The following chart contains all operators that have either drilled a Marcellus Shale well in Pennsylvania from March 6, 2006 to November 27, 2011, or have been issued a Marcellus Shale related violation by the Pennsylvania Department of Environmental Protection between January 1, 2008 and September 30, 2011. Results are cumulative, thereby reflecting each company’s legacy with the Marcellus Shale, rather than their performances for any given year. The Violations per Well (VpW) score has been color coded for easy reference, with the following scale:

Most companies that are issued violations are well operators, although there do seem to be some midstream companies on the violation list. This might account for some of the blue “No wells” below, but mostly they reflect operators that were not yet active. For example, Antero Resource’s first well was in 2010, so entries for 2008 and 2009 read as “No wells”.

Whenever we look at Marcellus operators over time, the changes in companies has to be dealt with in some way. In this case, I took a minimalist approach: while East Resources, Inc. and East Resources, Llc. were combined, I did not merge name changes that were more substantial than that. For example, even though CNX Gas and Consol Gas are both owned by Consol, I did not merge the two. Another example is St. Mary Land and Exploration changed its name to SM Energy, and those two entries were left unchanged. Because of all of the changes within the industry, I have included the most recent drill date, so that viewers can determine if the drillers are still active.

The Pennsylvania Department of Environmental Protection’s Bureau of Oil and Gas maintains violation data on their website (download the Excel file). The following is a summary of Marcellus Shale violations issued in the first eight months of this year, including the number of wells that were flagged for violations.

Marcellus Shale violations and offending wells in Pennsylvania: January – August, 2011

Left: Cabin Run orphaned oil well, Morgan County, Ohio. Many of the older oil and gas wells were either perfunctorily plugged, or else not at all. Right: The Pennsylvania DEP thinks this Bradford Township explosion in McKean County, PA might have been due to a nearby abandoned gas well that was drilled in 1881.

In April of 2000, the Pennsylvania Department of Environmental Protection (DEP) released a plan for dealing with the approximately 8,000 abandoned and orphaned oil and gas wells throughout the Commonwealth. This report singled out 550 wells that were especially problematic, and of those, 129 were flagged as the highest priority, with a point score of 30 or greater on their internal scale.

Eleven years later, there are over 8,500 abandoned and orphaned wells, and 186 with a point score of 30 or greater. Most likely, this increase doesn’t suggest newly abandoned wells so much as the discovery of additional old ones. After all, according to Independant Petroleum Association of America estimates, over 325,000 oil and gas wells were drilled statewide between 1859 and 2000. The DEP has no information on more than half of those wells–about 184,000.  Therefore, the actual number of abandoned and orphaned wells in Pennsylvania could be much higher than the estimates provided above.

Abandoned wells are those that have been out of production for a year or more, and orphaned wells are wells that were abandoned prior to 1985, and from which the current landholder or operator didn’t receive any economic benefits.  When wells are designated as orphaned, the DEP is responsible for plugging them.  As of February, there are 6,251 wells classified as orphaned and 2,272 abandoned wells.

Reasons for Concern

Obviously, the prospects of houses suddenly exploding, as in the picture above, is reason enough to be concerned, and yet there are a variety of ways in which abandoned oil and gas wells can impact Pennsylvania’s environment and the health and well being of our residents. Most unplugged wells release some amount of oil, gas, condensate, or brine, which can kill vegetation, damage fragile riparian ecosystems, and contaminate aquifers. There is also the possibility of injury due to the sudden release of pressure. Some abandoned wells are 30 inch diameter open holes that are obviously a danger for children to fall into.

May 30, 2011 sinkhole in Allentown, PA
There is also the possibility that the presence of wells, whether active or or not, will aggravate unstable geologic formations, which are fairly common in Pennsylvania, due to mining activities in the west and soluble limestone formations in the east. This recent Allentown sinkhole was reportedly caused by a water leak, and caused significant property damage.

To give an example of the potential impact of abandoned oil and gas wells, here are some of the comments from the Abandoned and Orphaned Wells Program, with corresponding point scores:

Comments on abandoned wells and their corresponding point scores.

