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Client Alert: DRBC Proposes Draft Marcellus Shale Drilling Regulations

12.14.10

On December 9, 2010, the Delaware River Basin Commission (DRBC) proposed detailed regulations for natural gas development projects in areas under its jurisdiction. In Pennsylvania, the Basin overlaps the Marcellus Shale formation primarily in Carbon, Lackawanna, Luzerne, Monroe, Pike, Schuylkill and Wayne Counties.  The proposed regulations impose planning requirements and practices to minimize impact to water resources. The regulations also propose a streamlined process potentially as short as 30 days for review of natural gas development projects that meet the planning requirements and satisfy other criteria designed to lessen environmental impact.  

The regulations are controversial. New Jersey, which is now reviewing the proposal, has said it will oppose the regulations if they are not sufficiently protective. New York has asked the DRBC to wait until it promulgates its own regulations before finally adopting the proposal.  

The draft DRBC regulations require that water used for natural gas development projects come from water sources approved by the Commission, to protect against overuse and undue impact.  The DRBC proposes a streamlined approval process for existing Commission-approved water sources to minimize the need for new water sources.  Natural Gas Development Plans (NGDPs) would be mandatory for natural gas well developers with total lease holdings of over 3,200 acres in the Delaware River Basin or who intend to build more than five natural gas well pads. An NGDP will identify the developer’s foreseeable natural gas development plans, geographic and hydrological constraints to the plans, and measures to minimize drilling impacts.  Drilling restrictions and setbacks would apply in environmentally sensitive areas and near certain water resources.  Water monitoring and characterization would be required before and after project construction.  Water usage and wastewater treatment and disposal also must be monitored and tracked, wastewaters must be disposed at approved facilities, and reporting requirements are imposed. 

The Commission principally relies on states to implement their laws and regulations concerning construction and operation of wells, well pads, and appurtenant structures.  All non-domestic wastewater must be transferred to tanks or wastewater storage facilities and fluids and drill cuttings from horizontal wellbores in the target formation must be beneficially reused or disposed at appropriate waste facilities.  Any wastewater treatment facility within the Basin may accept non-domestic wastewater from a natural gas development project only if the facility first obtains approval from the Commission based on treatability studies which show no unacceptable impacts to receiving waters.  

Financial assurance of $125,000 per well is required for plugging, abandonment and restoration of natural gas wells and remediation of any pollution from natural gas development activities.  After well installation and hydraulic fracturing are complete, the financial assurance may be reduced. 

The DRBC will be accepting written comments until March 16, 2011, and will hold three public hearings, to be scheduled. For more information on the lengthy proposal or about comment opportunities please contact Douglas Schleicher at dschleicher@klehr.com or (215) 569-2795.