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Bad News For Gas Drillers: DEP Orders EOG Resources To Halt All Nat Gas Drilling In Pennsylvania

Tyler Durden's picture




 

The pain for the onshore drillers is just starting. Following last week's explosion of an EOG Resources nat gas well in Clearfield County, Pennsylvania, the Department of Environmental Protection today ordered the firm to suspend gas well drilling activities in the state indefinitely, "until DEP has completed a comprehensive investigation into the leak and the company has implemented any needed changes." Somehow we have a feeling after today's follow up, and much more visible explosion in Texas, the reaction by the government will be exponentially worse for the nat gas drilling industry.

From the PA Dept of Environment Protection:

DEP Orders EOG Resources to Halt All Natural Gas Drilling Activities in PA

HARRISBURG -- The Department of Environmental Protection today ordered EOG Resources Inc. to suspend its natural gas well drilling activities in Pennsylvania after a June 3 blowout at one of the company’s Clearfield County wells sent natural gas and at least 35,000 gallons of drilling wastewater into the sky and over the ground for 16 hours.

DEP Secretary John Hanger said that while the order bans all drilling and hydrofracturing, or fracking, operations for specified periods of time, the suspension will remain in effect until DEP has completed a comprehensive investigation into the leak and the company has implemented any needed changes.

“DEP staff, along with an independent expert, will conduct a detailed investigation of not just the incident that occurred last week in Clearfield County, but of EOG Resources’ drilling operations, as a whole, here in Pennsylvania,” said Hanger. “The Clearfield County incident presented a serious threat to life and property. We are working with the company to review its Pennsylvania drilling operations fully from beginning to end to ensure an incident of this nature does not happen again.”

The order prohibits EOG Resources from drilling activities up to seven days; from engaging in fracking operations up to 14 days; and from completing or initiating post-fracking operations for 30 days in any wells throughout the state. These actions and operations cannot resume until the department agrees that the investigation has been fully completed.

The results of the investigation will also help determine whether DEP should take additional enforcement action against the company, such as fines or penalties.

Hanger added that EOG Resources has been fully cooperative and in agreement with the department’s ongoing investigation and order.

The leak began at approximately 8 p.m. on Thursday, June 3, when the well’s operators lost control of it while preparing to extract gas after fracking the shale. As a result, natural gas and flowback frack fluid was released uncontrollably onto the ground and 75 feet into the air. The well was capped at around noon on June 4.
The EOG well pad is located in a rural area near the Penfield/Route 153 exit of Interstate 80 in northwestern Clearfield County, near Moshannon State Forest.

The department’s Emergency Response and Oil and Gas programs responded to the incident, along with the Pennsylvania State Police, the Pennsylvania Emergency Management Agency, and local fire and police departments.

PEMA elevated its activation level to coordinate resources among multiple state agencies and worked with PennDOT and the Federal Aviation Administration to institute a temporary airspace restriction above the well. The restriction was lifted at approximately 1:45 p.m. on June 4.

“Fortunately, the well did not ignite and explode, and there were no injuries to the well crew or emergency responders,” said Hanger. “Our preliminary assessment is that the environmental damage was modest as the frack fluid was contained and did not appear to reach any streams, but DEP is continuing its monitoring efforts because sometimes the impacts of a spill like this are delayed. We have noted that a spring in the area has shown a spike in conductivity and that discharge is being collected by EOG for proper disposal.”

The secretary noted that the company expects to have a more accurate estimate of the amount of fracking water that was leaked after it finishes draining the pits and waterboxes it deployed to collect the fluids. As of June 7, initial estimates totaled 35,000 gallons, although more was certainly released and the company believes this accounts for a majority of the leaked water.

DEP’s preliminary investigation has determined that a blowout preventer on the well failed, but the agency does not yet know if that failure was the main cause of the incident. The blowout preventer has been secured and will be one piece of the investigation.

EOG Resources, formerly known as Enron Oil & Gas Co., operates approximately 265 active wells in Pennsylvania, 117 of which are in the Marcellus Shale formation.

For more information, visit www.depweb.state.pa.us.
 

 

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Mon, 06/07/2010 - 17:50 | 400544 Cleanclog
Cleanclog's picture

A contributory reason for Nat. Gas to have traded at $4.75 this morning and is now about $4.95.  Big move in one day.

Mon, 06/07/2010 - 17:55 | 400557 I need more asshats
I need more asshats's picture

Ben's final stand: Inflation driven by energy prices?

Mon, 06/07/2010 - 17:56 | 400561 Broken_Trades
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NG to the moon....

All the unemployed rig workers that have no jobs in the gulf, are going to go where now?

This sucks for a lot of people.

Politics and energy doesnt mix.

Mon, 06/07/2010 - 18:20 | 400585 Ying-Yang
Ying-Yang's picture

Tyler is it just me or could the oil spill and natural gas problems be a great excuse for the regime to further their agenda of carbon taxes?

Evil gas... evil oil....... Prices go up and alternatives become competitive.

