PA Marcellus News Digest 5/9/12

PA Marcellus News Digest

May 9, 2012

Releases

Bradford County Firm to Unveil Breakthrough Environmental System for Drilling Sites
Wallaby
May 8
HARRISBURG – D.A. Nolt, Inc., a general contracting company with a specialty in water management systems, will unveil its state-of-the-art Well Pad Containment and Water Management System on Thursday, May 10, 10:00 AM at the pilot project site located at 220 Ranch Lane, New Albany, PA.
The D.A. Nolt method features a non-permeable containment that stores water on-site thereby reducing transportation costs and environmental concerns.
Link: http://wallaby.telicon.com/PA/library/2012/2012050989.HTM

SUSQUEHANNA RIVER BASIN COMMISSION - Media Advisory for Planning Purposes 
Wallaby
May 9
[...]WHAT: The Susquehanna River Basin Commission (SRBC www.srbc.net) is holding a public hearing to receive comments on 32 project applications that are scheduled for action by SRBC at its next quarterly business meeting. A majority of the applications relate to water withdrawals for natural gas development in the Marcellus shale. Go to SRBC’s Public Participation web page for list of applications and rules of conduct for attending the public hearing: www.srbc.net/pubinfo/publicparticipation.htm. 
Link: http://wallaby.telicon.com/PA/library/2012/2012050988.HTM

Articles

Gibbons seeks shale gas money to replace dams at Hereford Manor
Ellwood City Ledger
Eric Poole
May 9
FRANKLIN TWP. — Two days after 2010’s general election, with the destruction of the Hereford Manor Lakes dams imminent, state Rep. Jaret Gibbons was asked where he expected to get the funds to replace the dams.
Gibbons, D-10, Franklin Township, replied that he hoped a natural gas severance tax stemming from the expected shale gas boom could fund the projects. That statement was ironic, coming a week after Pennsylvania elected Tom Corbett, a severance tax foe, as governor.
Link: http://www.ellwoodcityledger.com/news/local_news/gibbons-seeks-shale-gas-money-to-replace-dams-at-hereford/article_9cdee27f-81c7-5b54-978a-869a5713ae07.html

Gas boom follows pattern of history
Observer-Reporter
Editorial
May 9
Marcellus Shale gas wells in Pennsylvania generated an estimated $3.5 billion in gross revenues for drilling companies in 2011, according to an analysis by the Associated Press published Monday.
Fadel Gheit, an oil and gas analyst for Oppenheimer & Co., said the formation produced more than 1 trillion cubic feet of gas last year, and that is just "the tip of the iceberg" in terms of future production.
Link: http://www.observer-reporter.com/or/editorial11/05-09-2012-Gas-boom--Editorial

Natural gas at the pump could be in NEPA's future
Citizens Voice
David Falchek
May 5
WILKES-BARRE - Instead of going to the pump to gas up vehicles, people may soon be going to the "valve" to fill up on a different type of gas - compressed natural gas.
A morning-long panel discussion called "The Road To Efficient Fleets" drew 75 fleet managers, civic leaders and public officials to Genetti Hotel & Conference Center for the event sponsored by Wilkes-Barre-based Borton-Lawson Engineering.
Link: http://citizensvoice.com/news/drilling/natural-gas-at-the-pump-could-be-in-nepa-s-future-1.1310773#axzz1uNHSkxkJ

States Scramble to Regulate Fracking
Stateline, Pew Charitable Trusts
Jim Malewitz
May 9
Vermont lawmakers last week made an emphatic statement on the issue of fracking: Not in our state, at least not yet.
In the final vote of its legislative session, the state’s House of Representatives overwhelmingly approved a bill that would make Vermont the first state to ban hydraulic fracturing, the controversial method used to extract natural gas stored in shale deposits. The practice, commonly known as fracking, involves blasting millions of gallons of water mixed with sand and toxic chemicals deep into wells, freeing the gas.
Link: http://www.pewstates.org/projects/stateline/headlines/states-scramble-to-regulate-fracking-85899385716

Drill mud seeps out near creek
DEP investigating to find out what was released, whether any regulations violated.
Times Leader
Matt Hughes
DALLAS TWP. – Drilling mud broke through the ground near Leonard Creek during drilling for Chief Gathering LLC’s new Wyoming County pipeline last week, according to the company and the state Department of Environmental Protection.
Link: http://www.timesleader.com/stories/Drill-mud-seeps-out-near-creek,148469

Pennsylvania boom shows Ohio what might be ahead
Express
Katelyn Freil
May 8
WILLIAMSPORT - The director of the Williamsport/Lycoming Chamber of Commerce said he has never seen an economic boom like the one sweeping northcentral Pennsylvania.
Link: http://www.lockhaven.com/page/content.detail/id/538720/Pennsylvania-boom-shows-Ohio-what-might-be-ahead.html?nav=5003

