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Chesapeake Energy Corporation And Pennsylvania Enter Into Agreement On Methane Migration

 

Chesapeake Energy Corporation (NYSE:CHK), through its subsidiary Chesapeake Appalachia, LLC, announced this week it has voluntarily entered into an agreement with the Pennsylvania Department of Environmental Protection (PADEP) to address concerns regarding migration of subsurface methane possibly caused by natural gas drilling activity in Bradford County, PA.

As part of the agreement, PADEP will assess a civil penalty of $700,000 and Chesapeake will voluntarily deposit another $200,000 into the PADEP’s Well Plugging Fund. In addition, Chesapeake will establish an escrow account to cover the cost of water treatment equipment on select water wells in the vicinity of the drilling activity.

“We have worked in coordination and cooperation with the PADEP from the moment we learned a potential problem existed,” said Chesa-peake spokesperson Brian Grove, Senior Director of Corporate Development for Chesapeake’s Eastern Division. “Even though the results of our joint review remain inconclusive at this time, we believe proceeding with an agreement and taking prompt steps to enhance our casing and cementing practices and procedures was the right thing to do.”

In response to reports of methane in groundwater, Chesapeake, in cooperation with the PADEP, launched an internal review. The review focused on casing and cementing design and practices. After completing the review, Chesapeake engineers enhanced the casing and cementing practices and procedures by adding more cement and steel reinforcement to seal and secure shallow gas zones. Engineers added another string of casing in the shallow and intermediate zones going from two strings to three. A string represents a long steel pipe encased in thick cement to seal the well from the surrounding environment.

“As a result of the unique geology in this particular region, shallow methane is located at depths considerably above the targeted Marcellus Shale formation,” stated Grove. “Drilling operations in this area may change the pressure equilibrium in these shallow.”

Chesapeake has worked cooperatively with the DEP to introduce enhanced well construction methods in Pennsylvania. Chesapeake uses closed loop drilling systems, restricts water impoundments and temporary transfer lines to fresh water, recycles 100 percent of its produced water and uses advanced environmental controls at every well.

“The shallow gas-charged geology in this part of northeastern Pennsylvania, coupled with the lack of rural water well construction and maintenance regulations, prompted us to expand our pre-drill water quality testing program to where it exceeds the standards required by law,” said Grove. “We test all known water sources within 2,500 feet of our proposed drilling locations before we start any drilling activities. State guidelines recommend testing to 1,000 feet of a proposed natural gas well.”

A PADEP-certified independent laboratory performs the test. Previous tests have identified instances of pre-existing methane in local groundwater prior to the start of any drilling activity. Data from the testing programs shows approximately 25 percent of the sampled water sources have pre-existing detectable levels of methane present and 20 percent fail one or more of the EPA’s drinking water standards.

The PADEP, United States Geological Society and Pennsylvania State University have shown similar results from their testing programs. Chesapeake has also started offering educational sessions with landowners who have had water sampled and analyzed in the company’s pre-drill testing program.

“We offer professional consultants who review residents' test results, answer questions and provide advice on good water well management practices. For many of the residents that have a pre-existing issue identified through pre-drill testing, Chesapeake is offering services free of charge to assist in the management of the identified water quality condition,” said Grove.

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