It is not always clear why a well was given a particular priority rating.  Indeed, there are many instances where ratings are zero, but the comments give reason for concern, such as “Oil in water supply” and “Well intact, near implement dealer facility, is a fire hazard.” Additionally, less than 15 percent of the abandoned wells listed give any comment at all.

Incidents in McKean County

Recent explosion incidents in McKean County, PA. Please click on the gray compass rose and double chevron to hide those menus.

The Bradford Township fire mentioned above (the more southern of the two), is about half a mile from the nearest abandoned well on the list.  However, the suspected well, Rogers 9, was apparently only 300 feet away. Presumably, this well was not known about until the incident occurred.  Rogers 9 was drilled in 1881.

The other incident, in Foster Township, is at the northern edge of a tight cluster of recent drilling activity.  It is entirely possible that there are abandoned wells in that region too, but again, nothing is on our list in the immediate vicinity.

This information leads one to suspect that one of the fires was probably due to recent activity, while the other was caused by a long-forgotten well. Whether or not that was the case, it is clear that drilling holes in the earth near where people live can have an adverse effect for a very long time.

Well Plugging

While well plugging technology has obviously improved over the years, that doesn’t necessarily mean that it is always done right. A single $25,000 bond currently is the only insurance that an operator will plug all of their wells statewide, once they are no longer in production. In most cases, that is probably adequate, since there are non-monetary incentives for the operator to stay in good graces with the DEP. However, there are numerous smaller operators with wells still in production, including some residents who have their own private wells.

In these cases, the carrot of getting the bond money returned may not match the cost of plugging the well properly, especially if multiple wells are involved. In this 1998 document, the DEP put the average cost of plugging a well between $6,000 and $22,000. Last year, the DEP plugged 11 wells in Erie County for a cost of $137,348, or a cost of about $12,500 each.

According to the Bradford Era, over 2,700 wells have already been plugged statewide under the program. In McKean County, more than 950 wells have been plugged since 1989, at a cost of over $6.5 million.

As mentioned above, the DEP assumes responsibility for plugging the orphaned wells. The money for this comes from $150 fees added to oil permit applications, and $250 fees for gas permits. Money is clearly a limiting factor in how many wells the DEP can to plug. Those 11 Erie County wells required funds from 550 new gas permits. If those wells represent the average current price for plugging a well, then the 6,251 orphaned wells still on the list would cost over $78 million to plug, requiring the permit fees from 312,550 new wells. And that is still not including the approximately 184,000 abandoned wells that the DEP doesn’t even know about.

Maybe it is time for a new strategy.

Earlier this month, I examined 2010 oil and gas violation data for Pennsylvania on a summary level. Now I’m going to focus just on Marcellus Shale wells, and from the perspective of trying to determine the extent that drilling operators and location have on the likelihood of increased violations for any given well.

There are a number of ways in which this could be done. Although I am interested to see if the number of wells drilled in an area or by a drilling operator has a noticeable effect on violations, I have limited both investigations to 10 or more Marcellus Shale wells, both to avoid the erratic results of small sample sizes, and because the large number of results tends to make for crowded data displays.

Violations are only for 2010, both because it is current, and with 1,544 records, it is sufficiently large to make some generalizations about. As for wells, I decided to go for all drilled Marcellus Shale wells rather than just the 2010 wells, because wells that were spudded between 2006 and 2009 might well be included on the violations list. Also, the overall number of wells is a handy way to gauge the relative weight of a given operator or county on the industry as a whole.

2010 Marcellus Shale (MS) violations per total MS well, for counties with 10 or more MS wells.

2010 MS violations per total MS well, for operators with 10 or more MS wells.

There are, of course, a number of issues once we start looking at the data in detail. One of the biggest challenges is that many of these wells change hands, or else the companies that drill them change hands or are no longer active in the Marcellus Shale drilling industry in Pennsylvania. For example, in a previous analysis, I noted that Turm Oil had a large number of violations per well, and now they had none at all. I checked to see when their most recent well was drilled, and found my answer:

List of operators with 10 or more MS wells, with 2010 violations, frequencies per well, and the date of the most recent well drilled

Turm Oil hasn’t drilled a Marcellus well in almost two years. Looking at the chart above, Turm and Dominion don’t really belong in this analysis, and Eastern American and Fortuna may not for 2011. These four operators account for everyone with 10 or more total Marcellus Shale wells and no violations in 2010 except for Consol—kudos to Consol!