Mud release at Kunkle pipeline site under investigation
Citizens Voice
Elizabeth Skrapits
May 9
DALLAS TWP. - The state Department of Environmental Protection is investigating a mud release where a natural gas pipeline is being installed under Leonards Creek in the township's Kunkle section.
Link: http://citizensvoice.com/news/mud-release-at-kunkle-pipeline-site-under-investigation-1.1312505#axzz1uNHSkxkJ

Nockamixon gas drilling permit delayed
Philly Burbs
Amanda Cregan
May 9
Just as the brakes have been put on a new gas drilling well, Nockamixon’s court fight has kicked into drive.
Pennsylvania’s Department of Environmental Protection has temporarily halted Turm Oil’s permit application because there are items that require further review.
Link: http://www.phillyburbs.com/my_town/palisades/nockamixon-gas-drilling-permit-delayed/article_31c14a46-c49e-5d81-a759-815ff00d9114.html

With 456 drilled wells, Tioga County looks to see $6M from gas drilling fee
Sun Gazette
Cheryl R. Clarke
May 9
WELLSBORO - There were 456 natural gas wells drilled in Tioga County through the end of 2011 - the number that will be used to calculate how much money the county will receive from the state impact fee, Tioga County commissioners said Tuesday.
Link: http://www.sungazette.com/page/content.detail/id/578081/With-456-drilled-wells--Tioga-County-looks-to-see--6M-from-gas-drilling-fee.html?nav=5011

In Fracking's Wake
New Rules are Needed to Protect Our Health and Environment from Contaminated Wastewater
NRDC
May 1
This paper analyzes the problem of wastewater generated from the hydraulic fracturing process of producing natural gas, particularly with regard to production in the Marcellus Shale.* It shows that, while hydraulic fracturing (often called "hydrofracking" or "fracking") generates massive amounts of polluted wastewater that threaten the health of our drinking water supplies, rivers, streams, and groundwater, federal and state regulations have not kept up with the dramatic growth in the practice and must be significantly strengthened to reduce the risks of fracking throughout the Marcellus region and elsewhere.**
Link: http://www.nrdc.org/energy/fracking-wastewater.asp

Dominion plans shale expansion
Post-Gazette
Erich Schwartzel
May 9
Dominion Resources held its annual shareholder's meeting in Pittsburgh on Tuesday, a fitting location for a Richmond, Va.-based energy firm that sees huge growth potential in the natural gas transmission and transportation market springing up above Pennsylvania's Marcellus Shale formation.
Link: http://www.post-gazette.com/stories/business/news/dominion-plans-shale-expansion-635029/

Driller: Tests link Franklin Twp. methane to natural sources not shale
Times-Tribune
Laura Legere
May 9
Link: http://thetimes-tribune.com/news/gas-drilling/driller-tests-link-franklin-twp-methane-to-natural-sources-not-shale-1.1312592#axzz1uN7eDtsF

People's interest: Open the court record on the Marcellus Shale case
Post-Gazette
May 9
When Stephanie and Chris Hallowich bought their Washington County farm in 2005, they inherited a lease with a natural gas drilling company. One byproduct was the couple became vocal critics of the Marcellus Shale industry, giving interviews, posing for photographs and alleging environmental damage from multiple natural-gas operations nearby, including contamination of their well water.
Link: http://www.post-gazette.com/stories/opinion/editorials/peoples-interest-open-the-court-record-on-the-marcellus-shale-case-634985/

Drilling plan a concern
Altoona Mirror
Wayne Nelms
Letter to the Editor
May 8
There is a threat looming in Logan Township. Chevron Appalachia LLC has moved into a location just above the watershed serving Altoona with plans to set up a Marcellus Shale drilling rig. This site is located near the village of Coupon.
Link: http://www.altoonamirror.com/page/content.detail/id/560611/Drilling-plan-a-concern.html?nav=737

DEP to monitor plaza following evacuations
Observer-Reporter
Christie Campbell
May 8
BURGETTSTOWN - The state Department of Environmental Protection plans to place air monitors outside the Community Medical & Dental Plaza Wednesday in hopes of determining the source of an odor that has resulted in the building being evacuated three times.
On Friday, following the latest evacuation stemming from a strong smell of nail polish that permeated the upper floor of the building, chief executive officer for Cornerstone Care, Robert MtJoy, said the medical portion of the center will be moved to 1000 Waterdam Plaza in McMurray this week.
Link: http://www.observer-reporter.com/or/story11/05-08-12-dep-to-monitor-air

40 Acres and a Rule: Draft Federal Fracking Regs Cover Only A Sliver of Land
Pro Publica
Lena Groeger
May 8
Last week’s media coverage of the Obama administration’s newly-proposed fracking rules focused so heavily on how drilling companies would have to disclose the chemicals they use that it largely overlooked the toughest provisions: Drillers would be required to test the physical integrity of their wells, and more water would be protected from drilling. Since many wells fail because the cement and casings crack, the new tests could prevent dangerous leakages.
Link: http://www.propublica.org/article/40-acres-and-a-rule-draft-federal-fracking-regs-cover-only-a-sliver-of-land