Ah shucks... that can't be so

Mon, 06/07/2010 - 19:36 | 400677 DeeDeeTwo
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Of course, engineering a crisis to expand power is Marxism 101, baby.

Unfortunately for Obama, Jimmy Carter happened. It wasn't Carter's all-round incompetance that sunk Jimmy's Presidency... it was (a) Day XXX America Held Hostage and (b) spiking oil prices and gas lines.

The Obamatrons seem to only study past Progressive Icons, so they do not understand that now we will have a near exact parallel to Carter's... (a) Day XXX Gulf Disaster and (b) the long, hot summer of 2010 will bring all manner of SELF-INFLICTED energy crises (let's not forget the Strait of Hormuz).

It's all over for the hapless Obama, baby, a Republican Congress will simply cut off funding for all government expansion in early 2011.

 

 

 

Mon, 06/07/2010 - 23:34 | 400928 ColonelCooper
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Must you keep it up with the "baby"?  Jeezus, wipe the coke off your 70's porn stache and go sell a used car.

Mon, 06/07/2010 - 19:47 | 400688 Cognitive Dissonance
Cognitive Dissonance's picture

"Evil gas... evil oil....... Prices go up and alternatives become competitive."

If you are correct and this works out, then Leo might still be correct about his solar stocks. Just say'n. Often it doesn't matter why you're "right" just that you are or are not.

Mon, 06/07/2010 - 21:32 | 400758 Kali
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He is investing in the wrong kind of solar.  The typical "solar panels" most people are familiar with, are expensive and resource gluttons.  Look to the Germans for this, Europe has been using solar roof tiles for years, made out of silica.  Dow Chemical in the US is gearing up to start making them here.  We are waaay behing the curve on that.  The trend is to go to small, non centralized power generation, maybe using a combo of solar tiles, small wind turbines on your house to make each house, building, energy se;f sufficient.  Of course, the big energy providers hate that idea, No more PGE's, BP's, etc. There will always(?) be a need for large scale, centralized energy producers for energy hog industries, but we can reduce the number of them. There are other technologies developing that will, eventually, eclipse the ones we are using now, but I am not at liberty to discuss them.  You may also want to look at micro generation breakthroughs, the US Military is the biggest funder for those projects.

Mon, 06/07/2010 - 23:33 | 400933 ColonelCooper
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+100,000.  You are so right on the money with this.  Alternative energy works well on a small scale.  If a million people put up a small windmill, it is much more effective than 1 wind farm trying to power a million homes.

But as you say, the big energy providers don't much care for that idea.  Gotta follow the money.  Not much money there if I put in my own grid tie and generate surplus power is there?

Mon, 06/07/2010 - 17:57 | 400564 Spitzer
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Canada will gladly fill the gap

Mon, 06/07/2010 - 18:40 | 400616 BobPaulson
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Still, at 4.95 nobody is getting rich. People here are getting tense in some of the rural communities about the number of holes you poke with coal bed methane. Sucks when your tab water is combustible.

Mon, 06/07/2010 - 18:15 | 400580 economicmorphine
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Take a deep breath Tyler.  This is a state issue and they shut down one driller for 7 days.  Sounds reasonable under the circumstances.  Hell, they may not even be drilling another well.  PA isn't exactly the OCS.  

 

Speaking of which, the OCS is Obama's  Helen Thomas moment and he hasn't figured it out u yet.  When oil prices spike as a result (can't wait for the first storm) it will be his political future laying butchered on the altar, but some guys have to learn the hard way.  So be it.

Mon, 06/07/2010 - 22:24 | 400845 CPL
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amen

Mon, 06/07/2010 - 18:21 | 400587 economicmorphine
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Non story.  4 rigs, company had already voluntarily suspended drilling.  State's just strutting for the cameras.

 

http://investor.shareholder.com/eogresources/releaseDetail.cfm?ReleaseID...

 

 

Mon, 06/07/2010 - 18:37 | 400612 thesapein
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which is exactly why today's fire bomb was needed. 

Mon, 06/07/2010 - 18:26 | 400592 nonclaim
nonclaim's picture

Out of two extraordinary events, off-shore oil drilling and nat-gas drilling get suspended pending bureaucratic investigations while the middle and far east gets more unstable by the day. Unwise, even if well intentioned and for a few days (nat-gas).

Of course now you can scoop oil from the top of GoM but that's not very efficient either. Well, unless it is a plan to set the Gulf on fire and avoid a Chavez/Castros invasion by sea.

Mon, 06/07/2010 - 18:44 | 400623 thesapein
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I'd just change "unwise" to assisted suicide. It could be seen as smart, depending on your perspective. 

Mon, 06/07/2010 - 18:25 | 400593 economicmorphine
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It appears that the explosion in Cleburne Texas was on an INTRASTATE system.  If so, the Feds have no jurisdiction:

http://www.epplp.com/operations/

 

Mon, 06/07/2010 - 20:20 | 400711 Rusty_Shackleford
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That's only if you're assuming the Constitution is still in force.

The sad truth is that FedGod sees no limits on its power.