Does the number of wells impact violations?

Clearly, there is a tremendous range of violations per well, both in regards to who the operator is, as well as where the well is located. My hypothesis going into this analysis was that the more wells an operator drilled or the more wells drilled in a county, the fewer violations per well there would be.

I had several reasons for suspecting this to be the case. First of all, think of what must be done for a drilling operation without violations being issued. The site must be carefully placed, in accordance with all applicable regulations. The site must be prepared, taking into account all ground disturbing regulations. Then you have to drill through thousands of feet of rock, making sure that there is a structurally sound casing and cementing job to prevent gas migrations. Then there is the horizontal drilling, and the hydraulic fracturing. All along the way, not a drop of fracing fluid, diesel fuel, brine, or really anything else can touch the ground or enter Pennsylvania’s waters in any way. And when the drilling is done, the site must be restored in a timely fashion. And those are just a few of the regulations that the drilling operators agree to when they undertake drilling operations in Pennsylvania.

Let’s face it—that’s a lot to achieve. In order to consistently come in and out of a site with a clean record has got to take some practice. I’ve heard from industry sources that Marcellus Shale wells cost about $5 million to drill, so to do it right without cutting corners clearly takes significant resources as well.

In addition to all of that, a county level map of Marcellus Shale violations per well shows that the counties which produce the most Marcellus Shale gas wells are not the ones with the highest number of violations per well.

Map showing Marcellus Shale violations per county. Counties outlined in red have 100 or more Marcellus Shale wells. Click the gray compass rose and double carat (^) to hide those menus.

So is there then any correlation between the number of wells drilled and the violations issued? Let’s take a look (1).

The equations for the trendlines were calculated by Excel, and I selected the ones with the highest R-squared values. I was surprised that the best fit for operators was a convex polynomial. In the graph above, there is indeed a cluster of operators with between 300 and 400 wells, and with about 0.5 violations per well or less, but on the other end of the spectrum, the violations per well are spread far apart. There are so many operators big and small with around 0.5 violations per well or less that it seems some other factors must be at play for all of the operators that exceed that value by a significant margin. Perhaps not everyone will achieve zero violations like Consol did in 2010, but it doesn’t seem reasonable that Williams Production Appalachia should have more than twice the amount of violations as Range Resources Appalachia, despite having only 8 percent of the number of wells as the gas extraction giant.

The correlation was a bit stronger for the counties than for the operators. I’m not entirely sure what factors are at play here, other than perhaps having a crew that is well familiar with the geology of the region and all the specific challenges associated with that. Again though, that doesn’t seem to explain why Wyoming County would have 3.44 violations for every Marcellus Shale well, while those in Washington county can only expect a violation for less than one well out of eight drilled.

[photo removed]

Again, I’m sure that the way this analysis was set up had an effect on some of these numbers, and Wyoming is certainly a smaller sample size than Washington. I also don’t want to infer that there aren’t problems when large operators drill in well established portions of the Marcellus Shale. What’s more, while over 1,500 Marcellus Shale violations in a year is a huge number, it likely doesn’t account for all of the actual incidents, just the ones that the DEP can demonstrate, apparently beyond a shadow of a doubt (2). And even in the best scenario, there are significant impacts upon the land and neighboring residents near the well site.

I am suggesting, however, that there are companies that need to do better in their efforts to comply with laws designed to protect Pennsylvanians from pollution and other deleterious effects of oil and gas drilling. Excuses that environmental regulations are too strict don’t hold water, as their competitors are closer to compliance, sometimes dramatically so.

1. In order for Excel to be able to calculate all of the various regression lines, counties and operators with zero violations per well had to be excluded from this analysis.
2. I have personally talked to numerous residents who feel that their well water was spoiled by gas operations on neighboring lands. A common theme in their complaints is that the DEP places the burden of proof on residents that their wells were not spoiled before drilling operations began–an almost impossible situation for the residents to predict and be proactive about.