Drilling Health Concerns and Research Covered at IOM Event
Frack Tracker
Sam Malone
May 7
Last week I attended the Institute of Medicine’s Workshop on The Health Impact Assessment of New Energy Sources: Shale Gas Extraction in Washington, DC. This was part of a larger research initiative to understand the potential health impacts of shale gas extraction as a whole. The meeting involved very balanced discussions among presenters and attendees, not on whether gas drilling should occur, but how it will impact health and how the effects can best be studied. For those of you who could not attend in person, here are some key points that were raised:
Link: http://www.fractracker.org/2012/05/iomfracmtg/

Heard Off the Street: Marcellus Shale boom hits banks
Post-Gazette
Len Boselovic
March 29
For many of Pennsylvania's bankers, the Marcellus Shale natural gas bonanza brings the potential for new deposits, lending opportunities to the prospectors and their suppliers, and helping landowners invest their royalty checks. Moreover, banks seeking opportunities in higher growth markets could take a fancy to competitors in Marcellus Shale country.
Link: http://www.post-gazette.com/stories/business/heard-off-the-street/heard-off-the-street-marcellus-shale-boom-hits-banks-211177/

Corbett: Pennsylvania “Is A Leader In Energy”
State Impact
Scott Detrow
May 7
Link: http://stateimpact.npr.org/pennsylvania/2012/05/07/corbett-pennsylvania-is-a-leader-in-energy/

Wear and tear on pavement, motorists’ nerves
Sun Gazette
David Thompson
May 6
The most visible evidence of the natural gas industry in northcentral Pennsylvania has been trucks.
Lots of trucks. Trucks of all weights, shapes and sizes.
It is impossible to go anywhere in the region where those trucks are not visible.
Link: http://www.sungazette.com/page/content.detail/id/577952/Wear-and-tear-on-pavement--motorists--nerves.html?nav=5011

Financing in the Marcellus: Regional financing programs
Observer Reporter
Pat McCune President of Community Bank
May 7
This is the second of four articles about how to finance your small business and take advantage of the incredible opportunities available because of the Marcellus Shale boom. My first article addressed Pennsylvania State financing programs.
The Marcellus energy play is not limited to Washington and Greene Counties. In fact, the Marcellus is the second largest gas field in the world and extends over four states. If one were to include the other gas-containing layers now thought to be below our feet, the affected area gets even bigger. Suffice it to say that there will be plenty of business for local entrepreneurs if you have the passion to pursue it.
Link: http://www.observer-reporter.com/or/business11/05-07-2012-CONFERENCE-CALL-COLUMN---MON-BIZ

The man heads which agency?
Pocono Record
Editorial
May 7
The Department of Environmental Protection's mission is to protect Pennsylvania's air, land and water from pollution and to provide for the health and safety of its citizens through a cleaner environment. We will work as partners with individuals, organizations, governments and businesses to prevent pollution and restore our natural resources. — Pennsylvania DEP
Link: http://www.poconorecord.com/apps/pbcs.dll/article?AID=/20120507/NEWS04/205070305

Lawmakers to Vote on Stripping Feds of Water Withdrawal Authority in Allegheny National Forest
State Impact
Susan Phillips
May 7
Link: http://stateimpact.npr.org/pennsylvania/2012/05/07/lawmakers-to-vote-on-stripping-feds-of-water-withdrawal-authority-in-allegheny-national-forest/

Sierra Club Seeks To Move 'Beyond Natural Gas,' Drawing New Criticisms
Inside EPA
Dawn Reeves
May 7
(full text below)
The Sierra Club is launching a new “Beyond Natural Gas” campaign to
help intensify opposition to increased use of the fuel, a position
that is at odds with the Obama administration and one that is drawing
warnings from industry critics who say it shows the group is out of
touch with mainstream environmentalism and is delving into extreme
territory that could marginalize one of the nation's oldest
environmental organizations.

Sierra Club May 3 announced the launch of its campaign -- set to
replicate its successful, decade-old “Beyond Coal” effort -- noting it
would continue “ongoing efforts to move away from natural gas and
toward a clean energy future” with the added goal of moving off fossil
fuels entirely by 2050.

If the new campaign achieves some of the same successes as the group's
coal campaign, it could block construction of new natural gas plants
-- which are slated to begin coming on line due to a variety of
factors, including cheap natural gas and strict new EPA air quality
requirements.

Executive Director Michael Brune said in a statement that “switching
from one dirty fossil fuel to another only creates a new set of
problems. We need to wean ourselves from all fossil fuels, including
natural gas, by 2050, and we need to start that transition from
natural gas to clean energy yesterday.”

The group said the effort aims to address the “numerous loopholes in
air and water safeguards” for natural gas that can harm public health.
“The natural gas industry continues to focus more on their profits and
less on the people. We must push back and do everything we can to rein
in an industry run amok.”

