Well pad spill, wetland. Photo courtesy of WV Host Farms Program

By Matt Unger, FracTracker GIS Intern

When the unconventional oil and gas extraction boom hit Pennsylvania in the mid-2000s small, local operators were among the first on the scene. As shale plays continued to develop, many of these smaller companies were bought out by larger, national corporations. Larger oil and gas development companies often maintain that they are better able to handle the expected regulatory requirements, and so FracTracker wanted to determine if there was a change in the compliance record for wells that changed hands. Does having more resources available to them translate into stronger compliance standards for oil and gas drillers, better training for their employees, and a greater burden to get things right? Investigating these questions by looking into compliance data and the sale of wells, however, was no easy task.

Analysis Methods

There are no indications in either the drilled wells or permits datasets available from the DEP that a well has changed hands; in both of these sources, one operator’s name is simply substituted for the other. It is possible to comb through old news stories, and find that East Resources sold its assets to Shell in 2010, for example. However, this approach is piecemeal, and would not lead to satisfactory results on an industry-wide analysis.

Major obstacles to our analysis included:

• Lack of information on the transfer of oil and gas wells from one operator to another
• There is often a lag time between the time violations occur and when they are reported
• Errors in compliance reporting. For example, one API Number was found to have the operator listed as “Not Assigned” (It was later discovered that this well was never sold).

Results

Unlike wells and permits, any items on the compliance dataset are attributed to whichever company was operating the well at the time the violation was issued. So while FracTracker could not do the analysis that we wanted to because of the limitations of available data, we were able to isolate 30 wells that have changed hands between January 1, 2000 and November 4, 2014 (Table 1). One well has been bought and sold twice, with each of the three operators being issued violations.

In some instances the original well owner was reported to be out of compliance more times than the second owner. For example, API Number 013-20012 had 11 violations reported under its first owner and only 1 since it has been sold. The contrary also occurred, however, such as in the case of API Number 065-26481, which had 4 violations reported under its first owner and 14 under its second owner. There are not enough data points to determine which scenario is the trend in the data – if in fact there is one.

Due to limitations in the data, we cannot currently evaluate whether the notion that larger companies can improve the track record of problematic wells. In fact, many of the wells that were issued violations for multiple operators really just changed hands from one big operator who wanted to get out of the Marcellus to another big operator who wanted to get in. Our small sample doesn’t include any of the wells that were issued violations to only one company, of all the wells that changed hands over the years. To accurately assess the scenario, more data would have to be released, specifically the date when wells changed hands from one company to another.

Table 1. Wells with violations by API number that have changed ownership