Mon, 06/07/2010 - 18:30 | 400600 Chartist
Chartist's picture

Controlling water used in fracturing is a major concern for shale operators.  Western PA has a lot of radioactive radium in the ground which often results in high radon gas found in Pennsylvania home basements.  This is a real threat to the industry.

Mon, 06/07/2010 - 18:34 | 400607 sangell
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They were drilling for telephone poles in Texas and hit a gas line.

Mon, 06/07/2010 - 18:47 | 400627 thesapein
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lol... heard the guy on the live feed oddly pointing out the telephone poles. Did give a since of scale to the massive fire. It looked bigger than the one in Russia that was put out with the nuke.

Mon, 06/07/2010 - 18:35 | 400608 Cistercian
Cistercian's picture

 It is an event worth noting.If nothing else, the very real dangers associated with resource extraction...and how that may drive costs up.Given the "problem" in the gulf, there is hyper sensitivity to any energy related accident.And politicians may capitalize on these moments to "help"...which means higher prices.

  As we take more risks to get reserves that are more difficult to bring on line, there will be more accidents.And energy prices will rise...a lot.A paradigm shift is in progress.

Mon, 06/07/2010 - 19:06 | 400650 thesapein
thesapein's picture

I've heard this line of reasoning a few times lately now by some who have my respect, yet I'm inclined to believe that if these were indeed accidents, it has nothing to do with what we are capable of doing and more to do with what we avoided doing. The risk were unnecessary and entirely avoidable, even at today's energy prices. It's sounds like a lot money was just being thrown around, even to the crews for risking their lives, instead of paying the costs of updating equipment and technology. Now, its going to cost even more.

My point being, we don't have to take ever greater risks for energy. We just have to continue evolving.

Mon, 06/07/2010 - 19:17 | 400662 thesapein
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But I totally agree with "energy prices will rise...a lot."

Energy prices need to rise... a lot, but when I say this I don't mean in terms of gold or for the globe. I'm speaking about the US market. Energy is undervalued here. Gold is even more undervalued, so those holding gold will still see lower energy traded for their gold. However, in terms of food, clothing, housing, we'll see higher rates for energy, and this be a good thing from the perspective that it will give real value to the industry, bringing innovation and finally the next peak energy.

 

Mon, 06/07/2010 - 18:45 | 400624 papaswamp
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Guess prices are too low so the govt decided to prop up another sector via squeezing the supply.

Mon, 06/07/2010 - 19:42 | 400684 jkruffin
jkruffin's picture

What we need is another Obama "HOPE" speach.  Then things will be fixed. Won't they?  LOL

Mon, 06/07/2010 - 20:22 | 400715 DosZap
DosZap's picture

I guess soon we just walk 25 miles to work,ever tried carrying five bags of groceries on a cycle(of any kind)?.LOL

Time to go Amish..................

Mon, 06/07/2010 - 20:28 | 400722 Waterfallsparkles
Waterfallsparkles's picture

Interesting, just as Natural Gas was getting legs. 

Someone BIG is heavly short on Natural Gas.  Price has been depressed for a few years now.

Wonder if a big player was long oil and short Natural Gas.  Would have been a very profitable trade.  But, interesting when the trade is starting to unwind a Gas well blows up.

Mon, 06/07/2010 - 23:31 | 400931 Oh regional Indian
Oh regional Indian's picture

From the awesome series of Quotes on The Oil Drum:

“This order [i.e. capitalism] is now bound to the technical and economic conditions of machine production which today determine the lives of all the individuals who are born into this mechanism, not only those directly concerned with the economic acquisition, with irresistible force. Perhaps it will so determine them until the last ton of fossilized coal is burnt.”
—Max Weber, 1905

Very fitting.

The big tragedy, which overhangs this entire energy crisis (manufactured in my opinion), is that there are and have been forks on the road along the path to where we sit today.
All those forks led to the greater good, a more graceful relationship with nature and unfortunately, a more evenly spread potential for "profit". It is the last that made us inevitably take the wrong fork.

Wrong fork+wrong fork+wrong fork.... now we are truly lost.

And the same is fractally true for forks along our path (collectively and I assume individually too).

So we are individually and collectively lost.

PA and Texas though, one smallish, invisible, contained, the second visible, flaming.... quite portent-ious.

My own take on re-examinng the forks and the way back=the way forward is available at www.squareandc.net

It does not have to end badly, but momentum argues that it probably(s)will!

Tue, 06/08/2010 - 05:12 | 401135 litoralkey
litoralkey's picture

The people in Penna voted Fast Eddy Rendell as governor.

The people get the government they deserve, and they get it good and hard.

Tue, 06/08/2010 - 09:40 | 401403 crzyhun
crzyhun's picture

Ok let me put this out into the internet universe...

I am not a deep conspiracy type with tin foil on the head. BUT, all these accidents are too convenient to overlook. The Deep Water event, Dallas, PA, ...all too close together.

So, just wait for the next one...another Three Mile Island. Mark my word, hope I am dead wrong. 

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