 Jul 2009 – Jun 2010 (Marcellus Only, 12 months) 12
2009 Jan – Dec 2009 (Annual O&G, with Marcellus) 12
2008 Jan – Dec 2008 (Annual O&G, with Marcellus) 12
2007 Jan – Dec 2007 (Annual O&G, with Marcellus) 12
2006 Jan – Dec 2006 (Annual O&G, with Marcellus) 12
2005 Jan – Dec 2005 (Annual O&G, with Marcellus) 12
2004 Jan – Dec 2004 (Annual O&G, with Marcellus) 12
2003 Jan – Dec 2003 (Annual O&G, with Marcellus) 12
2002 Jan – Dec 2002 (Annual O&G, with Marcellus) 12
2001 Jan – Dec 2001 (Annual O&G, with Marcellus) 12
2000 Jan – Dec 2000 (Annual O&G, with Marcellus) 12

However, contrary to the requirements of Act 15, the DEP did not publish a report containing “production data from the preceding calendar year” (meaning January 2009 to December 2009) by November 2010. In fact, it is now nearly 18 months after the deadline imposed by Act 15 of 2010, and the DEP has yet to comply with the Act’s requirements. Additionally, the DEP has yet to publish a “subsequent semi-annual report” for the period January 2010 to June 2010. Operators were to have reported this information to the DEP by August 15, 2010, and the DEP was to have published it by November 2010.

In short, the DEP appears to be in violation of Act 15 of 2010. As a result of these reporting failures, it is not possible to accurately determine the production of Marcellus wells (and under Act 13 of 2012, all unconventional wells).

Separate from these potential failures to adhere to the Act’s requirements, in analyzing the reports that are available, we have uncovered some possible data quality and integrity problems. For instance, numerous identical wells are included in both Marcellus and Non-Marcellus reports (i.e., the same well is included in 2011-0, 2011-1, 2011-2). How can the same well be both a Marcellus well and a Non-Marcellus well during the same reporting interval? Obviously it cannot.

Even more alarming, we have encountered potential data integrity problems. For instance, some wells are included in all three 2011 production reports, but report discrepant quantities and days of production. For example, according to the “Marcellus” reports Well No. 059-24798 produced 802,211 Mcf of gas and was on production for 364 days. But according to the “Non-Marcellus” report, this well produced 707,758 Mcf of gas and was on production for 365 days. That is an approximately 95,000 Mcf discrepancy between the two reports. So how much gas did this well really produce? Finally, in addition to the ambiguity over whether this well is a Marcellus well or not, it is not consistently reported as a horizontal or vertical well.

059-24798 RANGE RESOURCES 325,441 183 Y N Jul – Dec 2011
059-24798 RANGE RESOURCES 476,770 181 Y Y Jan – Jun 2011
059-24798 RANGE RESOURCES 707,758 365 N N Jan – Dec 2011

I have brought these issues to the attention of David Raphael, Chief Counsel for the Office of Chief Counsel in the Department of Environmental Protection, but have yet to receive word on when these reporting deficiencies and data integrity problems might be corrected.

How Many Unconventional Wells Not Reported?

In a series of previous posts, I identified early Marcellus shale completions by various operators in Erie and Washington Counties, early Rhinestreet shale completions by Wainoco Oil and Gas Company (now HollyFrontier Corporation) in Crawford County and early Rhinestreet shale completions by Great Lakes Energy Partners (now Range Resources) in Crawford County.

Although these wells appear to meet the definition of an unconventional well under Act 13, CHAPTER 23 § 2302, as of April 2, 2012, none were reported by the Pennsylvania Department of Environmental Protection to the Pennsylvania Public Utility Commission as liable for impact fees, an apparent violation of Act 13.

In an effort to begin documenting these missing “legacy” wells in a more systematic and structured fashion I have started a small spreadsheet. To date, I have identified more than 200 legacy wells that likely meet Act 13’s definition of an unconventional well, all drilled prior to Range Resource’s “discovery” of the Marcellus shale in 2003-2005. If you are interested, I have posted these to a Google Spreadsheet.

Assuming the wells in question were vertical and not horizontal, these numbers, if correct, imply about $1.7 million in under-reported impact fees. If I were an elected official in one of the affected counties or municipalities (e.g., Crawford, Erie), this is something I would probably want to look into a bit more closely.

Two More Rhinestreet Completions

This post is a continuation of my research on “legacy” unconventional gas wells in the Marcellus formation and Rhinestreet formation.

In August 2001, Great Lakes Energy Partners LLC (now Range Resources Appalachia) drilled two wells in Crawford County, Pennsylvania, both of which penetrated the Rhinestreet shale — the W. Stein No. 2 well and the S. Preston No. 8 well.

Both of these wells appear to meet the definition of an unconventional well as stipulated by Act 13. But as of April 2, 2012, neither of them were included on the Pennsylvania Department of Environmental Protection’s Pennsylvania Public Utility Commission Act 13 Unconventional Wells Spud Report. In fact, despite the apparent history of unconventional well drilling in Crawford County, not a single well from Crawford County is included on the list of unconventional wells.