The campaign marks a major change for the group, which has been
embroiled in controversy since reports surfaced earlier this year that
the group returned and declined millions of dollars in donations from
natural gas interests, with most coming from the outgoing CEO of
Chesapeake Energy Aubrey McClendon.

As part of the campaign, Sierra Club May 4 urged EPA to ban the use of
diesel in hydraulic fracking fluids in response to EPA draft guidance
released the same day. “EPA's guidance is not enough to protect
families from benzene and other highly toxic chemicals contaminating
underground drinking water sources,” Sierra Club said.

And the group is pressing the administration to ensure that an
eventual free-trade agreement with Pacific nations, known as the
Trans-Pacific Partnership (TPP) agreement, does not ensure equal
"national treatment" for trade in liquefied natural gas (LNG), which
the group warns could expand LNG exports to TPP partners without
sufficient safeguards to protect the U.S. public interest.

But critics warns that Sierra Club's nascent campaign could alienate
supporters given both President Obama's and Democrats' support for the
booming development of hydraulic fracturing and horizontal drilling
technologies as well as the sheer volume of the obtainable oil and gas
resources they can reach.

In recent months, Obama and high-ranking administration officials have
offered strong support for natural gas development through hydraulic
fracturing, with the stipulation that the exploration and development
of those resources be done in a safe and environmentally responsible
way. Obama in a major energy speech in Las Vegas in January announcing
his “all-of-the-above” energy strategy said, “We are the Saudi Arabia
of natural gas.” He also noted in the speech that natural gas
development could add 600,000 jobs to the economy.

Additionally, one day after the Sierra Club launched the campaign, EPA
Administrator Lisa Jackson publicly embraced natural gas. In a May 14
interview with the Oregonian, Jackson called natural gas “an
extraordinary resource in this country” that will be used for power
generation and transportation. “That [is] huge because it can be 40
percent less carbon intense. I'm an environmentalist. I want to see it
developed and I want to see it developed well.”

'Core Constituency'

“What do they want to use instead? Candles?” one industry strategist
asks. “Pretending natural gas is not good is not sustainable.” The
source says the growing use of hydraulic fracturing and horizontal
drilling technologies has “changed the equation” because of the vast
new supplies of not only natural gas but oil that are now accessible.
“The reality of it is that Sierra Club . . . [runs] the real serious
risk of alienating everybody,” the source says.

The strategist also argues that Sierra Club is at risk of alienating
its core constituency, which “is not the sandal wearing hippies” but
rather “upper middle class white suburbanites” who “are getting all
kinds of signals that they should love this natural gas revolution,
from President Obama to their [low] natural gas bills every month.”

“In a world in which Democrats have embraced the natural gas
revolution, and what's going to come very shortly on the oil side . .
. it is going to be very difficult for [Sierra Club] to convince
[people] this is not a good thing. . . . When even President Obama has
acknowledged [a booming natural gas future], they're done,” the source
says.

The industry strategist also says that hydraulic fracturing technology
abruptly ends the conservation mantra that environmentalists have
embraced for 50 years. The ability of the technology to access vast
supplies of previously inaccessible energy “blew up the scarcity
narrative, and the environmental movement is not sure what to do
next.”

The fact that the Sierra Club “has decided to pretend that the
scarcity narrative is still operative is really damaging to them. It
is instructive that a lot of other environmental groups . . . are not
jumping on it. I think other groups, they know that the narrative has
been destroyed, and they are not going to say or do anything until
they figure out what to replace it with.”

One environmentalist not affiliated with Sierra Club, however, calls
the group's campaign “a sensible move” given that natural gas can harm
the environment and in light of evidence that it may not be better for
the climate than burning coal.

Sierra Club also defends its campaign in response to the criticism.
Deb Nardone, director of the campaign said in a May 4 statement that
electricity does not have to come from fossil fuels and that investing
in renewables and efficiency “can save money, reduce pollution and
wean us from both coal and natural gas. We need to make the investment
and transition now, not decades from now after we have exhausted all
the fossil fuels and polluted the planet in the process.”

Nardone adds that switching from coal to gas delays essential
investments in clean energy and “locks us into more fossil fuel
infrastructure. Moving toward renewable energy will create American
jobs, make our country more energy independent, save consumers money
while reducing air and water pollution, and protect the health of
those communities living near frack sites.”

Beyond Natural Gas follows the launch of Beyond Coal” in 2002, which
claims credit for stopping 150 new coal-fired plants that had been
slated for development -- though it is not clear whether plummeting
natural gas prices have contributed to some of those decisions.

Beyond Coal also recently touted the 100th coal plant retirement
announced in February of this year, saying Sierra Club “reached a
major milestone in its goal to retire one-third of the nation's aging
coal plants by 2020 and replace them with clean energy,” according to
the Beyond Coal website.

Sierra Club's decision to launch Beyond Gas also comes just months
after Brune returned money the group had taken from Chesapeake's
McClendon and other natural gas interests. “The first rule of advocacy
is that you shouldn't take money from industries and companies you're
trying to change,” Brune told Time magazine recently.

