What’s in PA Senate Bill 1378?

State Senator Joseph Scarnati III, from north-central Pennsylvania, has introduced a bill that would redefine the distinction between conventional and unconventional oil and gas wells throughout the state.  In Section 1 of the bill, the sponsors try to establish the purpose of the legislation,  making the case that:

  1. Conventional oil and gas development has a benign impact on the Commonwealth
  2. Many of the wells currently classified as conventional are developed by small businesses
  3. Oil and gas regulations, “must permit the optimal development of oil and gas resources,” as well as protect the citizens and environment.
  4. Previous legislation already does, and should, treat conventional and unconventional wells differently
This diagram shows geologic stata in Pennsylvania.  The Elk Sandstone is between the Huron and Rhinestreet shale deposits from the Upper Devonian period.

This diagram shows geologic stata in Pennsylvania. The Elk Group is between the Huron and Rhinestreet shale deposits from the Upper Devonian period. Click on the image to see the full version. Source: DCNR

Certainly, robust debate surrounds each of these points, but they are introductory in nature, not the meat and potatoes of Senate Bill 1378.  What this bill does is re-categorize some of the state’s unconventional wells to the less restrictive conventional category, including:

  1. All oil wells
  2. All natural gas wells not drilled in shale formations
  3. All shale wells above (shallower than) the base of the Elk Group or equivalent
  4. All shale wells below the Elk Group from a formation that can be economically drilled without the use of hydraulic fracturing or multi-lateral bore holes
  5. All wells drilled into any formation where the purpose is not production, including waste disposal and other injection wells

The current distinction is in fact muddled, with one DEP source indicating that the difference is entirely due to whether or not the formation being drilled into is above or below the Elk Group, and another DEP source indicates that the difference is much more nuanced, and really depends on whether the volumes of hydraulic fracturing fluid required to profitably drill into a given formation are generally high or low.

This table shows the number of wells in each formation in Pennsylvania that has both conventional and unconventional wells drilled into it.  Data source:  DEP, downloaded 7/9/2014.

This table shows the number of distinct wells in each producing formation in Pennsylvania that has both conventional and unconventional wells drilled into it. Data source: DEP, downloaded 7/9/2014.

As one might expect, this ambiguity is represented in the data. The chart at the left shows the number of distinct number of wells by formation, for each producing formation that has both conventional and unconventional wells in the dataset.  Certainly, there could be some data entry errors involved, as the vast majority of Bradford wells are conventional, and almost all of the Marcellus wells are unconventional.  But there seems to be some real confusion with regards to the Oriskany, for example, which is not only deeper than the Elk Group, but the Marcellus formation as well.

While an adjustment to the distinction of conventional and unconventional wells in Pennsylvania is called for, one wonders if the definitions proposed in SB 1378 is the right way to handle it.  If the idea of separating the two is based on the relative impact of the drilling operation, then a much more straightforward metric might be useful, such as providing a cutoff in the amount of hydraulic fracturing fluid used to drill a well.  Further, each of the five parts of the proposed definition serve to make the definition of unconventional wells less inclusive, meaning that additional wells would be subject to the less stringent regulations, and that the state would collect less money from the impact fees that were a part of Act 13 of 2012.

Instead, it is worth checking to see whether the definition of unconventional is inclusive enough.  In May of this year, FracTracker posted a blog about conventional wells that were drilled horizontally in Pennsylvania.

Conventional, non-vertical wells in Pennsylvania. Please click the expanding arrows icon at the top-right corner to access the legend and other map controls. Please zoom in to access data for each location.

These wells require large amounts of hydraulic fracturing fluids, and are already being drilled at depths of only 3,000 feet, and could go as shallow as 1,000 feet.  It’s pretty easy to argue that due to the shallow nature of the wells, and the close proximity to drinking water aquifers, these wells are deserving of even more rigorous scrutiny than those drilled into the Marcellus Shale, which generally ranges from 5,000 to 9,000 feet deep throughout the state.

A summary of the different regulations regarding conventional and unconventional wells can be found from PennFuture.  In general, unconventional wells must be further away from water sources and structures than their conventional counterparts, and the radius of presumptive liability for the contamination of water supplies is 2,500 feet instead of 1,000.

SB 1378 has been re-referred to the Appropriations Committee.