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PITTSBURGH -- In the event of fracking or drilling damages, Pennsylvanians and their communities may not be adequately covered financially when -- or if -- the bill comes, a new report says.
The report, "Who Pays the Cost of Fracking?," outlines what it says are shortcomings when it comes to the state’s financial assurance requirements for oil and gas companies. These assurance requirements are the state’s way of protecting leaseholders or communities from being left with the bill for damages when oil and gas companies move on.
“From contaminated drinking water to long-term illness, who is going to be there to pay the piper after the new gas rush is over?” said Erika Staaf, clean water advocate from PennEnvironment, the group that authored the report. “With Pennsylvania’s weak bonding requirements, all too often individual residents and communities are going to be left with a heavy tab for fracking damage.”
The report, released Tuesday, follows the first report of the series in 2012, "The Costs of Fracking."
Bonding, required by the Pennsylvania Oil and Gas Act and updated by 2012’s Act 13, requires that drillers must post a sum of money to cover the cost of plugging the well and reclaiming the site should the company not be able to do so, either during the drilling process or after drilling is completed, Staaf said. The amount of the bond varies depending on the depth of the well and various other criteria.
“It’s like a form of insurance,” Staaf said.
But the state’s current bonding requirements fall short in a number of ways, the report says. The report names the dollar amount of bonds required -- $4,000-$10,000 depending on the well’s depth -- the fact that the bonds only cover well plugging and site restoration, and that drillers are only responsible one year after the well is plugged and site is reclaimed as potential issues.
“From coal to oil to mining, we’ve seen every boom of extraction leave a legacy of pollution that future generations are left to grapple with,” Staaf said. “Pennsylvania’s weak bonding requirements are yet another reason why fracking is taking us down the same disastrous path.”
But others aren’t so sure of the report’s claims.
“Pennsylvania has strict bonding requirements and a dedicated revenue stream for plugging old abandoned and orphaned (shallow/conventional, non-Marcellus) wells,” said Travis Windle, spokesman for the Marcellus Shale Coalition, an industry group.
“Additionally, operators are investing billions of dollars to develop this clean-burning resource effectively and with a focus on environmental protection and enhancement," Windle said. "And under Gov. Ed Rendell and former DEP Sec. John Hanger, Pennsylvania strengthened well casing and construction standards to ensure that wells are properly constructed and water resources remain protected. The MSC supported these changes and our members continue to meet or exceed these guidelines."