Brune also told National Journal in May that it “would be the height
of irony if we decrease our reliance on coal and rather than jumping
to clean energy, we replace one dirty fuel with another.”

Nardone added in her statement that the group has not taken natural
gas industry money since 2010 and “has ramped up an aggressive natural
gas campaign that opposes dirty, dangerous fracking, as well as all
liquefied natural gas exports. The campaign has been ongoing, but the
new name better aligns with our goal to get off all fossil fuels by
2050 and move to a clean energy economy.” She adds that the group's
board of directors updated its gift policy in 2010 to ensure Sierra
Club does not take money from any fossil fuel-related industry. --
Dawn Reeves (dreeves@iwpnews.com)
###

Fracking's Alleged Links to Water Contamination and Earthquakes
(Am Bar Assn Sec of Litigation Energy Litigation Newsletter, Lead Story 5/9 by leading gas law defense firm)
Barclay Nicholson, Kadian Blanson, and Andrea Fair
May 9
(full text below)

Although hydraulic fracturing has been used in the United States for decades, the process and its alleged impact on water quality have received increased attention and scrutiny within the past two years from the media, Congress, the Environmental Protection Agency (EPA), and other regulatory agencies. Specifically, the scrutiny focuses on concerns about reduction of citizens’ water supplies due to the large volume of water used in the fracking process, alleged contamination of supply aquifers due to fracturing activities, and disposal or recycling of the wastewater or flowback water. Most recently, the attention has surrounded the potential causal link between hydraulic fracturing and earthquakes.

While lawmakers debate potential policies and regulations, and environmental agencies prepare studies and conduct testing, the number of lawsuits that have been filed involving hydraulic fracturing continues to rise. Since September 2009, approximately 40 lawsuits have been filed by landowners in various states against drilling companies. Nearly all of the plaintiffs in these suits are either landowners who leased oil and gas rights to the defendants or landowners who reside in close proximity to wells stimulated by hydraulic fracturing operations.

To date, the authors have not located any legal judgment against a well operator, drilling contractor, or service company for contamination of groundwater or earthquakes resulting from hydraulic fracturing. In fact, as further discussed below, the plaintiffs in one Texas case have filed a voluntary motion to dismiss because recent testing shows the contamination is no longer at a toxic level.

Water Contamination

Early Cases
Some of the first cases involving hydraulic fracturing were filed in Pennsylvania. More than 35 Pennsylvania plaintiffs filed at least four similar cases between September 2009 and December 2010 against several oil and gas companies, including Atlas America, LLC, Cabot Oil & Gas Corp., Southwestern Energy Production Co., and Chesapeake Appalachia, LLC. See Zimmermann v. Atlas America, LLC, No. 2009-7564 (Pa. Ct. Com. Pl., Sept. 21, 2009); Fiorentino v. Cabot Oil & Gas Corp., et al., No. 3:09-cv-2284 (M.D. Pa., Nov. 19, 2009) (including 19 families as plaintiffs); Berish v. Southwestern Energy Prod. Co., et al., No. 3:10-cv-1981 (M.D. Pa., Sept. 29, 2010) (including 13 families as plaintiffs); Armstrong v. Chesapeake Appalachia, LLC, et al., No. 3:10-cv-2453 (M.D. Pa., Dec. 6, 2010) (including three landowners as plaintiffs) (remanded to the Court of Common Pleas of Bradford County, Pennsylvania Civil Division on July 29, 2011, Cause No. 10-cv-000680). These lawsuits generally allege a causal connection between nearby hydraulic fracturing activity and water contamination. The various lawsuits assert that the use of toxic chemicals during the fracturing process has contaminated and polluted freshwater aquifers; that defective casing allowed contaminants such as diesel fuel, barium, manganese, methane, ethane, and strontium to migrate to the plaintiffs’ water wells; and that the release of combustible gas into the headspaces of the water wells has resulted in elevated levels of dissolved methane in the water. Similar cases are also ongoing in Texas, Arkansas, Colorado, Louisiana, New York, and West Virginia. See, e.g., Strudley v. Antero Resources Corp., et al., No. 11-cv-2218 (Denver County Dist. Ct., Mar. 23, 2011); Baker v. Anschutz Exploration Corp., et al., No. 2011-1168 (N.Y. Sup. Ct., Feb. 11, 2011); Hagy v. Equitable Prod. Co., et al., No. 2:10-cv-1372 (S.D.W. Va., Dec. 10, 2010).

In addition to these lawsuits, class actions are currently pending in Arkansas against Frontier Gas Services and Southwestern Energy Co., filed on behalf of all Arkansas residents who live or own property within one mile of any natural-gas compressor or transmission station and all Arkansas residents who live on or own property within three miles of any bore holes, wellheads, or other gas-extraction operations. Ginardi v. Frontier Gas Services, LLC, et al., No. 4:11-cv-420 (E.D. Ark. May 17, 2011); Tucker v. Southwestern Energy Co., et al., No. 1:11-cv-44 (E.D. Ark. May 17, 2011); Berry v. Southwestern Energy Co., et al., No. 1:11-cv-45 (E.D. Ark. May 17, 2011). The plaintiffs in these actions allege that the defendants’ hydraulic fracturing operations from the Fayetteville Shale have polluted the atmosphere, groundwater, and soil with harmful gases, chemicals, and compounds.

