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Pennsylvania regulations requiring bonding or insurance from gas and oil drillers fall short in protecting taxpayers and citizens from potential damages, a state environmental group said Tuesday.
PennEnvironment Research & Policy Center said that drilling for gas and oil presents threats to water, forests, ecosystems and people's health, and called on the government to require the industry to put up greater financial assurances equal to the cost of potential damages. The group made its case in a report called "Who Pays the Cost of Fracking."
The state requires a surety bond or similar instrument from $4,000 to $10,000 to cover the cost of plugging a well and reclaiming the land disrupted by the well pad. The bond or insurance would come into play should the company at some point fail or is unable to cap the well or restore the land. The bond is released one year after plugging.
Erika Staaf, PennEnvironment's Clean Water Advocate, said the amount is too little for even what it is supposed to cover. She said some well closures that have gone wrong ended up costing upwards of $700,000. Sometimes, problems can emerge decades after a well has been capped. The current state bond requirements provide no protection for environmental damages or individuals damaged from drilling activity.
"The industry, rather than the public, should bear the brunt of the costs," Ms. Staaf said. "We don't know what problems may emerge. We want to see assurances over time."
The group suggests having oil and gas production companies put up a minimum of $250,000 bond for plugging and reclamation and $5 million for damage to private property, health or environmental clean up. It wants those in place for at least 30 years after the well is capped. For wells with a useful life of 20 to 30 years, that would double the length of a bond's term.
"We've seen resource extraction booms give way to busts that could leave companies unwilling or unable to cover costs," Ms. Staaf said, invoking pollution from other extraction industries such as coal. "We can see a similar grim legacy for the oil and gas industry."
Travis Windle of the Pittsburgh-based Marcellus Shale Coalition considers Pennsylvania's bonding requirements strict. Producers pay into a fund that handles legacy and orphaned shallow conventional wells. The industry has spent millions of dollars in environmental protection and enhancements, he said.