The various causes of actions in the water-contamination lawsuits include claims of trespass, nuisance, negligence, gross negligence, negligence per se, strict liability, res ipsa loquitur, fraud, and misrepresentation. The plaintiffs seek similar damages, including compensatory damages such as lost profits and benefits associated with the property, natural-resource damage, permanent destruction of property, permanent destruction of water aquifers, loss of water-well use, reduction in property value, medical costs, loss of quality of life, emotional distress, and personal injury. Most plaintiffs also seek punitive damages and litigation costs and fees. Further, some of the plaintiffs seek the cost of remediation, the cost of future health monitoring, injunctions against further drilling, and the cost of purchasing an alternative source of water. The majority of these cases are currently undergoing discovery, and no dispositive rulings have been issued to date.

In addition to the civil lawsuits described above, federal and state government agencies have pursued actions against oil and gas companies. The Pennsylvania Department of Environmental Protection (PDEP) instituted an action against Cabot on behalf of the Fiorentino plaintiffs whose water wells were allegedly contaminated by Cabot’s nearby hydraulic fracturing activities. In December 2010, PDEP and Cabot announced a settlement in which the families collectively received $4.1 million in compensation and other concessions, and Cabot paid a $500,000 penalty to the PDEP. The settlement also allowed Cabot to resume its hydraulic fracturing activities and allowed the families to continue their suit against the company. Pennsylvania, Cabot Reach Settlement over Methane Contamination, Greenwire, Dec. 16, 2010.

In December 2010, the EPA issued an emergency order that required Range Resources Corp. to perform certain actions in connection with Range Resources’ activities in the Newark East (Barnett Shale) Field near Fort Worth, Texas. The order identified contaminants that “may present an imminent and substantial endangerment to the health of persons.” Range disputed the EPA’s findings and the validity of the emergency order, and the United States brought a lawsuit seeking civil penalties and enforcement of the emergency order. Both cases were mooted, and consequently, dismissed, after the EPA withdrew its emergency order in response to the U.S. Supreme Court’s decision in Sackett v. Environmental Protection Agency, in which the Court ruled that EPA administrative orders could be judicially reviewed. Notably, a parallel investigation by the Texas Railroad Commission concluded that Range’s operations did not cause or contribute to contamination of the water wells.

Fall and Winter 2011
Since late summer 2011, a few new lawsuits alleging water contamination have been filed, and some of the prior lawsuits have settled or been dismissed. In August 2011, the Dillon and Becka families brought related lawsuits against Antero Resources for water contamination in Pennsylvania. Becka, et al. v. Antero Resources, No. 2:11-cv-1040 (W.D. Penn. Aug. 12, 2011); Dillon, et al. v. Antero Resources, No. 2:11-cv-1038 (W.D. Penn. Aug. 12, 2011). The plaintiffs allege that Antero Resources used dangerous instrumentalities, methods, and hydraulic fracturing in operating a well that is located near their respective properties. Through its operations, Antero Resources allegedly discharged, spilled, or released hazardous chemicals, carcinogens, and other substances into the plaintiffs’ surface and subsurface water. The causes of action include negligence, strict liability, and trespass, through which the plaintiffs seek injunctive relief, compensatory and punitive damages, the costs of present and future testing and monitoring of the land and water, and litigation fees and costs. The parties engaged in court-ordered mediation in mid-December, but according to the report filed by the mediator, the parties did not resolve the dispute. The case is currently undergoing further discovery.

More recently, in early December 2011, the Teekell family sued Chesapeake Operating, Inc. in Louisiana state court based on contamination of two wells on the Teekell’s property allegedly caused by the defendant’s nearby hydraulic fracturing activities in the Haynesville Shale. Teekell v. Chesapeake Operating, Inc., No. 555,703 (La. Dist. Ct., Caddo Parish Dec. 8, 2011) (removed to the U.S. District Court for the Western District of Louisiana on January 12, 2012, as Cause No. 5:12-cv-00044). Specifically, the plaintiffs claim that the defendants discharged salt water, natural gas, hydrogen sulfide gas, and other pollutants into the ground, air, surface water, ground water, and aquifers. Testing has allegedly revealed high levels of sodium salts, iron content, and total dissolved solids. The plaintiffs also claim that one of the wells is holding hydrogen sulfide gas, resulting in obnoxious smells and gas bubbling up through puddles after rainstorms. The causes of action are familiar: negligence and strict liability, as well as Louisiana statutory claims. Damages sought include loss of the use of water wells, loss of usable water, costs for obtaining usable water, inconvenience, hardship, mental anguish, pain and suffering, diminished use of the home and property, costs of drilling a new well, and damages for the obnoxious smell and taste of the water. The plaintiffs further seek injunctive relief ordering that the defendants discontinue their operations in the area.

Although litigation is ongoing across several states, three cases in Texas have been settled or dismissed since August, and results from a recent study out of the University of Texas show that hydraulic fracturing is not directly linked to groundwater contamination. The Scomas and Grace Mitchell brought separate lawsuits against Chesapeake Energy Corp. and Encana Oil and Gas (USA), Inc., respectively, alleging that the drilling-waste storage sites and disposal wells near their properties resulted in contamination of their respective water wells. Scoma v. Chesapeake Energy Corp., et al., No. 3:10-cv-1385 (N.D. Tex., July 15, 2010); Mitchell v. Encana Oil & Gas (USA), Inc., et al., No. 3:10-cv-2555 (N.D. Tex., Dec. 15, 2010). The Scomas complained of increased levels of benzene, toluene, ethylbenzene, xylene, barium, and iron in their well water, while Ms. Mitchell asserted that her water became slick to the touch, gave off a gasoline-like odor, and tested positive for various chemicals including hydrocarbons similar to diesel fuel. The Scomas’ case was dismissed on December 9, 2011, and Ms. Mitchell’s case was dismissed on December 27, 2011, both pursuant to a settlement agreement reached between the parties.

A third Texas case was dismissed—without prejudice—on January 25, 2012. Harris v. Devon Energy Prod. Co., L.P., No. 4:10-cv-708 (E.D. Tex., Dec. 22, 2010). In December 2010, the Harrises sued Devon Energy Production Co., L.P. for alleged groundwater contamination resulting from bore holes drilled under and near their property and from hydraulic fracturing activities. However, on December 6, 2011, the Harrises filed a motion to dismiss without prejudice, stating that even though testing showed contamination when the lawsuit was filed, recent testing had shown that “the contamination [wa]s no longer at a toxic level.” Plaintiff’s Motion to Dismiss, Doc. 56, at ¶ 1 (Dec. 6, 2011). When the plaintiffs filed their motion to dismiss, the defendant had a motion for summary judgment pending. The court did not rule on the motion for summary judgment, but instead granted the plaintiff’s motion to dismiss without prejudice.

In early November 2011, the Energy Institute at the University of Texas at Austin released early results of a study on the use of hydraulic fracturing in shale gas development that suggest no direct link to reports of groundwater contamination. Press Release, University of Texas at Austin Energy Institute, Early Results from Hydraulic Fracturing Study Show No Direct Link to Groundwater Contamination (Nov. 14, 2011). According to Dr. Charles Groat, a geology professor at the university, many of the problems are related to other aspects of hydraulic fracturing activities, including poor casing or cement jobs, above-ground spills, or other mishandling of wastewater. The final report is expected to be issued in early 2012 and, according to a media release from the Energy Institute, will include analysis of reports of groundwater contamination allegedly caused by hydraulic fracturing in the Barnett Shale, the Haynesville Shale, and the Marcellus Shale. It is also anticipated that the final report will include an evaluation of allegations of fugitive air emissions attributed to equipment leaks, evaporative losses from surface impoundments, and spills.

Earthquakes
In addition to the lawsuits alleging water contamination, plaintiffs in several Arkansas class-action lawsuits have claimed that hydraulic fracturing operations damaged their properties by causing earthquakes. Frey v. BHP Billiton Petroleum (Arkansas) Inc., et al., No. 4:11-cv-475 (E.D. Ark. June 9, 2011); Hearn v. BHP Billiton Petroleum (Arkansas) Inc., et al, No. 4:11-cv-474 (E.D. Ark. June 9, 2011); Lane v. BHP Billiton Petroleum (Arkansas) Inc., et al, No. 4:11-cv-477 (E.D. Ark. June 9, 2011); Palmer v. BHP Billiton Petroleum (Arkansas) Inc., et al, No. 4:11-cv-476 (E.D. Ark. June 9, 2011). The class actions have been consolidated into one action currently pending in the Eastern District of Arkansas. Hearn v. BHP Billiton Petroleum (Arkansas) Inc., et al., No. 4:11-cv-474 (E.D. Ark.). The plaintiffs claim that “Central Arkansas has seen an unprecedented increase in seismic activity, occurring in the vicinity of” wastewater-disposal injection wells that are part of hydraulic fracturing operations. The plaintiffs cite several surveys, including the Arkansas Geological Survey and the U.S. Geological Survey, alleging “hundreds of earthquakes occur[ed] between September 2010 and December 2010.” Additionally, the complaint asserts that the largest earthquake in 35 years occurred on February 28, 2011, measuring 4.7 in magnitude, and that on that same day, the U.S. Geological Survey recorded as many as 29 earthquakes around Greenbrier and Guy, Arkansas, ranging in magnitude from 1.7 to 4.7.

Similar to the water-contamination cases, the causes of action include public nuisance, private nuisance, absolute liability, negligence, and trespass. Along with punitive damages and injunctive relief, the plaintiffs seek damages for physical damage to homes and commercial real estate, loss for the purchase of earthquake insurance, loss in the fair market value of the property, economic loss due to temporary stoppage of business operations, and emotional distress. After several changes to the parties, the remaining defendants include BHP Billiton Petroleum (Fayetteville) LLC, Chesapeake Operating, Inc., and Deep Six Water Disposal Services, LLC.

Recent studies have addressed this potential link. In July 2011, the Arkansas Oil and Gas (AOG) Commission held a hearing and determined that there was sufficient documentary and expert-witness proof to order a moratorium on drilling disposal wells in the earthquake area. Researchers with the Arkansas Geological Survey say that, while there is no discernible link between earthquakes and gas production, there is “strong temporal and spatial” evidence for a relationship between the Arkansas earthquakes and the injection wells. "Natural Gas: Arkansas Commission Votes to Shut Down Wells," Huffington Post (July 27, 2011). Further, Dr. Haydar al-Shukri, director of the Arkansas Earthquake Center at the University of Arkansas, testified before the commission that, because only 280 of the more than 10,000 small seismic events occurred within three miles of the well, these events were not caused by hydraulic fracturing.

Other organizations besides the AOG Commission have been studying the possible connections between drilling and earthquakes. In August 2011, the Oklahoma Geological Survey (OGS) drafted an open-file report, concluding that it is difficult to determine whether hydraulic fracturing causes earthquakes because of “our poor knowledge of historical earthquakes, earthquake processes and the long recurrence intervals in the stable continent.” Austin A. Holland, Examination of Possibly Induced Seismicity from Hydraulic Fracturing in the Eola Field, Garvin County, Oklahoma 25 (Aug. 2011).

In addition to the OGS study, Cuadrilla Resources Limited conducted a study to evaluate the relationship between Cuadrilla’s operations and two small earthquakes that occurred in Lancashire, United Kingdom. Dr. C.J. De Pater & Dr. S. Baisch, Geomechanical Study of Bowland Shale Seismicity: Synthesis Report (Nov. 2, 2011) (Quadrilla Resources Ltd.). The group concluded that the probability of a single factor, such as hydraulic fracturing, inducing a seismic event “with similar magnitude is quite low” and that many factors need to coincide to create a seismic event.

More recently, in March 2012, the Ohio Department of Natural Resources issued a report studying seismic activity near hydraulic fracturing operations after the Youngstown area suffered several low-magnitude earthquakes in 2011. The report concludes that a number of circumstances must occur for hydraulic fracturing to induce an earthquake, including the existence of a fault that is in a near-failure state of stress and an injection well deep enough and near enough to the fault with a path of communication to the fault. In fact, the report states that “properly located . . . injection wells will not cause earthquakes.” Preliminary Report on the Northstar 1 Class II Injection Well and the Seismic Events in the Youngstown, Ohio, Area 4, 17 (Mar. 2012) (Ohio Department of Natural Resources).

U.S. Geological Survey scientists have also studied possible connections between increased seismicity in the midcontinent and oil and gas operations. The scientists presented a paper at the Annual Meeting of the Seismological Society of America on April 18, 2012. The abstract of the paper is available and suggests that the increased seismic activity is “almost certainly manmade,” but that the relationship to changing extraction methodologies or the rate of oil and gas production is yet to be determined. W.L. Ellsworth, et. al, Are Seismicity Rate Changes in the Midcontinent Natural or Manmade?

Conclusion
The cases summarized in this article point to the concerns of landowners and citizens living near drilling operations that fracking is causing or will cause damage, not only to the environment and their property, but also to their personal health and safety. While that is merely speculation, the rise in hydraulic fracturing litigation evidenced by the cases discussed may be attributed, at least in part, to increased drilling in proximity to populated areas and heightened media scrutiny of the process. With the extensive media coverage, both in newspapers and on television, and with the higher visibility of fracking operations near towns, more people have taken an interest in fracking, both positive and negative. Some praise fracking as an enabler in providing gas supplies for lower-carbon sources of electricity and as creating numerous industry-related jobs, while others fear that a major fracking catastrophe is waiting to happen.

Given that most of the hydraulic fracturing cases are in the early stages of litigation, the claims and allegations being asserted are very fluid and change frequently. While it will likely be a number of years before any of these cases make it to trial, if at all, a few courts have already granted partial summary-judgment motions dismissing selected gross negligence and fraud claims. Notably, it will be interesting to see whether courts ultimately address the issues of water contamination and earthquakes before the final results of pending environmental studies and congressional investigations. With continued debates about state versus federal regulation, industry standards, and the facts in particular cases, more fracking cases will undoubtedly be filed and will continue to be filed until a set of “best fracking practices” are endorsed by the regulators and the energy industry and until the public is confident about the safety of fracking operations.

Barclay Nicholson is a partner and Kadian Blanson and Andrea Fair are associates with Fulbright & Jaworski L. L.P. in Houston, Texas.